[Business Communication]

Corporate restructuring1IntroductionReasons for Corporate RestructuringObjectives of an OrganizationComponents of RestructuringBarriers to RestructuringTypes of Corporate RestructuringStrategic options in Corporate RestructuringCase study

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IntroductionCombination of two words Corporate meaning a large company or group and Restructuring meaning rearrangementCorporate restructuring is the process of redesigning one or more aspects of a companyIt is a necessity when the company has grown to the point that the original structure can no longer efficiently manage the output and general interests of the company

Reasons for Corporate RestructuringChange in fiscal & government policiesCore competenciesInformation technology revolutionConcept of customer delightCost Reduction

Objective of an OrganizationComponents of RestructuringRenegotiation of labor contracts to reduce overheadRe-financing of corporate debt to reduce interest paymentsMajor public relations campaign to reposition the company with consumersForfeiture of all or part of the ownership share by pre-restructuring stock holdersSale of underutilized assets, such as patents or brandsOutsourcing of operations such as payroll and technical support to a more efficient third party

Barriers to RestructuringInadequate commitment from the Top managementResistance to changePoor communicationAbsence of requisite skillsFailure to understand the benefits of restructuringAvailability of resourcesOrganizational WorkloadNon adherence to time scheduleLack of clear and visible leadership

Types of Corporate restructuringOrganizational RestructuringPortfolio RestructuringFinancial Restructuring

Organizational RestructuringRestructuring strategy is designed to increase the efficiency and effectiveness of personnel, through significant changes in the organizational structureIncludes response changes in the business and related environments.Takes the form of divestiture and acquisitions.

Portfolio RestructuringInvolves divesting or acquiring a line of business perceived peripheral to the long term business strategy of the companyRepresents the companys attempt to respond to the marketing needs without losing sight of its core competenciesResult of some strategic alliance Responds to shareholders desire to downsize and refocus the companys operations Responds to outside boards suggestion to restructureResponds to strategies adopted as a response to exercising call or put options

Financial RestructuringIt Involves change in the capital structure and capital mix of the company to minimize its cost of capitalIt involves infusion of financial resources to facilitate mergers, acquisitions, joint venture, strategic alliances and stock buy-backDepends on availability of free cash flows, takeover threats faced by the company and concentration of equity ownership

Purpose of Financial RestructuringGenerate cash for exploiting available investment opportunitiesEnsure effective use of available financial resourcesChange the existing financial structure, in order to reduce the cost of capitalLeveraging the firmPreventing attempts of hostile takeover

12Strategic options in corporate restructuringProcess of eliminating existing inefficiencies

Aims:Improving operations Alter the relative strength of the organization to face competitionFacilitate creating of competitive advantageProvide better customer satisfactionGenerate profits in a free market economyHelp the organization differentiate itself from competitorsEnsure it delivers value to the customers

Strategic OptionsStrategic OptionsCase StudyOrganization :Dell Inc.Industry : IT Hardware

AbstractThe case examines the corporate restructuring program at Dell Inc. (Dell), the US based leading technology companyFounded in 1984, Dell went on to become the largest seller of PCs and servers in the 1990s. However, with rising competition by early 2000s, Dell's market share started falling and its profitability was affected. To counter the competition and in an effort to arrest the declining market share and profitability, Dell started a major corporate restructuring program. Case Study Issues for the CompanyUnderstand the changing dynamics of the global PC industry.Examine the growth strategies of Dell over the years.Evaluate the efficacy of the measures adopted by Michael Dell to improve the financial performance of the company during his second term as the CEO of Dell.Analyze the impact of global financial crisis on Dell.Examine the future strategy of Dell. Case StudyThe restructuring program was implemented under the leadership of Michael Dell (Michael), the founder, Chief Executive Officer (CEO) and Chairman of the company.He initiated several changes including more focus on product design, selling PCs through retail stores, acquiring software, storage and technology service companies and implementing significant cost-cutting exercise.However, when the restructuring efforts were still underway, the global financial crisis of 2008-09 affected Dell's financial performance adversely.Case StudyIn January 2009, Dell started another major reorganization program in which its global business was restructured around four customer groups Large Enterprise, Public Sector, SMB, and Consumer instead of the earlier geographical divisions.The company also initiated changes at the top management level. The case ends with examining some strategic measures taken by Dell to regain its market leadership position.Thank You.