Assignment

Strategic Human Resource Managment

Nouman Murad
17-Arid-5397
Bachelor of Business Administration

Topic:

Differentiate between Downsizing and Restructuring

Barani Institute of Sciences Burewala

Pir Mehr Ali Shah
Arid Agriculture University Rawalpindi
Pakistan
Downsizing:

Downsizing involves organizational restructuring which results in decreasing the size of the
organisation leading to a flat organisation structure so as to respond more readily to the pace
of environmental changes. In many cases, downsizing involves reducing the size of the
organisation through pruning of workforce.

Corporate downsizing, characterized by massive layoffs, has been an unfortunate reality in

America for the past 20 years. Although some economists have questioned the long- and even
the short-term benefits of this strategy -- the data suggest that downsizing often fails to save a
struggling company, exposes it to the risk of employee lawsuits and puts remaining
employees under stress -- many major corporations have downsized more than once in an
effort to cut costs and remain competitive.

Examples:

I. Banana Republics

The term “banana republic” refers to past practices of large agricultural corporations to
“install” leaders into power in Latin America who would favor conditions that ensured
cheap export of bananas. While the days of the corporate installed banana republics are
gone, Rebecca Cohen writes in the "Science Creative Quarterly" in 2008 that the banana
trade still exploits workers by a “race to the bottom” in countries striving to limit costs to
meet the demands of supermarkets to offer the lowest price to their shoppers. The WTO
rules, she writes, prevents importing countries from prohibiting buying bananas from
exporting countries based on the treatment of workers or lax environmental practices.

II. Shoes, Toys And Cola

The website Global Issues writes that multinational companies lobby for international trade
agreements that foster the race to the bottom in exporting countries supplying many
different products. Nike has been criticized for using cheap labor in Asia, where loose
regulations and lax oversight of working conditions allow suppliers to use sweat shop
operations, and in some cases child labor. The "Nation" ran a cover story in 2006 about
international protests against Coca-Cola’s human rights record, including intimidation and
even the use of death squads by its partner bottlers in Colombia, and pollution and depletion
of water supplies in India. Even toy companies come under criticism for the harsh labor
conditions that exist in such countries as China where plants produce name-brand toys for
American and European markets.

Restructuring:

Organizational restructuring is referred to as a corporate action that is conducted when the

company is facing some severe issues. It is a significant modification that tries to save the
overall company’s jeopardy or severe financial harm.

Positive restructuring creates a sense of belonging and unity in the company that encourages
growth and development. It happens by creating a competent HR department so that they can
allocate the best people to fill the various job positions.

Negative restructuring happens because the HR department of a company is not equipped to

handle its responsibilities adequately. It generally results in either stagnant growth or a
downward spiral that can cause severe repercussions for the company.

Examples:

I. Google

In 2015, Google announced a reorganization and the creation of its Alphabet holding
company to solidify its lead as one of the world’s most successful tech innovators and expand
into new industries. The reorganization named a new CEO and also provided Google’s two
cofounders more time to focus on exploring new business opportunities.

Since reorganizing, Google has continued its growth trajectory. After two years of operating
under the new structure, the company announced some of the positive outcomes of its
reorganization, including: The separation of its traditional business from speculative ventures
has offered greater transparency for investors.
Each business unit has its own CEO and greater autonomy in day-to-day operations.
Alphabet’s speculative “moonshot” business units have controlled spending and are working
toward becoming profitable. The company’s leadership team has become more diverse, with
more women on its senior executive team (six out of 13) than any other tech company in the
Fortune 100.

II. Disney

Disney has grown exponentially since Walt Disney created the company’s first org chart,
which featured a mass of arrows pointing in every direction. Most recently, Disney announced
a corporate restructuring to help it capitalize on U.S. and international growth opportunities.
Under the new structure, the company will be organized into four key business segments, a
move that is intended to position the company for global expansion, more technological
innovation, and the creation of more diverse content for its audiences.

Disney creates theme park magic and movies that captivate both young and old, and it is also
taking steps to compete with the likes of Netflix and Amazon in direct-to-consumer
streaming. The recent reorganization consolidates certain business units and expands
responsibilities for certain individuals on the management team. In addition, CEO Bob Iger
has committed to delaying his planned retirement from 2019 to 2021, evidence of flexibility
in the company’s succession and workforce planning as it continues to grow.