...If you look at Ford as a company, it has some characteristics in common with the other organizations being discussed today, and some things that are very different. One important difference is that to a first approximation, we have one product and its main attribute has not changed over the years. The automobile is something that provides a way of moving people and goods from place to place. Characteristics that are the same at some level are complexity and scale. Ford is a very large company. It is the second largest company in the United States. The economies of scale are extremely important to this business, probably more important than to any other business in the world. The other characteristic of an automotive company, which it shares with some companies but which makes it different from others, is that the automotive business is more appropriately characterized as a systems integrator than as a full-scale producer and developer of commodities. It is more like the aircraft business than it is like the microelectronics business, for example. And that has been true throughout its history. The company is now 92 years old, and if you look back to the beginning, or almost to the beginning, what Ford has been is an extremely efficient mass manufacturer of personal transportation worldwide. It has the broadest possible customer base. The first Henry Ford had a very deliberate vision of selling vehicles to everyone, not just to the elite. The business has always been...
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...Management & Organizational Behavior Case Study Alan Mulally’s Restructuring of Ford Motor Company Alan Mulally’s Restructuring of Ford Motor Company Case Study Alan Mulally received an opportunity to turn around one of the most famous brand names in the United States. Ford was struggling; losing more than 12.7 million in 2006 (Nelson p558) and desperately needed a change. Alan Mulally took the challenge, and stated he would do what many thought was impossible at the time – make Ford profitable. He did just that. Mulally knew Ford had issues and the first step was to identify those structural issues. The issues included a wide variety of models and styles of automobiles. A work force that was not collaborating or communication to a high standard, hypercompetitive and relentless competition in pricing and sales, and possibly the most important was lack of accountability. With the development of his strategic plan of “One Ford” Mulally was on his way to the turnaround of one of the biggest automakers in the world. The first major act of this plan was to sell the Aston Martin division of the company and focus on the customer by building what they really want. By eliminating 70 percent of his vehicle models in fewer than four years, and cutting labor costs by 22 percent, Mulally was well on his way to achieving great success (Nelson p588). The direction Mulally took in approaching his goals of the One Ford was through understanding what was needed. The focus was on the...
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...Growth with Recovery: Coming Back from Company Restructuring Changes From Recovery When economic times are tough the company has to look at measures to conserve costs. Over the years, a firm’s standard response to finding itself in financial difficulty was to reduce its workforce (Gandolfi, 2008). The effects of the worst recession since the Great Depression, hurt both big and small corporations, new and old, and in many different types of industries. Major industry sector that has been hit hard are corporations that deal with consumer durables. Companies like General Motors, Johnson Controls, Ford, and Harley-Davidson. The effects of layoffs will be felt on at the companies especially General Motors who is still partially owned by the U.S. Government. Recovery is a long road for some companies that are unable to pickup and improve especially when the company cannot relinquish those ties. Responsible downsizing can benefit company in making needed changes to keep up with the economy and upturns and downturns that come with it. Restructuring must be thought out properly, “A downsizing plan should be included in the strategic management plan of all organizations, regardless of whether they plan to downsize or not. By including such a plan, the organization will be better prepared to begin the staff-reduction process should it be forced to do so in response to environmental changes” (Davis, 2003). The short-term affects involves some initial costs like severances...
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...Maidenform Restructuring: An Analysis of its Benefits and Negative Effects Introduction Maidenform is an intimate apparel manufacturing company that specializes in women’s undergarments. It recently revealed a massive restructuring plan in order to reduce on its forecasted losses for the first quarter of the year. This essay aims at providing an in depth analysis of the Maidenform restructuring plan with particular attention on the extensive effects of the process. The Restructuring Plan The restructuring will take place over 2013. Over the year, the company plans to close all unprofitable segments of businesses. These unprofitable lines require considerable resources but still yield an unappreciable level of profits. Additionally, Maidenform plans to close the Charm brand along with its 10 retail stores along with ‘de-emphasizing.’ These plans will reduce overall sales by close to US$20 million over the financial year 2013. Maidenform plans to channel all resources from the exited businesses to its key priorities. On the other hand, the company intends to undertake aggressive marketing. It also wants to reduce its stock keeping unit (SKU) that it offers by about 20 percent before the year lapses. In essence, the strategy revolves around narrowing of operations to include profitable segments of the business only. It plans to reduce overhead costs by $5 million via Maidenform’s supply chain. Most corporate restructuring plans occur so that the firm...
