restructuring and divestiture

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Restructuring and Divestiture BOH4M1-02Alexandra Bishop, Becky McBroom, Celine Stewart, Patrick Street, Uros Radic

+ Agenda Completion of Initial Survey Seminar Application Activity – Scenario

Analysis Review Activity – Apprentice Group

Challenge Completion of Post-Seminar

Survey

+ Agenda Completion of Initial Survey Seminar Application Activity – Scenario Analysis Review Activity – Apprentice Group

Challenge Completion of Post-Seminar Survey

+ Initial Survey

Complete the Survey marked Initial Survey

You will have 2 minutes to complete it Please do not write your name on the

survey When finished place the completed

survey face down on your desk

+ Agenda Completion of Initial Survey Seminar Application Activity – Scenario

Analysis Review Activity – Apprentice Group

Challenge Completion of Post-Seminar Survey

+ Seminar Restructuring and Divestiture Strategies (pg.

237) Key Terms: Retrenchment StrategyLiquidation

Restructuring Downsizing Rightsizing

Divestiture

+ Retrenchment Strategy Defined: Changes operations to correct

weaknesses Among master strategies used by

businesses Goal: reverse or change approach to

compete better Most extreme form is LiquidationCease in operations and assets are sold

+ Retrenchment Strategy Liquidation Example: In October of 2009 General Motors

announced its plans to shut down the Saturn Brand

Occurred after a deal Roger Penske (owner of Penske Automotive) unexpectedly collapsed

His intention were to buy the Saturn brand from the automaker

This decision lead to the closure of many dealerships in the US and the loss of many jobs.

+ Restructuring Common and less extreme form of

retrenchment Defined: Reduction in scale/mix of

operationsGoals: consolidating to gain short-term

efficiencies and gaining time for new strategy preparation for future success

+ Restructuring Restructuring Example: Air Canada financially restructured in 2003.

They got rid of hundreds of old aircrafts and acquired new ones on newer leasing terms.

They also negotiated many new contracts and reduced their head count.

+ Downsizing Form of restructuring Defined: Reducing the size of operations Expected Benefits: Reduced costs and

improved efficiency in operations Common way to “downsize”: cutting workforce size Most effective when strategic or focused on

key performance objectives Known as “Rightsizing”

+ Downsizing Downsizing Example: General Motors filed for bankruptcy in 2009 They downsized by laying-off 75,000 to

100,0000employees.

They also closed down more than a dozen production facilities.

+ Divestiture Another form of restructuring Opposite of an investment Defined: selling off parts of an organization to refocus

attention on core business areas Goals: refocusing on core competencies, cutting costs,

and improving efficiency Common use: “over diversified” organizations having

trouble with complexity of operations Take advantage of internal assets; selling to a

component that can stand on its own as an independent business

+ Divestiture Divestment Example: Ford divested: Sold various businesses that were not closely

related to their core business such as Volvo, Mazda and Jaguar.

+ Agenda Completion of Initial Survey Introduction Seminar Application Activity – Scenario

Analysis Review Activity – Apprentice Group

Challenge Completion of Post-Seminar Survey

+Scenario Analysis

In your apprentice groups: analyze the given scenario and answer the questions

All groups have 2 minutes to discuss and answer the questions

Once finished you will briefly present your scenario and answers to the class

INSTRUCTIONS

+Scenario Analysis Recall the Key Terms: Retrenchment StrategyLiquidation

Restructuring Downsizing Rightsizing

Divestiture

+Scenario 1

______________________________________________________________________

+Scenario 2

+Scenario 3VAN ZANT OFFICE SUPPLIES

+Scenario 4

+Scenario 5

Becky’s Dance Place

Becky’s Dance Company

+Scenario 6

+ Agenda Completion of Initial Survey Introduction Seminar Application Activity – Scenario

Analysis Review Activity – Apprentice Group

Challenge Completion of Post-Seminar Survey

+Apprentice Group Challenge INSTRUCTIONS

You will be asked a series of questions If your group or a group member knows the

answer to a question: All group members must stand up with their

hands clasped above their heads to be granted the chance to answer

Participation will be rewarded

+ Review Challenge

What form of strategy changes operations to correct weaknesses?

Retrenchment

Strategy

+ Review Challenge

What is the most extreme form of Retrenchment Strategy?

Liquidation

+ Review Challenge

What is a less extreme form of Retrenchment strategy that reduces the scale and/or mix of operations?

Restructuring

+ Review Challenge

Rightsizing is Downsizing with what type of focus?

Strategic

+ Review Challenge

Why might an organization sell off a part of their business?

Refocus on core

areas

+ Review Challenge

What is the opposite of an investment?

Divestment

+ Agenda Completion of Initial Survey Introduction Seminar Application Activity – Scenario

Analysis Review Activity – Apprentice Group

Challenge Completion of Post-Seminar Survey

+ Post- Seminar Survey

Complete the Survey marked Post – Seminar

You will have 1 minute to complete it Please do not write your name on the

survey When finished put both surveys

together for collection

+

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