Restructuring

.To what extent does restructuring transform corporate market and financial performance?

Strategic management is a complex process not only includes management team, but also depends on organisational structure.

“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.” (Lamb, 1984)

Therefore, company at different level is seeking for different development and strategies. Corporate-level strategy is one of the main components of the strategic planning process. At this stage company is concerned with “identifying which business opportunities a company should pursue, how it should pursue those opportunities, and how it should exit from business that do not fit with the company’s strategic vision.” It leads to the one of the approaches—restructuring.

This essay will first identify what is restructuring by introducing its background, the reasons, the approaches, and the importance to company. Then will discuss how restructuring transform the company’s assets in terms of corporate market and financial performance and its influences toward stakeholders’ value. Furthermore, it will explore the benefits and limits in terms of the company. The extended example provided in this essay will be General Electric (GE).

According to Jensen, restructuring is seen as new management teams use assets “more productively” and increase return to benefit shareholders. It has become an increasing popular strategy among the companies during the 1960s, 1970s, and 1980s. As...