Risks of company restructuring
Posted: Sun Dec 22, 2024 8:20 am
The effectiveness of a company's restructuring may be reduced by various factors that hinder its successful implementation.
The influence of the social factor cannot be ignored. A sharp reduction in staff causes tension among employees and affects the overall employment structure in the company.
Risks of company restructuring
Source: shutterstock.com
In conditions of economic instability, replacing an outdated singapore business mailing list management mechanism with a new model can lead to results that not only fail to meet expectations, but also turn out to be the exact opposite of what was planned.
Subjective circumstances such as a lack of government support, a shortage of qualified personnel, limited material resources and the difficult financial situation of the enterprise can slow down the change process.
The company restructuring procedure is very complex and labor-intensive, requiring high qualifications and responsibility from the management and the team. Without this, there is a risk of serious losses for the company.
To minimize potential risks it is necessary:
Define specific goals and objectives of restructuring : business development, strengthening competitive positions, improving economic indicators.
Select the appropriate transformation method , taking into account the need for operational or strategic reorganization.
Correctly distribute the resources that will be involved in the company restructuring process and take into account the qualifications of employees.
Take into account the potential for conflicts between different stakeholders in the change process , such as management, employees, partners and trade unions.
Negative social consequences associated with a possible reduction in the number of personnel.
Legal risks need to be considered separately. If entrepreneurs perceive restructuring as a method of increasing the company's efficiency, supervisory authorities may view it as a way to avoid tax payments, withdraw assets, or eliminate debt problems.
As a result, the company will likely face a number of compliance audits. Therefore, to avoid problems with regulatory authorities, efforts should be focused on ensuring the transparency of accounting operations, correcting tax discrepancies and eliminating any suspicious transactions.
Risks of company restructuring
Source: shutterstock.com
Choosing the right team to implement the change is key, as relying solely on your own efforts is not always effective.
Heads of individual departments may not have sufficient qualifications to carry out structural changes, and in-house lawyers may not be able to cope with comprehensive legal support.
In the case of a major restructuring of the company, the manager may consider the option of engaging third-party specialists. Independent experts will conduct an audit, develop reorganization methods and help minimize risks. Their intervention will not affect the current work of the enterprise, which contributes to the rapid and smooth implementation of changes.
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"B2B Marketing: Key Features, Promotion Channels"
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Evaluation of the effectiveness of restructuring
The following criteria are used to assess the effectiveness of a company's restructuring:
Financial results
Common indicators for various sectors of the economy include profitability, liquidity, and financial stability ratios.
When analyzing financial indicators to assess the success of restructuring Russian companies, it is important to consider that many methods and recommended values of indicators have been developed by foreign economists for stable financial conditions abroad.
These parameters may not correspond to the realities of domestic companies, and seasonal fluctuations and specific conditions may distort the data (for example, profit), and as a result, not fully reflect the effectiveness of the restructuring.
Companies with monopoly status and short-term strategies can temporarily raise prices, which brings them significant profits in the short term.
However, such incomes in themselves do not allow us to separate monopoly companies that conduct “passive” restructuring from those that use active restructuring in conditions of market competition.
The influence of the social factor cannot be ignored. A sharp reduction in staff causes tension among employees and affects the overall employment structure in the company.
Risks of company restructuring
Source: shutterstock.com
In conditions of economic instability, replacing an outdated singapore business mailing list management mechanism with a new model can lead to results that not only fail to meet expectations, but also turn out to be the exact opposite of what was planned.
Subjective circumstances such as a lack of government support, a shortage of qualified personnel, limited material resources and the difficult financial situation of the enterprise can slow down the change process.
The company restructuring procedure is very complex and labor-intensive, requiring high qualifications and responsibility from the management and the team. Without this, there is a risk of serious losses for the company.
To minimize potential risks it is necessary:
Define specific goals and objectives of restructuring : business development, strengthening competitive positions, improving economic indicators.
Select the appropriate transformation method , taking into account the need for operational or strategic reorganization.
Correctly distribute the resources that will be involved in the company restructuring process and take into account the qualifications of employees.
Take into account the potential for conflicts between different stakeholders in the change process , such as management, employees, partners and trade unions.
Negative social consequences associated with a possible reduction in the number of personnel.
Legal risks need to be considered separately. If entrepreneurs perceive restructuring as a method of increasing the company's efficiency, supervisory authorities may view it as a way to avoid tax payments, withdraw assets, or eliminate debt problems.
As a result, the company will likely face a number of compliance audits. Therefore, to avoid problems with regulatory authorities, efforts should be focused on ensuring the transparency of accounting operations, correcting tax discrepancies and eliminating any suspicious transactions.
Risks of company restructuring
Source: shutterstock.com
Choosing the right team to implement the change is key, as relying solely on your own efforts is not always effective.
Heads of individual departments may not have sufficient qualifications to carry out structural changes, and in-house lawyers may not be able to cope with comprehensive legal support.
In the case of a major restructuring of the company, the manager may consider the option of engaging third-party specialists. Independent experts will conduct an audit, develop reorganization methods and help minimize risks. Their intervention will not affect the current work of the enterprise, which contributes to the rapid and smooth implementation of changes.
Read also!
"B2B Marketing: Key Features, Promotion Channels"
Read more
Evaluation of the effectiveness of restructuring
The following criteria are used to assess the effectiveness of a company's restructuring:
Financial results
Common indicators for various sectors of the economy include profitability, liquidity, and financial stability ratios.
When analyzing financial indicators to assess the success of restructuring Russian companies, it is important to consider that many methods and recommended values of indicators have been developed by foreign economists for stable financial conditions abroad.
These parameters may not correspond to the realities of domestic companies, and seasonal fluctuations and specific conditions may distort the data (for example, profit), and as a result, not fully reflect the effectiveness of the restructuring.
Companies with monopoly status and short-term strategies can temporarily raise prices, which brings them significant profits in the short term.
However, such incomes in themselves do not allow us to separate monopoly companies that conduct “passive” restructuring from those that use active restructuring in conditions of market competition.