Corporate restructuring can be driven by a need for change in the organizational structure or business model of a company, or it can be driven by the necessity to make financial adjustments to its assets and liabilities. Frequently, it involves both. Companies restructure for a variety of reasons:
Internal reasons behind corporate restructuring -
Profitability below expectations
Stagnant or decreasing revenues,
Too low gross margin,
Too high operating costs,
Bad cash flow,
Over- or under-investment,
Productivity/KPIs below market standards,
High labour costs,
Unclear roles & responsibilities,
Poor internal communication,
Lack of leadership,
Bad design of processes,
Marketing budgets allocated ineffectively.
To reduce costs
To concentrate on key products or accounts
To incorporate new technology
To make better use of talent
To improve competitive advantage
To spin off a subsidiary company
To merge with another company
To decrease or consolidate debt
External reasons behind corporate restructuring -
New consumer trends
Innovations that redefine the market
Company\'s market share decrease due to actions of competition
Most companies declare their commitment to address market changes in their strategies, but not many of them really realize this goal in practice. Deep restructuring is not an easy fix and requires radical changes in distribution network, channel management, supply chain, HR policy, production and its sourcing, communication with consumers, product/category management, etc
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