1.Downsizing
Call it downsizing,
layoff, rightsizing or smart sizing; in essence, it is all one and the same
thing. This restructuring strategy is about reducing the manpower to keep
employee costs under control.
Example:
Take the
case of auto-giant General Motors, which in 1991 decided to shut down 21 plants
and lay off 74,000 employees to counter its losses.
Example:
IBM,
which had never laid off staff ever since its incorporation, but had to layoff
85,000 employees to stay in business. This type of restructuring is tough to
manage and is mostly adopted to overcome adverse situations. Downsizing is not
always a result of business losses; it may be needed even in cases of
takeovers, acquisitions and mergers, where duplicity of the staff propels this
form of organizational restructuring.
2. Verticalization
This is
the latest in restructuring trend, wherein an organization restructures itself
to offer tailored products and services to cater to the requirements of a
specific industry.
Example:
In 2002,
HCL verticalized its operations to meet the specific demands of five different
industries: retail, media and telecom, manufacturing, finance and life
sciences. This type of restructuring opens up avenues for specialization.
3. Outsourcing
Today’s
businesses prefer to outsource some of their processes to other firms. There
are two ways outsourcing benefits a business; first, it helps in reducing costs
and second, it allows the business to concentrate on its core business and
leave the remaining tasks to outsourcing firms.
Whenever
a business plans to outsource one of its processes, it will cause some major
restructuring and reshuffling within the company. Downsizing is common when a
business outsources its processes.
Example:
For
instance, Nokia plans to layoff 4000 of its employees by the year end 2012, as
it will be outsourcing the production of its Symbian operating system
4. De-layering
De-layering involves
breaking down the classical pyramid setup into a flat organization. The main
objective of this type of restructuring is to thin out the top layer of
unproductive and highly paid ‘white collar’ staff. General Electric has reduced
the number of management levels from ten to four in some of its work facilities
in order to improve overall productivity.
5. Starburst
This restructuring
strategy involves breaking a company into smaller independent business units
for increasing flexibility and productivity. This may be done either to dissect
the business into manageable chunks or when the business wants to diversify and
foray into unrelated areas.
Example:
One of
the latest examples of this strategy is Pfizer’s decision to spin off four
non-pharmaceutical firms this year.
Starbursting
may also be used for expansion of the existing business such as when a business
decides to spin off subsidiaries to handle business in different geographic
areas.
6. Virtualization
This strategy
involves pushing employees outside the office to places where they are more
needed like at the client’s site. It also involves upgrading to technology,
which allows unmanned virtual offices to be set up.
Example
The
ATMs offered by banks are their virtual units.
7. Business Process Reengineering
This type
of restructuring is carried out for making operational improvements. It begins
with identifying how things are being done currently and then it moves on to
re-engineering the tasks to improve productivity.
Business
process re-engineering usually results in changing roles. While at times BPR
may lead to layoffs, it can also create new employment opportunities.
Example
When Ford
Motor was trying to reduce its cost, it found that the process at its accounts
payable department needed to be re-engineered. The reengineering helped in
simplifying the controls and maintaining the financial information more
accurately, that too after laying off 75 percent of the staff from the accounts
payable department.
8.
Strategies, which are based on realistic goals:
Successful
strategies are the one, which is based on realistic goals. Such a strategy that
focuses on the realistic goals and fulfill the realistic target
9.
strategies, which are based on right people, involved
Such, a
strategy, which involves the right people. This leads to the success of the
strategy. Such h a strategy rarely leads to unsuccessful path
10.
Strategies, which are based in the sufficient data:
A
strategy, which is based on sufficient data, and all the required information
and data, is being taken in the analysis while making up the strategy, such a
strategy is said to be a successful strategy
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