How Corporate Restructuring Transformed Market, Productive and Financial Performance - Essay Example

Use an Example of Your Choice to Discuss How ‘Corporate Restructuring’ Transformed Market, Productive and Financial Performance Table of Contents Introduction 3 A Brief Overview of Corporate Restructuring 4 Corporate Restructuring in Barclays PLC 7 Conclusion 11 References 13 Introduction The present business market scenario is incessantly changing due to increased level of globalisation, liberalisation along with internationalisation and broader use of pioneering technological advancements. In this similar context, business organisations are required to formulate as well as implement appropriate strategies with the assistance of which their respective operational functions might be performed successfully and competitively. Additionally, business organisations are also required to be strategic in their approaches for better survival and growth in this competitive worldwide business market segments. It can be affirmed that the competition level and the changing preferences of customers have changed the business environment at large. In this regard, the management of the companies have witnessed to face adequate complexities along with challenges in performing operations suitably in accordance with market demand (Froud & et. al., 2006). Subsequently, business organisations adopt corporate restructuring strategy with the aim of enhancing their business performances. Corporate restructuring is utilised as a procedure of changing business process, investment structure or organisational arrangement, so that business operations can be conducted with better competitiveness and effectiveness. Moreover, the strategy also aids business organisations to build flexibility in their operational activities (ABeam Consulting, 2004). Barclays PLC is a UK based multinational banking as well as financial service entity. The company offers various services that include credit cards, investment banking, personal banking and wealth management among others. Presently, the company has undertaken restructuring strategy with the aim of improving its business sustainability and competitiveness in the long-run (Barclays, 2014). With this concern, the essay emphasises analysing the strategy of corporate restructuring and its importance in improving productive functions, market operations and financial performances through using an example of Barclays. A Brief Overview of Corporate Restructuring In the present competitive and changing market scenario, business organisations are required to adopt effective strategies with the intention of ensuring that their respective operational functions are performed in a profitable and competitive manner. In this respect, the notion of corporate restructuring is utilised immensely by the management team of organisations in order to improve business and operational performances. Conceptually, the notion of corporate restructuring is identified as a process of modifying the business activities, production operations, business strategies and business processes. Restructuring process aids in reorganising overall business operations and functions with the aim of developing flexibility in the operational activities. Additionally, it ensures change in the resources of business organisations through acquisition, divesture and shrinking workforce sizes among others (Tetrevova, n.d.). An effective restructuring plan is fundamentally based on certain strategic procedures that include problem diagnosis, recognising as well as implementing effective solutions and determining resources that assist companies in performing their operations successfully. The restructuring strategy is often adopted by companies with the aim of improving their performance and ensuring sustainable growth in this competitive landscape (Vance, 2009). Theoretically, corporate restructuring is a systematic procedure, which comprises different activities that include debt swaps, spin-offs, stock repurchases, divestiture and acquisitions. Additionally, the management of business organisations are also identified to adopt structural changes in their management operations. In this regard, corporate restructuring is used with the aim of enhancing their value in performing business efficiently. Respectively, the process of restructuring is used in the present day context with the objective of improving productivity, enhancing wealth of the shareholders along with reducing business costs or operational expenditures. Contextually, management of business organisations with the assistance of corporate restructuring might be able to enhance business performances through increased revenue or decreased cost (Froud & et. al., 2006; Besanko & et. al., 2003). The corporate restructuring procedure is segregated into three aspects that entail organisational restructuring, portfolio restructuring and financial restructuring (Zu, 2008). These three restructuring concepts have been discussed in the following. Financial Restructuring Financial restructuring is a technique of altering the capital structure of a business organisation in an effective manner. The restructuring process in this arena generally takes into concern leveraged recapitalisation, debt swaps and leveraged buyouts. Financial structure of business organisations comprises investment base, reinvestment of earnings, overhead and debt as well as equity structure among others. It is worth mentioning that financial restructuring ensures generating better economic values for businesses (Zu, 2008). Portfolio Restructuring Portfolio restructuring is a procedure based on which changes are made in assets mixture. It is implemented through the mode of sales, liquidation, spin-offs and divestiture of assets. In this respect, the management team of the business organisations