strategic management - restructuring

7/29/2019 Strategic Management - Restructuring

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FACULTY OF BUSINESS

Nurturing professionals with high moral and ethical values

Assoc. Prof. Dr. Mohd Fuad Mohd [email protected] 6629

16th. March 2013

Strategic Management

RESTRUCTURINGRESTRUCTURING

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FACULTY OF BUSINESS


Organization restructuring happens when thereporting hierarchy of a company changes.

RESTRUCTURINGRESTRUCTURING

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HELPS A COMPANY PREPARE FOR THEFUTURE!


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Organizational leaders often find it necessary tochange how their units operate for reasons like:changing unit priorities

UNDERSTAND

Plan for Change

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enhancing organizational effectivenessaddressing budget reductions


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Organization RestructuringOrganization Restructuring

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Organization Restructuring & ChangeOrganization Restructuring & ChangeManagementManagement

1. Background

2. Scope and Process : Organization Diagnosis

3. Output : Organization Diagnosis

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4. Task Determination (Current)

5. Future Tasks and Direction


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Decreased Org.

Efficiency dueto rapid growth

(particularly in

terms of org.

size)

Organizational SituationOrganizational Situation

1. Background1. Background

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Need for

Change

Lowered

Managerial

Capacity of Mid.

Mgmt. due to

considerableincrease in

headcount

Lack of

within the org.

Lack of

Customer-

centered

Mindset of

Employees due

to increased

bureaucracy

within the org.


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Employees Initial Attitude of the ProjectEmployees Initial Attitude of the Project

Sensitiveness Junior

and

Senior

Leader

1. Background (Contd)1. Background (Contd)

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Defensiveness

Expectation

All

Employees

All

Employees


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Overcoming problems concerned,

1) in-depth organization diagnosis was conducted

2) change management tools were utilized to

1. Background (Contd)1. Background (Contd)

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Determination of Issues Diagnosis & Task DevelopmentAction Planning

to Strengthen Org. Capability

Focus

Phase I Phase II Phase III

Organization Diagnosis Scope and ProcessOrganization Diagnosis Scope and Process

2. Scope and Process :2. Scope and Process : OrganizationOrganization DiagnosisDiagnosis

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Interview(Junior)

Main

Issues

Determined

FocusGroup

Interview(Senior)

FocusGroup

Interview(Leader)

Exec.Interview

EOS Result

Review

Tasks

Identified

External/ Internal

Environment

Review

Task

Development

Top Mgt.

Workshop

to determine

tasks

Action Plan

Solution

Development


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Change Management ToolsChange Management Tools

Develop Business Case to attract employees attention

Identify and analyze Key Stakeholder

2. Scope and Process : Org. Diagnosis (Contd)2. Scope and Process : Org. Diagnosis (Contd)

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Assess Communication Channel


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PriorityTasks Urgency Short-Term

Effectiveness

Manpower Structure

Org. Structure Re-design

Remarks

EasyImplementa-

tion

StrategicImportance

Each task has to be ranked based on their strategic importance, easy implementation, urgency

and short-term effectiveness (Amway Korea example)

3. Output : Org. Diagnosis3. Output : Org. Diagnosis

Redefining and Sharingof Vision & Strategy

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Performance MgmtSystem Re-design

Job Analysis

-

Leadership Development

CommunicationEffectiveness Planning

Succession Planning

Korean Title PromotionPolicy Re-design


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Org. StructureRe-design

SuccessionPlanning

LeadershipDevelopment

Performance MgmtSystem Re-design

Infrastructure for Change Mgmt

3. Output : Org. Diagnosis (Contd)3. Output : Org. Diagnosis (Contd)

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Manpower Structure

Re-design

Job Analysis

Implement Team-

Based Org.

