Development by restructurization

From CEOpedia | Management online

Development by restructurization involves various improvement in existing structures and systems of the company. Main goal of restructurization is increase of effectiveness of company, defence against competition and modernization of equipment. There is two main types of this process:

  • Restructuring for repair
  • Restructuring for development.

Repair restructurization

Restructuring for repair is a collection of activities, usually carried out in enterprises with poor economic performance, low liquidity, risk of loss and even bankruptcy. The primary aim is to maintain at least a minimum level of financial liquidity, allowing it to survive. Repair activities are directed primarily to stop the negative developments and trends and to maintain company's production and sales of the same product range. It mostly covers selected areas of business where there is a need to introduce changes immediately to stabilize a deteriorating situation.

Development restructurization

Restructuring for development is based on the company's strategic decisions. Main objectives are:

  • Increase the company's market share,
  • Development of exports,
  • Improvement or change in the design of products,
  • Improvement of manufacturing technology,
  • Better methods for meeting customer needs,
  • Protecting the environment.

Objectives of development by restructurization

This objectives are determined by such conditions as:

  • Use of all of the available opportunities
  • Attempts to go beyond the current product and market scope,
  • Prediction and design of changes in the environment,
  • Efforts to boost business development
  • The use of product, technological, technical and marketing innovations,
  • Willingness to take economic risks,

See also:

Examples of Development by restructurization

  1. Reorganization of Business Structure: This type of restructurization involves the rearrangement of the company’s functional departments and units in order to maximize efficiency and optimize the company’s resources. This could include streamlining of the hierarchy, centralizing decision making, and introducing cross-functional teams. For example, the introduction of cross-functional teams in a large manufacturing company could result in improved communication and collaboration between the various departments, allowing the company to make better use of its resources and become more competitive.
  2. Diversification: Diversification involves the introduction of new products or services in order to capitalize on new markets or opportunities. This could involve adding new divisions, subsidiaries, or even acquiring outside businesses. For example, a company that was previously focused on the production and sale of books may decide to diversify its business by launching an online store to sell e-books, or by acquiring a business that sells office supplies.
  3. Streamlining of Processes: This type of restructurization involves the streamlining of processes, such as production, sales, and customer service. This could involve automating certain processes, introducing new technologies, or reorganizing the company’s processes in order to reduce costs and increase efficiency. For example, a company could introduce automated robots to handle certain production tasks, or they could reorganize the customer service process so that customers can get their questions answered more quickly.
  4. Focus on Innovation: This type of restructurization involves the introduction of new technologies and processes in order to stay ahead of the competition. This could include the introduction of new products, the development of new services, or the introduction of new technologies to improve the company’s existing products and services. For example, a company may introduce new technologies to improve its existing production process, or it may introduce new products or services to capitalize on new markets or opportunities.

Advantages of Development by restructurization

Development by restructurization has many advantages. These include:

  • Increased efficiency - Restructuring can involve reorganizing departments and processes to eliminate redundancies and make the company run more smoothly. It can also involve updating equipment and technology to increase productivity and reduce costs.
  • Improved financial performance - Restructuring can involve changes to the company’s pricing and marketing strategies to increase revenue and profits. It can also involve reducing expenses to improve the bottom line.
  • Enhanced competitiveness - Restructuring can involve changes to the company’s product, service, and customer service offerings to make it more competitive in the market. It can also involve making changes to the company’s organizational structure and processes to make it more flexible and agile.
  • Improved employee morale - Restructuring can involve changes to the company’s policies and practices to make employees feel more valued and appreciated. It can also involve providing better training and development opportunities to help employees grow professionally.
  • Increased innovation - Restructuring can involve changes to the company’s organizational structure and processes to make it more open to new ideas and trends. It can also involve introducing new technologies to improve efficiency and increase productivity.

Limitations of Development by restructurization

Development by restructurization has a few limitations. These include:

  • High cost - Restructuring usually requires a significant amount of financial resources, making it difficult for many companies to implement.
  • Time consuming - Development by restructurization often takes a lot of time and effort to complete. This can delay the implementation of other initiatives.
  • Resistance to change - Many employees may be resistant to changes in the way they work, which can slow down the process.
  • Risk of failure - Restructurization can be risky and there is no guarantee that it will be successful. If changes are not implemented properly, it can lead to further problems.
  • Loss of morale - Restructuring can lead to a decrease in morale among employees, leading to a decrease in productivity.
  • Lack of expertise - It can be difficult to find the right people with the right skills to make the necessary changes effectively.

Other approaches related to Development by restructurization

There are many different approaches to Development by restructuration.

  • Organizational Restructuring: This approach involves creating a new organizational structure to improve efficiency and communication between departments and teams. This could include reorganizing departments and roles, creating new ones, or consolidating departments.
  • Performance Management: This involves improving the performance of the team, ensuring that everyone is meeting their goals. This could include establishing performance metrics, setting expectations, and providing feedback and coaching to ensure that everyone is meeting their goals.
  • Process Optimization: This approach involves improving existing processes to make them more efficient and reduce waste. This could include automation, streamlining, and process reengineering.
  • Strategy Refinement: This involves revisiting the company’s overall strategy and making adjustments to ensure it is still in line with the company’s goals. This could include analyzing current performance, researching the market, and assessing the competitive environment.
  • Innovation: This approach involves introducing new products, services, or processes that will help the company move forward. This could include developing new technologies, exploring new markets, and creating new products and services.

In summary, Development by restructurization can involve a variety of approaches, such as organizational restructuring, performance management, process optimization, strategy refinement, and innovation. Each approach is designed to improve the effectiveness and efficiency of the company.


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