ORGANIZATIONAL

RESTRUCTURING

A social unit of people that is structured and

managed to meet a need or to pursue collective
goals, is called an Organization.

Organizational Structure consists of activities

such as task allocation, coordination and
supervision, which are directed towards the
achievement of organizational goals.
 ORGANIZATIONAL
RESTRUCTURING

Organizations are a variant of clustered entities.

An organization can be structured in many

different ways, depending on their objectives.

The structure of an organization will determine

the modes in which it operates and performs.
 ORGANIZATIONAL
RESTRUCTURING

A visual schematic of Organizational Chart

 ORGANIZATIONAL
RESTRUCTURING

A business organization makes changes in

personnel and departments and change how
workers and departments report to one another
to meet market conditions.

Some companies shift organizational structure to

expand to serve growing markets & other
companies reorganize downsize or eliminate
departments to conserve overhead.
 ORGANIZATIONAL
RESTRUCTURING

Organization restructuring happens when the

reporting hierarchy of a company changes.

After organization restructuring certain groups

will report to different departments, and some
departments may be newly created or disappear
altogether.
 ORGANIZATIONAL
RESTRUCTURING
Causes of Organizational Restructuring

Changing Strategy

Changing Structural Types

Downsizing

Expanding
 ORGANIZATIONAL
RESTRUCTURING
Changing Strategy
Companies reorganize structure to
accommodate the market shifts.
Some companies create new divisions to
facilitate new products or product lines.
Some companies trim production staff due to
surplus production
Some companies increases sales staff to drive
sales.
 ORGANIZATIONAL
RESTRUCTURING

Changing Structural Types

Companies often rearrange business structure to
follow a new business model.
Some companies shift organizational structure to
a regional model to assign local managers.
Some companies create a matrix grid to place
the key managers over various departments and
divisions.
 ORGANIZATIONAL
RESTRUCTURING
Downsizing
Companies commonly downsize to remain
functional during a loss of revenue.
Most companies will close departments, drop
product lines, lay off managers and sell facilities
to keep a company afloat.
Some companies reorganize business structure
to meet the needs of the new organization at its
smaller size
 ORGANIZATIONAL
RESTRUCTURING
Expanding
Corporate expansion demands the creation of
new departments to accommodate new products
or new facilities.
For any expansion companies has to rearrange
business structure to include the new staff.
Companies often make changes in the basic
organizational structure for any expansion.
 Merger and Acquisition

Merger and Acquisition refers to the process of

acquiring a company at a price called the
acquisition price or acquisition premium.

The key principle behind M & A is to create

shareholder value over and above that of the
sum of the two companies.

Two companies together are more valuable than

two separate companies
 Merger and Acquisition
Distinction between Mergers and
Acquisitions

When one company takes over another and

clearly establish itself as the new owner, the
purchase is called an acquisition.

When two firms, often of the same size, agree to

go forward as a single new company rather than
remain separately owned and operated, this is
referred to as a merger.
 Merger and Acquisition

Types of Merger

Horizontal Merger
Vertical Merger
Co-Generic Merger
Conglomerate Merger
Amalgamation
 Merger and Acquisition
Horizontal Merger

Merger exists between two companies who

compete in the same industry segment.

The two companies gain strength in terms of

improved performance, increased capital, and
enhanced profits

Reduces the number of competitors in the

segment and gives a higher edge over
competition.
 Merger and Acquisition

Vertical Merger

Merger exists between two or more companies in

the same industry but in different fields of
business.

The companies in merger decide to combine all

the operations and productions under one
shelter.
 Merger and Acquisition

Co-Generic Merger

Merger exists between two or more companies

which are related to the production processes,
business markets, or basic required
technologies.

It is the extension of the product line or acquiring

components that are required in the daily
operations.
 Merger and Acquisition

Conglomerate Merger

It is an arrangement where two or more

companies consolidate their business to form a
new firm, or become a subsidiary of any one of
the company.

Involves dissolving the entities of amalgamating

companies and forming a new company having a
separate legal entity.
 Merger and Acquisition
Amalgamation

Merger or venture exists when two or more

companies belonging to different industrial
sectors combine their operations.

Companies are no way related to their kind of

business and product line.

This is just a unification of businesses from

different verticals under one flagship enterprise
or firm.
 Change in Company attitude
Organizational change occurs when a company
makes a transition from its current state to
desired future state.

This is managed so as to minimize employee

resistance and maximizing the effectiveness of
the change.

Managing organizational change is the process

of planning and implementing change.
Change in Company attitude

Major areas of attitude change.

Strategy,

Technology,

Structure,

People
 Change in Company attitude

Three basic stages of strategic change.

Realizing that the current strategy is no longer

suitable,

Establishing a vision for the company's future,

Setting up new systems to support change.

 Change in Company attitude
Technological changes are often introduced as
components of larger strategic changes.

Technology change is incorporated into the

company's overall systems & structure.

Structural changes can also occur due to

strategic changes.

It also occurs due to operational changes or

changes in managerial style.
 Change in Company attitude

People change is a result of other changes.

Sometimes companies seek to change people

attitude to increase their effectiveness.

Positive change of people that match with

companys goal help for successful merger.
 Change in Employee attitude
Aftermath of mergers and acquisitions impact the
employees or the workers the most.

In a merger or an acquisition, employees are

bound to be laid-off or downsized.

The workers will have to compromise.

Employees may experience job/career/life

dissatisfaction, lower self-esteem, depression,
and anxiety
 Change in Employee attitude
Reaction of employee to a merger:

Denial: At first employees feel that the merger

will not really happen.
Fear: As plans for the merger begin to unfold,
employees begin to fear the unknown and
imagine the worst.
Rumors: Circulate rumors of mass layoffs,
terminations & job loss.
 Change in Employee attitude

Anger: Employees begin to express anger

towards the deal.

Sadness: Employees begin to grieve the loss of

their corporate identity.

Differentiation: They focus on the differences in

the way the two companies operate and are
managed
 Change in Employee attitude

Best practices for positive employee attitude:

Better understanding of the human implication of

a merger.
Nurture employees through training and
coaching.
Frequent and regular communication during and
after the merger.
 Change in Employee attitude

Employee assistance programs to reduce stress.

Counseling to help employees distinguish the real

effects of a merger.

Establish clear, well-defined reporting

relationships.
 Dos and Donts

Dos:

Retain key people.

Communicate opportunities early to high
potential staff.
Insist on honesty and transparency in the
communication.
Expect and plan for ups and downs
 Dos and Donts

Donts:
Loose control over the situation and access to
information.
Treat the acquired company as occupied
territory.
Reduce trust and cooperation between
organizations.
Allow negative impact of the merger on
employees