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...Value Creation of Spin-offs and Carve-outs Dissertation zur Erlangung der Würde eines Doktors der Staatswissenschaften vorgelegt der Wirtschaftswissenschaftlichen Fakultät der Universität Basel von Roger Rüdisüli von Amden SG Difo-Druck GmbH Bamberg 2005 Genehmigt von der Wirtschaftswissenschaftlichen Fakultät der Universität Basel auf Antrag von Prof. Dr. Heinz Zimmermann und Ass.-Prof. Dr. Wolfgang Drobetz. Basel, den 10. Mai 2005 Der Dekan Prof. Dr. Heinz Zimmermann Acknowledgements V Acknowledgements My dissertation would not have been possible without the support of various people to whom I would like to express my sincere gratitude. Firstly, I would like to thank my academic supervisors Heinz Zimmermann and Wolfgang Drobetz of the University of Basel (Switzerland) for their academic guidance, encouraging support and the very pleasant cooperation. Special thanks goes to Jürg Wicki for his advice in selecting the subject, structuring the dissertation, and choosing its fundamental building blocks. I am also heavily indebted to Neelesh Singhal and his team at McKC in Madras (India) who helped me to find the vast amount of data used in my research. Without their assistance it would have been impossible to obtain the data. I am also grateful to Sabine Keller-Busse and the partners of McKinsey & Company in the Zurich office for making my educational leave possible and for the financial assistance provided. My acknowledgement also goes to Thomas Bollinger...
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...Introduction Since 1908, General Motors (GM) is primarily engaged in automotive production and marketing and financing and insurance operations. GM designs, manufactures, and markets vehicles worldwide, having its largest operating presence in North America. By 2008, GM became vulnerable to the auto industry crisis, which they were not able to meet obligations. Over the years, GM was a dominating force in the auto industry. However, rising labor costs, concessions made to the unions, higher gas prices and a recession, GM was heavily burdened and could not provide the sufficient marketing funds for any one of its product lines. The U.S. government agreed to lend $13 billion in order to buy time to develop a restructuring plan (DePamphilis, 2012, p.648). The restructure plan impacted employees and operations in U.S. and Canada. With mergers and acquisition activities, the intent is to preserve and provide jobs to the community. However, this was not the case with GM. Was it justified to reduce the workforce? Therefore, the review of the bankruptcy steps taken by GM will determine if the restructure was successful. Pension Plan General Motors pension fund obligations and health care obligations appear to threaten the future of the company. Majority of General Motors’ U.S. employees are members of the United Auto Worker (UAW) Union, which ensures health insurance for its members by entering into contractual agreements with employers. In the 1990’s the UAWs’ officers...
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...focusing on restructuring and how it relates to cost improvement. This information has been investigated in order to gain a good knowledge on the importance of restructuring. In order to test this theory, I used random sampling of 20 different data reports relate to the issues that the company faces concerning expenditures, labor and necessary spending. Each month every section of the company has a major meeting and part of the meeting is to discuss the financial reports of the company. Many companies may not find this to be important but it is necessary for our company to do this to track spending. Companies typically do not discuss financials with everyone but they do with us because everyone is given a credit card and a budget for their particular section. We are able to access the other part of company’s financial documents if we want to use them as a tool to improve our budgets. What prompted me to do this is I started working for the company in the year of 2011. After working 5 months for the company, the employees received a letter stating that there will be pay cuts due to the government cutting funding for the program that we are in. There were many complaints from employees who have been there for many years. The employees complained stating that they were told the last pay cut they received would be the final pay cut. I was able to speak to some people in the office and found that they didn’t receive any pay cuts. The company should make the necessary restructuring if they...
