Financial Management

11Course-Corrections: Business Transformation and Restructuring

All businesses are eventually forced to deal with the reality that the strategy, business model, or cost structure are not aligned with the reality they face in the markets. The business may fall short of growth and profitability targets. Staying the course is not a viable option. Financial management generally takes a leadership role in restructuring or transforming the business to be positioned for future success.

THE NEED FOR CHANGE…

All organizations will eventually have to consider making significant course-corrections. This occurs for a variety of reasons, including life cycle maturity, competitive pressures, disruptive forces, failed investments or strategy and economic cycles. Even high-growth technology companies with a long history of growth, including Amazon, Meta (Facebook), and Alphabet (Google), had to face this reality in recent years.

How Did We Get Here?

There are many paths that lead to a need for business transformation.

Competitive Threats. Nearly all enterprises face significant competition. This competition is often intensified by a new entrant to the market, or by an innovation in product, process, or distribution. This intensification will typically result in lower market share (volume) and price erosion with a significant impact on profitability.

Disruptive Forces and Black Swan Events. Many industries have been disrupted by significant changes in technology, and social, environment, ...