Down time in businesses is not a surprising incident for business owners. There are multiple situations that can lead to falling business performances. Some of the reasons are change in market dynamics, or introduction of powerful competitors and so on. However, the best solution to tackle declining business growth is the corporate restructuring process and to introduce new business strategies.
Research by McKinsey has shown that 70 % corporate operational restructuring has led to enhanced profitability. However, restructuring is a complex process and requires robust planning and strategizing. In the following section of the blog would discuss the common situations that require corporate restructuring.
What is Corporate Restructuring?
Operational restructuring refers to introducing a new business model and changing business structural and operational accordingly. These processes are directed towards regaining market dominance by pacing up with the market forces. However, companies often need to take hard decisions like employee lay-offs, eliminating extraneous departments and so on.
While restructuring companies run the risk of faulty decisions and often end up making the wrong move. These faulty decisions lead to costly consequences leading to additional disruptions. In order to avoid such risks partnering with third party turnaround professionals is the most secure decision. Certified turnaround consultants bring about their talent and expertise to offer expert guidance propelling your business towards profitability.
Reasons to Corporate Restructuring
It is beneficial to understand the needs to restructure so as to take necessary steps to revive your company. Here are the common reasons for corporate restructuring.
1. Enhancing Efficiency and Rearrange Operations
Corporate restructuring is required to enhance productivity and streamlining processes. One of the main reasons for a company’s low performance is inefficient workforce and redundant processes. Companies often bear the cost of extra departments that do not contribute to the core production growth. Such as back office tasks, like bookkeeping, HR services, and so on.
Restructuring the operation process by outsourcing back office tasks can significantly reduce the overhead cost of maintaining a separate department in-house. Moreover, you can organize the core research and development processes in a more productive format to improve performance and profitability. On the other hand, introduction of automation and powerful software is another way to enhance productivity.
2. Keep Up with Market Changes
In the competitive business landscape it is of paramount importance to keep up with the changes in market forces. For instance, developing an online sales channel is a way to restructure marketing strategies. If your company does not have any online stores then you are likely to lag behind your competitors. Such restructuring enhances your company’s resilience and navigates competitive dynamics more efficiently.
3. Improve Employees’ Performance
Employees’ performance determines the entire business performance at the market level. Declining performance or inefficient leadership is often tackled by replacement and rearranging responsibilities. On the other hand, downsizing of employees is a common tactic employed by most companies to reduce costs. Instead the resources are channelized towards important production related departments.
Conclusion
Corporate restructuring is a common requirement in the face of adverse business situations. Moreover, it is also required to adjust to new market structure and demands. However, taking expert help from top turnaround management professionals can help businesses with expert guidance and strategies.
