...Bankruptcy and Restructuring at Marvel Entertainment Group 1. Why did Marvel file for Chapter 11? Were the problems caused by bad luck, bad strategy, or bad execution? What is the amount of debt of MEG (the operating company) and the Marvel Holding Companies (Marvel owners)? The Chapter 11 bankruptcy provided an opportunity for all the major stakeholders to evaluate their options regarding their investment and control of Marvel. Bankruptcy alleviated Marvel’s immediate cash shortage, protected it from creditors and some litigation, and provided Marvel with a ‘fresh start.’ Bad strategy: Diversified youth Entertainment Company Bad execution: Overpaying for acquisitions There’s a combination of bad strategy and bad execution caused the problem. First, Perelman attempted to “expand the industry pie” and decrease marginal costs, which instead only worked to distract Marvel from producing quality product. Besides, Perelman showed a poor judgment in several acquisitions aimed at building Marvel into an entertainment empire but which only further distracted the company and paid more than he could earn from the acquisitions At the year 1996, there are more than 70% debts at Marvel entertainment group. The public debts issued by Marvel Holding Companies are 47.2% of the old shares and 9.1% new shares by the time reorganization plan 2. Describe and evaluate the proposed restructuring plan. Will it solve the problems that caused Marvel to file for chapter 11? The...
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...Bankruptcy and Restructuring at Marvel Entertainment Group Bankruptcy and Restructuring at Marvel Entertainment Group 1. Why did Marvel file for Chapter 11? Were the problems created by bad luck, bad strategy or bad execution? Before addressing its bankruptcy, it is necessary to have a general understanding of the company being analyzed. Marvel Entertainment Group began in 1939 as Timely Publications, a comic book publishing company that gained fame around the time of the Second World War. One of its most successful characters from this period was Captain America, who was often depicted fighting against the Germans. Other new characters came in the decades that followed, some of which still maintain popularity to this day, including The Fantastic Four, The Incredible Hulk, The X-Men, and Spider-Man. Attempting to reflect the general “psychological spirit” of the era (WWII, Cold War, etc.), many of Marvel’s creations in the mid-20th century fought against Communist foes. Editor-in-Chief Stan Lee helped usher in the ‘Marvel Age of Comics’ of the 1960’s, writing most of the superhero titles himself, and restoring many of the aspects from the late 1930’s superhero genre. Skipping forward a few decades, Marvel Entertainment Group was bought in January 1989 by Ron Perelman for $82.5 million, financed using only $10.5 million of equity. The remaining portion was borrowed from a syndicate of banks led by Chase Manhattan, seeing this as a relatively insignificant amount for Perelman...
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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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...Organizational Structure Michael Thompson Grand Canyon University: MGT - 605 April 23, 2014 Organizational Structure Key components of organization’s survival and success are leadership and communication. Most of the organizations that merge, restructure, or fail are primarily due to lack of leadership and communication. Hax, A. & Majluf, N. (1981, p. 445), described several common symptoms that leads to organizational structure inadequacy. Couple of common symptoms is: 1) Failure to integrate mechanisms due to lack of coordination among divisions, and 2) Repetitive and excessive duplication of process between different units of organization due to lack of clarity and defined roles (Hax and Majluf, 1981, p. 445). Two common variables that consistently contribute to inadequate organizational structure mentioned by Hax & Majluf (1981, p.445) are leadership and communication. Leadership provides vision and direction for the organization, whereas, communication helps to define divisional and employee roles and functions, minimize ambiguity, and potential conflicts. Blanchard, K. (2010) states that it is leadership’s responsibility to provide and define the direction of the organization and communicate division’s roles and responsibilities. Furthermore, by providing direction, divisions are able to work efficiently through mutual coordination and collaborative efforts to reduce duplication of processes...
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...Paper for MGMT 541 – Organizational Behavior Objective: Develop an improved knowledge of Organizational Behavior Theory and an improved ability to relate Theory to an Organizational Situation. This improved knowledge and improved ability should emphasize a solutions oriented approach. Assignment: 1. Write an 8 page paper which identifies an Organizational Behavior Theory. Provide a brief explanation of the theory. 2. Identify a situation in an organization to which this Theory can be applied. Find an article in business related publication (e.g. Wall Street Journal, Harvard Business Review, business section of New York Times or Chicago Tribune, etc) to which you can apply the theory. For example, the article might describe an action the organization is taking such as an acquisition, divestiture, employee layoff, market expansion/contraction, etc.). 3. Describe how the theory helps to identify what actions the organization should take to achieve the best outcome(s). Did the organization take these expected actions? Why or why not? 4. If the article did not contain the actions the organization should take with employees, suggest what these actions should be and why. 5. Your paper is to contain at least 4 professional references which support your statements. Identify these references both in the body of the paper and at the end. The text and any readings in the Discussion Board cannot be used as one of the 4 professional references. 6. Your...
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...A CASE STUDY ON CORPORATE RESTRUCTURING IN L&T SUBMITTED BY: GROUP 1 ANSHU KUMARI (60011) ABHIJEET SINHA (60001) AMBUDHEESH PARASAR (60005) ABHISHEK CHOUDHARY (60002) AMRIT RAJ (60006) HIMANI SINGHAL (60016) IN THE COURSE OF COST ACCOUNTING DURING TRIMESTER 2 IN THE ACADEMIC BATCH OF 2013-15, CIMP UNDER THE GUIDANCE OF DR. ASHISH VARMA ACKNOWLEDGMENT The light of a matchstick can never be a match for sunlight. In the similar fashion, it was not possible for our group to complete the project on our own. First of all, we would like to extend our gratitude to DR. Ashish Varma .we were fortunate that he considered us to be good enough to carry on with this project. It was his valuable suggestion, constant help and incessant monitor which helped us in carrying out this project. We would also like to thank our friends and family for their valuable inputs and help. We would be failing in our duty if we ignore the library resource centre of CIMP as it helped us in gathering information which helped us in carrying out this project. 1. INTRODUCTION After the opening up of the Indian economy there had been an advent of large MNC’s and big global corporate houses in India. As a result there had been a constant pressure on Indian corporate houses not only to survive but to come out as a key player in their respective sectors. Many of the Indian firms which followed a rigid organisational structure felt the need to restructure their businesses. Many of the...
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