World economic integration took place strongly and spread over many countries, facing the pressure, the issue of corporate restructuring is becoming a top concern. This is an extremely important factor to help businesses improve operational efficiency and save costs. So what is corporate restructuring? When do businesses need to restructure? Let’s find out with Indochina Holdings!

What is corporate restructuring?

Enterprise restructuring is a process of surveying, re-evaluating the current structure of an enterprise, and then solutions for a new structural model to create an effective "state" for the enterprise.

This can be understood as the process of organizing and rearranging (or possibly renewing) an enterprise based on the old structure. The purpose of this restructuring is to overcome internal weaknesses that prevent enterprises from being able to compete in the market.

The areas that frequently apply this method are finance, human resources, sales, production, etc.

When to restructure a business?

Basically, corporate restructuring must be reviewed regularly, otherwise, imbalance in the system can occur at any time. However, this problem is also caused by the following reasons:

Enterprises have to restructure because of external pressures to adapt to the fundamentally changing business environment. For example: Equitization policy - policy of international economic integration or joining AFTA, WTO...

It is necessary to restructure by internal pressures to match the growth and development scale of the business. For example, when there is a request for a deeper specialization or to prevent the downturn of an enterprise on the verge of bankruptcy.

Or restructuring comes from both internal and external pressure streams

Signs that a business needs restructuring

Signs in the surface group

These are all the most easily recognizable signs, including: declining sales, shrinking market share, stagnant operations, loss of control in many aspects, loss of competitive advantage, etc.

Signs in the near-face group

These signs are directly related to business results such as no coordination or communication between departments, unclear business policies, unstable product quality, marketing activities. Inefficient marketing and sales, high debt, high inventory...

Signs in the middle class group

Although these symptoms do not directly affect the business results, they have indirect effects and gradually cause the operation of the business to stagnate, such as: weak human resources, uncoordinated departments. In case, the head is not able to manage, can’t solve human resource problems or has a poor decentralization mechanism.

Signs in the deep layer group

This is the most difficult sign to recognize because they depend a lot on the senior management of each business. For example: The business has no business philosophy, long-term goals, nor culture, vision and core values. Management misdirects or fails to see potential dangers when formulating strategy for the company.

Steps required to restructure the business

Step 1: Clarify the status of the business

This is a mandatory step in the implementation of corporate restructuring. Enterprises need to understand, make statistics and identify the problems that lead to stagnation and laxity, or which departments and departments are not operating effectively before they can plan for reconstruction.

After accurately determining the status of the business, it is possible to set out specific goals and scope of restructuring. This is not only a common goal, but it is necessary to divide specific goals for each group and each department.

The scope of refactoring must cover all the vulnerabilities in the system and the way it works.

Step 2: Make a detailed plan

The planning and detailed design is a matter of utmost importance.

This is an orderly process. Therefore, enterprises need to identify the fields that can be deployed as soon as possible to master the progress and be suitable to the level and urgency of the business.

Step 3: Define your approach

Một vấn đề khác không thể bỏ qua chính là phương thức tiếp cận. Khi lựa chọn phương thức tiếp cận không phù hợp, việc tái cấu trúc sẽ trở nên đình trệ và bị kéo dài.
Bên cạnh đó, doanh nghiệp cần phải đưa ra chiến lược thực hiện và kế hoạch theo kiểu “cuốn chiếu”. Điều này giúp doanh nghiệp có thể tạo ra sự rõ ràng trong việc thực hiện tái cấu trúc.

Another issue that cannot be ignored is the approach. When choosing the wrong approach, the refactoring will become stagnant and protracted.

In addition, businesses need to come up with an implementation strategy and plan in a "rolling" style. This makes it possible for the business to create clarity in the implementation of the restructuring.

Step 4: Implement the plan step by step

After having a plan, businesses need to start implementing it step by step, should not be too hasty, which can lead to ineffectiveness.

When each step of the plan is completed, it is necessary to continuously evaluate its effectiveness and see if it is appropriate and where adjustments are needed.

Step 5: Operate the new system and perform periodic evaluation

After completing all the above steps, the business will start operating the whole new system. During this process, businesses will need to have periodic reviews to know how effective this restructuring plan is, delivering quality and meeting the set goals.

Restructuring helps businesses operate smoothly and overcome previous internal weaknesses (Photo: Internet)

Thus, restructuring is a necessary activity for every business to perform if it wants to operate more effectively. To help Vietnamese businesses use this method more optimally, Indochina Holdings offers restructuring consulting services for businesses. With a team with many years of working experience, we ensure long-term and sustainable value.

Cao Duy