with the assistance of portfolio restructuring process might remain much focused towards performing core business operations effectively in order to raise capital or get rid of languishing operations through sell-off approach. Additionally, business organisations with the aim of managing or restructuring their portfolio might entail the strategic option of divestitures along with acquisitions in the form of corporate restructuring policy (Clarke & Chanlat, 2009; Zu, 2008). Organisational Restructuring Organisational restructuring is a procedure of changing or reorganising operational functions through reformation of business boundaries and hierarchical levels. Additionally, there are certain other procedures based on which organisational restructure is conducted that include improving control aspect, reducing product range, minimising business process, downsizing employment, reviewing compensation and reforming governance initiatives. The management of business organisations with the assistance of organisational restructuring is facilitated with the opportunity of improving or stabilising business performances by a certain degree (Clarke & Chanlat, 2009; Zu, 2008). In this context, the management of business organisations while implementing corporate restructuring is seemed to remain much focus towards different spheres that include property, financial, organisation, production, information, sales along with purchases and personnel (Tetrevova, n.d.). Corporate Restructuring in Barclays PLC Barclays is a financial along with banking service provider operating on a global context and its headquarter is located in London, UK. The company offers products and/or services including credit cards, investment banking, personnel banking and wealth management. The company operates in around 50 countries possessing almost 140,000 employees globally with the intention of meeting the needs and the requirements of its worldwide customers. It would be vital to mention that the company adopted corporate restructuring plan in order to meet the requirements of its stakeholders. Additionally, the management of the company has undertaken the measures of de-risking activity and developing business efficiency for better profitable growth (Barclays Bank PLC, 2014). The company planned to adopt corporate restructuring due to declining trading revenues and complex regulation policies. Additionally, the management of the company with the assistance of the corporate restructuring is planning to develop a values-driven culture based on integrity, respect, excellence, stewardship and service. Respectively, the company developing an effective workplace culture on a global context will be facilitated with the opportunity of meeting the expectations of the stakeholders at large. In this respect, the management has planned to meet the expectations of the stakeholders based on certain grounds that include colleague, conduct, citizenship, company and customer along with client (Barclays Bank PLC, 2014). In this context, it can be apparently identified that Barclays has formulated as well as implemented the policy of organisational restructuring under the policy of corporate restructuring. The company adopted this policy i.e. organisational restructuring with the objective of transforming its cultural values, downsizing employees, extending board segments and eliminating certain business processes. Respectively, the management of the company has changed the composition of Board Members, so that effective governance structure is formed and maintained. Consequently, three additional board segments have been formed as well as developed that include ‘Operational Risk Committee’, ‘Reputation’ and ‘Board Conduct.’ The Board Members of the three newly board segments are assigned with performing operations in an aligned manner with the existing ‘Board Financial Risk Committee’. Thus, it can be comprehend that the changes in board composition has been made with the aim of ensuring that business operations are conducted with better governance (Barclays Bank PLC, 2014). Specially mentioning, Barclays formulated the corporate restructuring plan after the incidence of manipulation in relation to ‘market interest rate’ of mortgage loans. The company was convicted of mis-selling insurance based products to small businesses as well as consumers. Accordingly, the company was charged with a fine of around $453 million. In this respect, the company adopted corporate restructuring policy of downsizing employees from its ‘Corporate’ along with ‘Investment Bank unit’. Additionally, the company planned to lay-off employees from retail as well as business banking operations that are conducted outside the business market segments of the UK (NYDailyNews, 2013). In this regard, Barclays planned to make lay-offs of around 3,700 employees on a global context with the objective of meeting its financial targets. The above depicted incident had adversely affected the brand image and business performance of the company in the worldwide business market segments where it operates. It can be affirmed that the above discussed restructuring plan has been adopted by the company due to the fall of global economy and increased number of complex regulatory policies along with standards. In this context, dipping trading revenues affected the performance of the company at large. The management of the company has adopted restructuring operations with the aim of recovering its financial revenues. Moreover, it can be affirmed that the company with conducting the task of employee lay-offs, has planned to improve its overall financial performances (BBC, 2014). Furthermore, Barclays considered its restructuring initiative in order to eliminate ‘wealth management services’ from around 130 countries within the year 2016 for enhancing its overall financial