Restructuring- the Case of Caterpillar

| |2012 |

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|[MN2201] |

|To what extent does restructuring transform corporate market and financial performance? Discuss using an extended example. |

Management strategy can no longer just focus on extracting surplus from the product market through productive intervention. Cost recovery through intervention in in the product market is restrained by todays’ more matured and intensively competitive markets (Haslam, Neale & Johal, 2000). Added to that, is the increasing pressure by institutional shareholders for higher returns, despite the U.K averaging a 2.3% GDP growth per annum (Haslam et al., 2000) Thus corporate strategy has been redefined, with managers pressurised to engage in new strategic moves that promises to deliver numbers (Froud, Johal, Leaver & Williams, 2006).

During the 1890s, U.K and U.SA became involved in corporate restructuring, mainly in the form of mergers and acquisitions, - which is what this essay will mainly focus on- in the hopes of improving return on capital and thus shareholder wealth (Froud, Haslam, Johal & Williams, 2000). This essay will attempt to assess the efficiency of restructuring, and the extent to which it has transformed the corporate market and financial performance with the example of GEC/Marconi, a British consumer and defence electronics, communications and engineering company (Froud et al., 2006).

Restructuring can involve a wide range of corporate actions (Wright, Chiplin, Thompson and Robbie, 1990) to maintain or improve ROCE and increase the surplus distributable to shareholders (Haslam et...