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Restructuring and Divestiture

Restructuring and Divestiture . BOH4M1-02 Alexandra 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 .

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Restructuring and Divestiture

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

  2. Agenda Completion of Initial Survey Seminar Application Activity – Scenario Analysis Review Activity – Apprentice Group Challenge Completion of Post-Seminar Survey

  3. Agenda Completion of Initial Survey Seminar Application Activity – Scenario Analysis Review Activity – Apprentice Group Challenge Completion of Post-Seminar Survey

  4. 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

  5. Agenda Completion of Initial Survey Seminar Application Activity – Scenario Analysis Review Activity – Apprentice Group Challenge Completion of Post-Seminar Survey

  6. Seminar • Restructuring and Divestiture Strategies (pg. 237) • Key Terms: • Retrenchment Strategy • Liquidation • Restructuring • Downsizing • Rightsizing • Divestiture

  7. 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 Liquidation • Cease in operations and assets are sold

  8. 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.

  9. Restructuring • Common and less extreme form of retrenchment • Defined: Reduction in scale/mix of operations • Goals: consolidating to gain short-term efficiencies and gaining time for new strategy preparation for future success

  10. 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.

  11. 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”

  12. 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.

  13. 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

  14. Divestiture • Divestment Example: • Ford divested: • Sold various businesses that were not closely related to their core business such as Volvo, Mazda and Jaguar.

  15. Agenda Completion of Initial Survey Introduction Seminar Application Activity – Scenario Analysis Review Activity – Apprentice Group Challenge Completion of Post-Seminar Survey

  16. 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

  17. Scenario Analysis • Recall the Key Terms: • Retrenchment Strategy • Liquidation • Restructuring • Downsizing • Rightsizing • Divestiture

  18. Scenario 1 ______________________________________________________________________

  19. Scenario 2

  20. Scenario 3 VAN ZANT OFFICE SUPPLIES

  21. Scenario 4

  22. Scenario 5 Becky’s Dance Company Becky’s Dance Place

  23. Scenario 6

  24. Agenda Completion of Initial Survey Introduction Seminar Application Activity – Scenario Analysis Review Activity – Apprentice Group Challenge Completion of Post-Seminar Survey

  25. 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

  26. Review Challenge • What form of strategy changes operations to correct weaknesses? Retrenchment Strategy

  27. Review Challenge • What is the most extreme form of Retrenchment Strategy? Liquidation

  28. Review Challenge • What is a less extreme form of Retrenchment strategy that reduces the scale and/or mix of operations? Restructuring

  29. Review Challenge • Rightsizing is Downsizing with what type of focus? Strategic

  30. Review Challenge • Why might an organization sell off a part of their business? Refocus on core areas

  31. Review Challenge • What is the opposite of an investment? Divestment

  32. Agenda Completion of Initial Survey Introduction Seminar Application Activity – Scenario Analysis Review Activity – Apprentice Group Challenge Completion of Post-Seminar Survey

  33. 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

  34. Thank You

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