Structure

Korean Title

Promotion Policy

Re-design

Redefining and

Sharing of Vision &

Strategy

Effective

Communication

Planning


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Possible ChangesPossible Changes in Employees Attitude after the Projectin Employees Attitude after the Project

3. Output : Org. Diagnosis (Contd)3. Output : Org. Diagnosis (Contd)

Positive attitude of project intention among team leadersincreased

Employees trust of the top management increased

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Employees expectation of the project increased

But, lets wait and see attitude still exists especiallyamong the juniors

There are still some managers who are not prepared tobuythe project objectives, hence not willing to participatein current initiatives for change


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Key Findings

HRM and HRD are separated; HRD is tied with GA

(Usually HRM and HRD form one HR department;

alternatively, each of the three functions operateindependently)

Despite the increase in number of IBOs, sales

function has remained unchanged.

Local Sourcing serves as an independent unit, with

an executive as the department head.

Amway Korea

Management PR & Govt

4. Current Task4. Current Task

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Implications & Solutions

Review HRDs roles and relocate as necessary.

Review the capacity of sales function in line with

the increase in both revenue and number of IBOs.

Review Local Sourcings position in the org., and

investigate potential linkage with other function(s).Due to the rapid growth of the org. there exists

possibility of moral hazard, which may lead to need

for internal audit function.

Review span of control : Sales & MKT,

Management Service

Biz. Relations

Marketing

Special Event

Tech. Reg/QA

RM & GDS

Distribution

Logistics Planning

CSD

RDC

Treasury

HRM

Local Sourcing

Service Affair

PR & Govt Affair

Legal Affairs

BCR & BSM

Import & Export

Purchasing

Local Sourcing

Treasury


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Change Management

Succession Planning based on the New Org. Structure

Performance Management- Identify future leadership competency

Establish Training & Development Plan based on succession planning

-

5. Future Tasks and Direction5. Future Tasks and Direction

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- Performance Management & Coaching Skills Training- Executive Development Program

- Customized in-house MBA program

Others

- Introduce Cafeteria Benefit Program

- Talent Management and Retention

- Develop Total Compensation Strategy


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Strategic Management

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businessIt is actually aIt is actually aIt is actually aIt is actually a

MERGERS & ACQUISITIONSMERGERS & ACQUISITIONS

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combination


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Merger

A transaction where two firms agree to integrate theiroperations on a relatively co-equal basis because they have

resources and capabilities that together may create a strongercompetitive advantage.

The combining of two or more companies, generally by

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acquiring company in exchange for the surrender of theirstock

Example: Company A+ Company B= Company C.


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Acquisition

A transaction where one firms buys another firm with theintent of more effectively using a core competence by makingthe acquired firm a subsidiary within its portfolio of business

It also known as a takeover or a buyout

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It is t e uying o one company y anot er.

In acquisition two companies are combine together to form anew company altogether.

Example: Company A+ Company B= Company A.


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MERGER ACQUISITION

DIFFERENCE BETWEEN MERGER AND

ACQUISITION:

i. Merging of two organization in

to one.

ii. It is the mutual decision.

iii. Merger is expensive than

i. Buying one organization byanother.

ii. It can be friendly takeover orhostile takeover.

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.

iv. Through merger shareholderscan increase their net worth.

v. It is time consuming and thecompany has to maintain so

much legal issues.vi. Dilution of ownership occurs in

merger.

iii. cquisition is ess expensivethan merger.

iv. Buyers cannot raise their enoughcapital.

v. It is faster and easiertransaction.

vi. The acquirer does notexperience the dilution ofownership.


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When two or more companiescombines into one company

ma mer e with existin co

MergerMerger

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Merger

form new company

in India merger is called

Amalgamation


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MergerMergerMerger

Objectives

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Faster GrowthImproving ProfitabilityManagerial EffectivenessGaining Market PowerLeadership

Cost Reduction


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Acquisition

An Acquisition may be an act of acquiring

effective control by one company over assets

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or management o anot er company w t outany combination of companies..

Companies may remain independent, separate

But there may be change in control ofCompanies..


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Acquisition & Takeover

When Ac uisition is unfriendl or hostile

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It may be called Takeover


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Are there an alternatives to Mer ers or ac uisitions?

