1. The document discusses various phases in a company's lifecycle and the appropriate financing methods for each phase. Equity financing is most suitable for early phases due to high risk, while debt becomes more accessible as the company matures and risk decreases. 2. It also discusses strategies for organizational restructuring such as realigning structure to strategy, reducing complexity, focusing on core activities, and creating feasible roles to implement restructuring successfully. Clarity in implementation and maintaining flexibility are also important. 3. Restructuring may involve actions like regrouping business units, downsizing workforce, decentralizing decision making, outsourcing functions, and adopting quality management programs. The overall goal is to adapt the organization

2. 1. Introduction phase:
The firm should only use equity financing because it needs all the
flexibility available to change resources, adapt to market conditions and
meet customer needs. The risk born by all providers of capital would be
too great for any lender to accept. The firm incurs large losses throughout
the period and no lender would accept that. Only trade financing may
be used as soon as receivables build up.
2. Expansion phase:
Most financing should be with equity because of the need to
accumulate resources that are to stay permanently in the company. As
soon as the company starts to break-even, short term financing should
be used. The profits are not sufficient to pay interest on long term debt
and the company is still too risky.
3. Maturing phase:
The company becomes very profitable. Short term and long term debt
are now accessible on good terms. Lenders are attracted by a high
growth and profitability track record. Still, equity represents a good
portion of capital. Acquisition of smaller firms in the industry uses up free
cash and retained earnings.

3. 4. Standardization and obsolescence:
As the product market stabilizes, risk diminishes and profits
become more steady. Lenders, both short and long term, see the
company as a good credit risk and the repayments are indeed
assured as long as the customers keep buying the products. The
company needs to expand its sales, and for that, plant and
equipment must be expanded. There are savings in automation
to boot. Plant and equipment needs can be financed with long
term debt. The company now follows a very conservative
dividend policy that attracts shareholders who prefer income or
defensive type of stocks. Equity as a proportion of total assets is
reduced because most of the assets growth is financed by debt.

4. 5. Corporate restructuring and new
products:
A firm will not continue existing with a product that becomes obsolete.
The firm would be forced to close down, if it did. All firms must keep
seeking new ways to serve their customers. As they do, they enter a
new corporate life cycle and this mandates financial restructuring: to
move through a new series of phases. New equity capital will be
needed to pay some of the debt accumulated in the last phase of the
previous cycle.
One can naturally imagine companies that go simultaneously through
different phases of corporate cycles while handling products at
different stages of maturity. Their needs for borrowing are more of a
mix; there isn't one optimum capital structure for all firms. One way to
determine if a given company is close to its own optimum is once again
by looking at its costs of different sources of funds.

5. a) Regrouping of business:
This involves the firms regrouping their existing business into
fewer business units. The management then handles theses
lesser number of compact and strategic business units in
an easier and better way that ensures the business to earn
profit.
b) Downsizing:
Often companies may need to retrench the surplus
manpower of the business. For that purpose offering
voluntary retirement schemes (VRS) is the most useful tool
taken by the firms for downsizing the business's workforce

6. c) Decentralization
In order to enhance the organizational response to the
developments in dynamic environment, the firms go for
decentralization. This involves reducing the layers of
management in the business so that the people at lower
hierarchy are benefited.
d) Outsourcing
Outsourcing is another measure of organizational
restructuring that reduces the manpower and transfers the
fixed costs of the company to variable costs

7. e) Enterprise Resource Planning
Enterprise resource planning is an integrated management
information system that is enterprise-wide and computer-
base. This management system enables the business
management to understand any situation in faster and
better way. The advancement of the information
technology enhances the planning of a business.
f) Business Process Engineering
It involves redesigning the business process so that the
business maximizes the operation and value added
content of the business while minimizing everything else

8. g) Total Quality Management
The businesses now have started to realize that an outside
certification for the quality of the product helps to get a good will in
the market. Quality improvement is also necessary to improve the
customer service and reduce the cost of the business. The
perspective of organizational restructuring may be different for the
employees. When a company goes for the organizational
restructuring, it often leads to reducing the manpower and hence
meaning that people are losing their jobs. This may decrease the
morale of employee in a large manner. Hence many firms provide
strategies on career transitioning and outplacement support to their
existing employees for an easy transition to their next job.

9. 1. Align structure to strategy
All restructures must align to strategy. This may seem self-
evident, yet a significant number of organisations fail to do so.
For example, if local conditions are a predominant factor, then
stress local sales and marketing functions rather than a
centralised behemoth that then tries to matrix with local
elements.

10. 2. Reduce complexity
Simply put, complexity costs. Whether it is a complex organisational
structure, a complex product offering or complex transactional processes,
the added cost of complexity can be a drag on performance.
To mitigate complexity, there are three considerations that help with
organisational design:
 Design structure for strategy before you design for specific personnel.
Organisational redesigns which are a compromise between strategic
intent and line management preferences inevitably add complexity. So,
while internal political intrigue is unavoidable, at least start with a clean
and clear design that matches to strategy.
 Avoid making leadership roles too complex.
 Minimise the use of matrices. They introduce measurement overhead
and a lack of clear direction to the staff.

11. 3. Focus on core activity
Remove noise (inefficiency in processes) and enhance core before
restructuring roles. This means that you will need to know what people are
doing today by obtaining a detailed understanding of tasks by role. This
ensures that no value-added activities are thrown out when removing a role.
Similarly, duplication and redundant activity can be removed at the time of
the restructure.
4. Create feasible roles
Don‟t overload roles – restructures generally leave an organisation with
fewer people to do the same amount of work. When restructuring to reduce
headcount, make sure you understand the current workload of employees.
This will help to ensure you design roles that are neither too heavily laden
nor indeed too light. Furthermore, role design must take into account realistic
groupings of skills. Packing a role with too many distinct skill-sets reduces
the pool of durable candidates.

12. 5. Balance ‘own work’ and ‘supervisory load’ of
managers
The case of leadership or “management loading” can be particularly
troublesome in restructures. Often, the inability of managers to focus on
leadership tasks due to increased output requirements can create
significant problems for an organisation. For example, time spent
mentoring and coaching staff drops off, staff become disengaged, more
issues arise due to staff errors and managers end up spending more time
resolving them. To ensure management are appropriately loaded, it‟s
critical to balance three elements:
 The number of staff directly managed or supervised.
 Staff ability to perform work without supervision.
 The amount of „own work‟ managers have to do on top of their
leadership activity.

13. 6. Implement with clarity
Often there is confusion in the first weeks and months after an initial restructure.
After all, who is supposed to be responsible for what? The answer is to clarify
roles and responsibilities from the beginning, identify all functions (activities,
tasks and decisions) that have to be accomplished for effective operation, clarify
who should be involved and be specific about accountability.
7. Maintain flexibility
Finally, it is important not to cut your resources too fine. If the organisational
change is material, you will need resource flexibility in the first few months. So
even as you strive to operate more efficiently, be sure to give yourself some
wriggle room in your staffing. Flexibility applies not only to staff members, but to
staff capability.
Leave yourself and your leadership team some room to respond to capability
gaps in the new structure.