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...Organizational Downsizing Techniques and Handling Layoffs Team 1 Christina Berardi Bridget Quinn-Carey Tung-Yueh, Lee Over the last two decades, organizational downsizing has been a key management strategy favored by many organizations attempting to cope with fundamental and structural changes in the shifting economy. In the mid-1980’s, downsizing was implemented primarily by companies experiencing difficult economic times (Gandolfi, 2006). Companies hoped to cut costs and improve performance. By the late-1980’s, it developed into a proactive restructuring strategy for a multitude of organizations. Furthermore, since then, organizational downsizing has now transformed the corporate landscape and changed the lives of hundreds of millions of individuals around the world (Gandolfi, 2006). There are several definitions that have been developed to effectively define the phenomenon of organizational downsizing. To sum it up in one sentence, organizational downsizing refers to a set of activities, taken on by the core management of an organization, designed to improve organizational efficiency, productivity, and competitiveness. It represents a management strategy that affects three components: (a) the size of the firm’s workforce, (b) the costs, and (c) the work processes. On the surface, downsizing can be interpreted as merely a reduction in organizational size, and the process is a chaotic and uncertain experience...
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...------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Task 01: Plan and Present Workplace Communication system Review of case study JKL industries is an Australian owned company selling forklift, small trucks and spare parts to industry. They also have a division which leases forklifts and small trucks on long term leases over three months. The company’s head office is in Sydney and JKL has branches in Brisbane, Melbourne, Perth, Adelaide and the ACT. After 12 years in business focusing on forklifts and small trucks JKL has been offered sales rights to arrange of medium and large trucks from an overseas supplier which will benefit JKL in range over its competitors. The past five years, sale of forklift and truck have averaged 10% increase but the rental market has been in decline. JKL then come up with an idea to restructure company itself by solely focusing on retails sale and exit from rental market. JKL plan to hire the staff from rental department who wish to remain with the company. The organization intends to build and maintain a positive organizational culture, reduce risk and achieve organization goals through this following points: * Developing an effective...
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...formal plan for the restructuring identifying at least: (i) the business or part of a business concerned; (ii) the principal locations affected; (iii) the location, function, and approximate number of employees who will be compensated for terminating their services; (iv) the expenditures that will be undertaken; and (v) when the plan will be implemented; and (b) has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. “ By making the press release and communicating the termination plan to its employees , Pharma Co raised a valid expectation to those affected by announcement of the plan. Also, Pharma Co set the date when the plan will be implemented, the principle location affected, the part of the business concerned, the number of employees who will be terminated, and the expenditures that will be undertaken. According to IAS 37, paragraph 80, “A restructuring provision shall include only the direct expenditures arising from the restructuring, which are those that are both: (a) necessarily entailed by the restructuring; and > (b) not associated with the ongoing activities of the entity. “ Thus, only direct costs must be accrued in the end of 2010: the lease termination fee $1.3 mln and the exit package for the terminated employees $3 mln. Cost of dismantling the old equipment should not be accrued as a restructuring cost because there...
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...discharge those responsibilities For example: manufacturer has repaired any faulty items free of charge though there is no warranty in the sales agreement 3. Provision is a liability of uncertain timing or amount. It is accrued on the statement of financial position as it is probable it will be settled and a reliable estimate can be made of the amount that will be settled. Application of the recognition and measurement rules Future operating losses Do not meet the definition of liability and no provision should be made. Onerous contracts Where certain rights and obligations make a contract onerous, a provision should be recognized for any unavoidable costs exceed the benefits expected. 2. b) 4. 1 Intermediate Accounting 2 Restructuring plans Week 2 - Answer Recognition of the provision is required because a constructive obligation may arise from the decision to restructure when, and only when, an...
