Total Marks 20
Starting Date Wednesday, June 20, 2012
Closing Date Friday, June 22, 2012
“Restructuring; Characteristics & impacts of restructuring on organizations”
Suppose you are working as a management consultant in Sunshine Pvt. Ltd. since 2011.Sunshine is a local telecom company working with the technology focused approach and resolve to grow with the ever evolving global technology trends. It has always been at the forefront in driving technological revolution to deliver innovative products and services that improve the digital lives of its customers.
The management of Sunshine Pvt.Ltd. observed a major decline in sales and profit during last 5 months in 2012 due to intense competition in the market.CEO (Mr. Ali) called a meeting of board of directors and discuss the company situation with them. Agenda of meeting was to discuss the restructuring process and its possible benefits for the organization. Finally at the end of meeting management of Sunshine Pvt. Ltd. concluded at the point to restructure the company.
As a management consultant, you are required to guide them about the possible actions that management should take while restructuring the company.
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Restructuring a company in the face of declining profits is a tough, nononsense
operation that requires a willingness to face financial realities
and triage difficult decisions.
1.Consider hiring a turnaround specialist--as either an interim manager or a consultant--to help with restructuring. An outsider often brings objectivity and a fresh point of view.
2. Analyze the extent of the problems. Is the profit picture merely ailing or is it terminally ill? Is the company's core business still financially viable?
Develop a restructuring plan and present it to the board of directors, management and employees. It may also be advisable to show the plan to certain outsiders, such as bankers and other creditors, and to major vendors.
4. Start at the top. Replace weak members of top management and the board of directors. Then reduce management layers. Unprofitable companies are often bloated with middle managers.
5. Investigate the possibility of restructuring debts or acquiring bridge loans to finance the restructuring costs.
6.Identify the most profitable customers. These aren't necessarily the biggest accounts. Concentrate on buyers who make few demands on the customer-service department, rarely return products and require only minimal marketing attention to prompt repeat orders.
7.Prune less-profitable product lines and increase financial and employee investment in more-profitable areas. Withdraw completely from unprofitable markets.
8.Close some facilities to reduce overhead. Consolidate divisions to eliminate duplicate administrative functions, and/or sell off underperforming divisions of the company.
9.Lay off employees or reduce some jobs from full to part time. Although this is one of management's most painful tasks, it's often essential for improving the profit picture.
10.Outsource costly services. Paying a flat fee to have selected services performed may reduce expenditures associated with in-house employees.
11.Move part--or all--of the company to another state (or country) to obtain lower employee wages, reduced power rates and/or special tax incentives.
12.Form a partnership with another company to share administrative services or technical expertise.
13.Investigate the latest technology for streamlining operations and/or improving products. Autoresponse voice-mail programs can handle phone inquiries. Robotic production components are becoming increasingly sophisticated and cost-effective.
14.Schedule personnel meetings to deal with the questions and concerns of remaining employees. After restructuring, the company's management will need to explain new procedures and financial projections.
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