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DEFINITION
a. Corporate restructuring can be defined as any change in the business
capacity or portfolio that is carried out by an inorganic route or
b. Any change in the capital structure of a company that is not a part of
its ordinary course of business or
c. Any change in the ownership of or control over the management of
the company or a combination thereof.
a.1 Any change in the business capacity or portfolio carried out by
inorganic route.
Tata Motors launched Sumo and later, Indica-leading to an expansion of
its business portfolio. However, these products were launched from Tata
Motors own manufacturing capacity in through an organic route.
Hence, it would not qualify as corporate restructuring
Tata Motors acquisition of Jaguar Land Rover from Ford, through
Jaguar Land Rover Limited is corporate restructuring
Grasims acquisition of Larsen & Toubros (L&T) cement division
through UltraTech Cement Limited is an example of corporate
restructuring
a.2 Change in the business portfolio could also be in the nature of
reduction of business handled by a company.
In the case of Grasim and L&T, the demerger of L&Ts cement business
into UltraTech Cement Limited was reduction of its business portfolio
and thus, amounted to corporate restructuring of L&T.
Functional organization
Divisional organization
Matrix organization
With businesses having become more complex along with the
acceptance of newer concepts of organization building such as tutorship,
mentorship, etc., the hierarchies have stopped strictly falling into one of
the three types mentioned above.
Any migration of an organization from functional to divisional or to
matrix type or to any new or hybrid type or vice-versa would not be a
case of corporate restructuring.
(c) Change in the business process
Re-engineering is the fundamental rethinking and redesign of business
processes to achieve dramatic improvement in critical, contemporary
measures of performance such as, cost, quality, service and speed.
Thus, It refers to the radical redesigning of business processes and not to
the ownership and control or to the capital structure of the organization.
(d) Downsizing
It is another form of organizational change in which the business
organization substantially cuts down on its manpower, recurring cost