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...FOR BANKS ON CORPORATE ETHICAL STRATEGY THESIS STATEMENT The thesis statement of this research paper is “The impact of corporate America downsizing for banks on corporate ethical strategy”. The paper shall cover issues such as the causes of downsizing, how to go about the downsizing process, impacts of downsizing and measures that can be put in place to curb such adverse impacts to the downsized and those employees left behind at large and ethical issues that relate to downsizing. INTRODUCTION Downsizing is the process whereby companies reduce the number of employees for a short while or for an unknown period of time. Companies downsize due to radical changes in the external and internal environment of the organization such as restructuring of the organization, poor performance of businesses and business processes reengineering .Globalization and collapsing of trade barriers within nations and the cropping up of technology and computerization has compelled companies to downsize. Several steps are necessary for successful downsizing: education, fortifying of the organizations goals and values, trustworthiness and pride every time, designing, and communication. Other vital points to note when conducting downsizing, including putting in place a clear vision and goals, achieving the transition successfully, planning, joint effort, concern and skills. Downsizing has shown to cause family breakup, lowering of self-esteem, trauma, involvement in crime and also death to those...
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...How To Make Restructuring Work for Your Company Published: | October 1, 2001 | Author: | Stuart C. Gilson | Executive Summary: A bungled corporate restructuring can turn a good idea into disaster. In an excerpt from his new book, HBS professor Stuart Gilson outlines the keys for a successful corporate makeover. Plus: Gilson Q&A. About Faculty in this Article: Stuart Gilson is the Steven R. Fenster Professor of Business Administration at Harvard Business School. * More Working Knowledge from Stuart C. Gilson * Stuart C. Gilson - Faculty Research Page Editor's Note: The following excerpt is taken from the "Lessons of Restructuring" section of Gilson's introduction to Creating Value through Corporate Restructuring. Although the case studies in this book span a wide range of companies, industries, and contexts, some common issues and themes emerge. Taken together, they suggest there are three critical hurdles or challenges that management faces in any restructuring program: 1. Design. What type of restructuring is appropriate for dealing with the specific challenge, problem, or opportunity that the company faces? 2. Execution. How should the restructuring process be managed and the many barriers to restructuring overcome so that as much value is created as possible? 3. Marketing. How should the restructuring be explained and portrayed to investors so that value created inside the company is fully credited to its stock price? Failure to address any one of...
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...opinion, downsizing in a company always means inflicting pain on employees and enduring attacks by politicians, labor groups, and the media. It’s the last thing a company choice, faced with difficulties they can’t get over. Main body Nowadays, many people want to start a business with their own hands. And it turns out that you can gain little successes so long as you have nothing but ambition. Nevertheless, it is well known that starting a business is easy while keeping it going is difficult. What are some ways organizations can do downsize? First, they should use downsizing only as a last resort. Second, and related, they should inform employees about the problem, and give them a chance to contribute alternative restructuring solutions. Third, organizations need to bend over backward to ensure that employees see the layoff process as fair, including making sure the layoff criteria are fail (and ideally result from employee involvement), advance notice is given, and job relocation assistance is provided. Finally, make sure downsizing is done to good effect---not just to cut costs, but to reallocate resources to where they can be most effective.[i] Conclusion Essay question: how to get employee motivated in an...
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...Bankruptcy filing of Kodak Whenever a big corporation files for bankruptcy, many investors question the move. After the recession, many big corporations like Lehman Brothers etc filed Chapter 11. A chapter 11 case starts when the company voluntarily files for a petition in bankruptcy court. When the company has many outstanding, it prefers to file for the case. It was no big surprise when Eastman Kodak, 131 year old company that was founded by George Eastman filed for bankruptcy protection in 2012 under chapter 11 of US bankruptcy code in Southern District of New York. It was pioneer in introducing first automatic snapshot camera. It was the first company that provided the individuals a solution for taking their own photographs and not depends on professionals. The term ‘Kodak Moment’ became synonymous with taking pictures of precious moments and having pictures of life time of memories. Reasons for Bankruptcy An attempt is made to understand what lead to the financial distress in the company. The top management of Kodak could never innovate. Though they were pioneers in launching the concept of self photography, many competitors developed better products and took the market share from the company. The company thought that its customers would remain loyal to it but when new products and new technology was offered in the market, it lost its market. The company did not pay attention to the improvement in the technology. When digital cameras came into existence, Kodak did...
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