Essay: Past Business Restructuring

Sample Essay – Business Restructuring 

Business restructuring is not a new phenomenon; it has been used by various business practitioners to boost performance in the past. An inconclusive body of literature gives further evidence on this issue. For instance, Opler T. et al. (1996) report that in the US alone, from 1976 to 1990, there were 35,000 corporate restructurings with a total market value of $2.6 trillion.

In another findings, Blair et al. (1991), reports that the dollar value of horizontal mergers in US and UK increased from $25 billion in 1970 and 1978 to $261 billion in 1979 and 1987. On a contrary opinion, Opler, T. et al. (1996) advocate that corporate restructurings are mainly motivated by consolidation and that they would decrease competition, thereafter, hamper business operations in long term.

In reacting to these ideas, Valsan (2001) views that corporate restructuring enhances market discipline, forces the firms to focus on the industries in which they have a competitive advantage and reduces capacity at both the firm and industry levels, improving productivity and efficiency.

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