General Management @ Knowledge Zone



Corporate Restructuring
Strategies & Implementation

by Aviral Sanghera *

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Part - II

Domestic and global strategies: Company should decide on whether to investor not, where to invest, how to invest and on its dividend policy. This is the basic financial management. It should know how to raise funds, when to invest. How to raise funds is determined by keeping in mind the following principles commonly knows as F.R.I.C.T. - flexibility, risk, income, control and timing. When to invest is determined by the cost of capital and risk. It should use the global financial innovations available and keep in mind the economic reforms. It should also utilize global resources like ADRs and GDRs the way reliance has done it. It should also make use of other financial options like hedging and FOREX rates, etc.

HRD transformation: HRD is a must in an organization especially at times of restructuring. Every organization has its own core values, which are unique. The HR department has to integrate the new organization workers with their company. Its three steps are: -

  1. Remove top management
  2. Strategic organizational improvement
  3. Integrate - delayering, monetary benefits are ways of integrating workers

Leadership challenges: Changes take place in almost all areas. The toughest challenge we will face is how to bring about these changes that we know are crucial. The common qualities of leaders are: -

  1. Commitment
  2. Concern
  3. Integrity
  4. Quality
Leaders should create value or value addition and also do disaster planning.

Above are the key strategic management points, which the organization needs to consider at times of restructuring. Organizations should also consider that the restructuring should add value or create value. It could be a value capture. At times of restructuring leaders should have in mind the strategic business plan and strategic vision. They should look for value drivers. One thing should be kept in mind that every organization goes through "Valley of Death". Restructuring is to move one step ahead quickly. Valley of death is high profitability to low profitability and then high profitability. Restructuring process should be quick but the organization should decide the price of being fast.

Concluded.

* Contributed by: -
Aviral Sanghera,
PGP 2003-2005,
XIM Bhubaneswar.