Meaning

Corporate restructuring can be

defined as any change in the
business capacity or portfolio that is
carried out by an inorganic route or a
change in the capital structure of a
company that is not a part of its
ordinary course of a business or any
change in the ownership of or control
over the management of the
company or a combination thereof.
 Meaning
Restructuring is the corporate management term for the act of
reorganizing the legal, ownership, operational, or other
structures of a company for the purpose of making it more
profitable, or better organized for its present needs..
The Corporate Restructuring is the process of
making changes in the composition of a firms one
or more business portfolios in order to have a more
profitable enterprise. Simply, reorganizing the
structure of the organization to fetch more profits
from its operations or is best suited to the present
situation.
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 The needs for corporate restructuring
To focus on core strengths
To achieve economies of scale by expanding to national and
international markets.
Attainment for operational synergy and efficient allocation of
managerial capabilities and infrastructure.
Ensuring constant supply of raw materials and access to R& D.
Helps in reducing cost of capital.
Helps in survival and rehabilitation of a sick company by
adjusting losses of the sick unit with profits of a healthy unit.
Improve corporate performance to bring it at par with competitors
by adopting the fast changes bought by information technology.
 When Tata Motors launched Sumo and later
Indica, it was not just an expansion of its
product portfolio but was an actually an
expansion of its business portfolio.but
these were launched from Tata Motors own
manufacturing capacity hence it would not
qualify as corporate restructuring.
Acquisition of Jaguar Land Rover from Ford by
Tata Motors, through its step down subsidiary ,
Jaguar Land Rover Limited, qualifies to be
called corporate restructuring.
 Activities or changes which are not
termed Corporate Restructuring
1. Initial creation of a corporate structure.
2. Change in the internal command structure or
hierarchy.
3. Change in the business processes/
Reengineering(fundamental rethinking and
radical redesign of business processes).
4. Downsizing
5. Other activities such as outsourcing, enterprise
resource planning, total quality management,
franchising alliances and licensing.