performance. Additionally, the company has devised effective plans to lay-off employees associated with this service in order to minimise complexities in the operational procedures. The management with the assistance of the corporate restructuring plan has strategized to reduce expenses and accordingly improve profit margin. Contextually, it can be affirmed that the company with the assistance of the restructuring plan might be facilitated with the opportunity of limiting its services from unprofitable business market segments. Thus, it can be ascertained that the company has planned to conduct business operations in those market segments that are profitable and effective, ensuring better future growth (Melville, 2013). The corporate restructuring plan has been formulated as well as implemented by Barclays with the aim of developing a better values-driven culture in its global operations. Additionally, the aforesaid changes have been made in the form of corporate restructuring with the aim of developing an effective communication network with its global subsidiaries. The communication network will certainly facilitate the company in recognising and meeting the expectations of the stakeholders at large. The formation along with the development of additional board segments will ensure that business operations are conducted with better corporate accountability. Moreover, the financial and other relevant reports of the company should be presented in a concise along with narrative manner for better understanding and transparency. Thus, the company with better engagement with the stakeholders might be able to enhance its market share. In this context, the company reducing workforces and eliminating unproductive business segments is able to enhance productivity and financial performances at large (Barclays Bank PLC, 2014; Froud & et. al., 2006). Conclusion It can be comprehended from the above discussion that corporate restructuring is an important strategy for improving business performances. Additionally, it also assists business organisations in accomplishing superior competitive position in the worldwide business market segments. In this presently changing as well as competitive business scenario, business organisations are required to reorganise their respective operations and business processes for ensuring sustainable performances globally. In this regard, it can be affirmed that an effective restructuring plan is required to be conducted in accordance with certain procedures that include problem identification, identifying appropriate solutions and managing adequate resources to perform business operations effectively. Barclays, after witnessing financial scandals and accordingly imposed with large sum as fines, has planned to transform its business operations along with processes through corporate restructuring. In this respect, the company has changed its governance procedures by performing business operations based on forming along with developing values-driven culture. This particular culture assisted the company in meeting the expectations of the stakeholders effectively. Contextually, the management with the assistance of this approach has planned to enhance its market share. Additionally, the company has planned to downsize employment and eliminate its business processes as well as services from unprofitable business market segments in order to perform its operations with better productivity. Thus, it can be concluded that the corporate restructuring plan, which adopted and implemented by the company has transformed its productive functions, market operations and financial performances towards the attainment of predetermined business targets by a considerable degree. References ABeam Consulting, 2004. Corporate Restructuring Shrink to Grow. Research Report. [Online] Available at: https://www.abeam.com/research_reports/eng/RR057_E(Corporate%20Restructuring).pdf [Accessed March 13, 2014]. Barclays, 2014. About Barclays. About Us. [Online] Available at: http://group.barclays.com/about-barclays/about-us#about-us [Accessed March 13, 2014]. Barclays Bank PLC, 2014. Building the ‘Go-To’ Bank. Annual Report 2013. [Online] Available at: http://group.barclays.com/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobheadername1=Content-Disposition&blobheadername2=MDT-Type&blobheadervalue1=inline%3B+filename%3D2013-Barclays-PLC-Annual-Report-PDF.pdf&blobheadervalue2=abinary%3B+charset%3DUTF-8&blobkey=id&blobtable=MungoBlobs&blobwhere=1330707490828&ssbinary=true [Accessed March 13, 2014]. BBC, 2014. Barclays to Cut Hundreds of Investment Banking Jobs. Business. [Online] Available at: http://www.bbc.com/news/business-25939803 [Accessed March 13, 2014]. Besanko, D. & et. al., 2003. Economics of Strategy. John Wiley & Sons. Clarke, T. & Chanlat, J., 2009. European Corporate Governance: Readings and Perspectives. Routledge. Froud, J. & et. al., 2006. Financialization and Strategy: Narrative and Numbers. Routledge. Melville, T., 2013. Barclays to Shut Wealth Management Services in 130 Countries. Article. [Online] Available at: http://www.reuters.com/article/2013/09/26/us-barclays-wealth-idUSBRE98O1CF20130926 [Accessed March 13, 2014]. NYDailyNews, 2013. Barclays Bank to Slash At Least 3,700 Jobs in Major Restructuring. News. [Online] Available at: http://www.nydailynews.com/news/world/barclays-bank-slash-3-700-jobs-article-1.1261763 [Accessed March 13, 2014]. Tetrevova, L., No Date. Concept of Corporate Restructuring and Reengineering. Bitstream. [Online] Available at: https://dspace.upce.cz/bitstream/10195/32208/1/CL655.pdf [Accessed March 13, 2014]. Vance, D., 2009. Corporate Restructuring: From Cause Analysis to Execution. Springer. Zu, L., 2008. Corporate Social Responsibility, Corporate Restructuring and Firms Performance: Empirical Evidence from Chinese Enterprises. Springer. Read More