Organizational restructuring aims to make companies work more effectively and efficiently through changes like downsizing, acquisitions, mergers, and strategic alliances. Restructuring strategies are used by organizations to improve performance, enter new markets, gain competitive advantages, and increase profits. Common reasons for restructuring include changes in competitive environments, markets, government policies, and the need for new skills or reduced costs.

2. The aim of all organizational restructuring
strategies is to change the organization and
make it work more effectively, more
efficiently, to be more productive and
increase profits. Whether in the private sector
or in government agencies restructuring is a
never ending process. Restructuring strategies
are also used by global organizations to
improve and enhance their business's position.

3. Smart-sizing: It is the process of reducing the size of a
company by laying off employees on the basis of incompetence
and inefficiency.
Examples
1. Acquisitions
2. Diversification: Videocon group is diversified into power
projects, oil exploration and basic telecom services.
3. Merger: Asea and Brown Boveri came together to form ABB.
4. Strategic alliances: Siemens India has got a Strategic
alliance with Bharati Telecom for marketing of its EPABX.
5. Expansion: Siemens is expanding its medical electronics
division- a new factory for medical electronics is already
come up in Goa.

4.  Changes in competitive situation: Because of
foreign competition, accelerated rate of
technological change& competitive pressures
faced globally. To focus on core competencies by
divesting non-core businesses; these disinvestments
can have attractive valuations.
 Changes in capital markets : Abolition of
Controller of Capital Issues, empowering SEBI,
freedom to FIIs to invest in new issues and existing
stocks, access to capital globally at cheap rates,
scope for private placement, scope for delisting,
the emergence of angel investors as well as
venture funds, etc., are forcing companies to
rethink their capital structure.

5.  Changes in Govt. policies :Major changes in
MRTP Act, FEMA, Industrial licensing, setting up
of Competition Commission of India, etc.; Size no
longer is a constraint; growth strategy is based on
competencies and not govt. licenses; MNCs can
gain control of operations in India. A classic
example is HUL
 To avoid unsolicited take-overs :As bidders
believe that the stock prices of some companies do
not reflect true values achievable via restructuring of
businesses (after acquisition).Going concern value
may be lower than break-up market value.
Therefore, some firms increase debt considerably to
become unattractive.

6.  To gain long term competitive advantage:
Honda Motors India broke up with Kinetic Engineering to set up
HMSI Private Ltd.
HUL restructured itself via project millennium in 2000. Now after
loosing market share to competitors in 2008-09 it is trying to reinvent
itself.
 To enter international markets :This is especially in the face of
quota & other restrictions besides the effects of globalisation.
Ranbaxy acquired firms’ abroad to penetrate foreign markets.
Infosys reorganised itself as per demands of international stock
exchanges and investors.
Tata’s acquired Tetley, Chorus and Jaguar Land rover to enter
global business in tea, steel and automobiles.

7.  New skills and capabilities are needed to
meet current or expected operational
requirements.
 Parts of the organization are significantly
over or under staffed.
 Technology and/or innovation are
creating changes in workflow and
production processes.

8.  To achieve operational & market related benefits:
Restructuring of the appropriate kind can lead to improved
competitive position (say via vertical integration), gains in market
share (by business combinations) and increased productivity (via
modernisation and retraining)
 To reduce cost: Reducing the cost structure via a host of
organisational, portfolio and financial restructuring is essential
to make firms cost competitive/ profitable.
 To increase management control: By merger of
investment companies, increasing share holding pattern, etc.

9.  By giving proper training and hiring skilled
staff inside and out side the organization.
 Avoid merging, acquisition,
diversification
 Get new technology and process by
hiring consultants and educate
employee inside to avoid reorganization.
 Retain skilled staff and eliminate
underperformer by 10% every year.