MERGERS & ACQUISITIONSMERGERS & ACQUISITIONS

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Merger

Alternatives

Joint VentureStrategic Alliance

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m na ng ne c en

OperationsProductivity ImprovementHiring CapableManagers


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Limit Competition

Market PowerDiversificationGrowthEconom of Scale

MOTIVES & BENEFITS OFM & A

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Access to Foreign MarketResourcesDisplace existing ManagementCircumvent Govt Regulations

AggressivenessDiversifying RiskProfitability


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Accelerated Growth

Expanding Existing Markets


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Expand InternallyExpand ExternallyDeveloping Operating FacilitiesPrice Paid for Merger

AC O S SS


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Enhanced Profitability

Economies of Scale


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perat ng conom esSynergy

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Steps in AnalysisOf Mergers & Acquisitions Planning

Search &Screening

Financial

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Evaluation

Mode ofMerger

Negotiation

PostMerger

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Why is Important Problem With Merger

MERGER:WHY & WHY NOT

i. Increase Market Share.

ii. Economies of scale

iii. Profit for Research and

i. Clash of corporate cultures

ii. Increased business complexity

iii. Employees may be resistant to

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development.

iv. Benefits on account of taxshields like carried forwardlosses or unclaimeddepreciation.

v. Reduction of competition.

change

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Why is Important Problem With Acuiqisition

ACQUISITION:WHY & WHY NOT

i. Increased market share.

ii. Increased speed to market

iii. Lower risk comparing to

i. Inadequate valuation oftarget.

ii. Inability to achieve synergy.

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develop new products.iv. Increased diversification

v. Avoid excessive competition

iii. Finance by taking huge debt.

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Impact of Mergers and Acquisitions

Competition

Management

Public

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ImpactEmployees Shareholders

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Why Mergers and Acquisitions Fail?

Cultural Difference

Flawed Intention

No guiding principles

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No ground rules

No detailed investigating

Poor stake holder outreach

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How to Prevent the Failure

Continuous communication employees, stakeholders, customers,

suppliers and government leaders.

Transparencyin managers operations

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must be ready to greet a new or modified culture.

Talent management by the management

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M&A DEALS

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1. Tata Steel-Corus: $12.2 billion January 30, 2007

Largest Indian take-over

After the deal TATAS

became the 5th largest

STEEL co.

100 % stake in CORUS

paying Rs 428/- per share

Image: B Mutharaman, Tata Steel MD; Ratan

Tata, Tata chairman; J Leng, Corus chair;

and P Varin, Corus CEO.

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2. Vodafone-Hutchison Essar: $11.1 billion

TELECOM sector

11th February 2007 2nd largest takeover

67 % stake holdingin hutch

Image: The then CEO of Vodafone

Arun Sarin visits Hutchison

Telecommunications head office in

Mumbai.

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3. Hindalco-Novelis: $6 billionJune 2008

Aluminium and

copper sector Hindalco Acquired

Hindalco entered theFortune-500 listing of

world's largest

companies by salesrevenues

Image: Kumar Mangalam Birla

(center), chairman of Aditya Birla

Group.

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4. Ranbaxy-Daiichi Sankyo: $4.5 b Pharmaceuticals sector

June 2008

Acquisition deal largest-ever deal in the

Indian pharma industry

Daiichi Sankyo acquiredthe majority stake ofmore than 50 % inRanbaxy for Rs 15,000crore

15th biggest drugmakerImage: Malvinder Singh (left), ex-CEOof Ranbaxy, and Takashi Shoda,

president and CEO of Daiichi Sankyo.

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5. ONGC-Imperial Energy:$2.8billion

January 2009

Acquisition deal

Imperial energy is abiggest chinese co.

ONGC aid 880 er

share to theshareholders of imperialenergy

ONGC wanted to tapthe siberian market

Image: Imperial Oil

CEO Bruce March.

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strategic management - restructuring

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