Why restructuring an organization?

The pressure of competition as a result of liberalization is squeezing margins and profits. An efficient organizational structure is therefore becoming increasingly essential. Product divisions are being consolidated for synergy and those that do not fit into a company’s main line of business are being divested.

Companies that are restructuring are the ones that are struggling to survive in the competitive environment. The entry of multinational companies and reduction of tariff barriers has exposed domestic industry to competition. There are new entrants in every conceivable product segment from processed food to steel to personal computers. As a result of this, every company is restructuring to cope with the emerging realities. There are various reasons for this:

New developments in information technology and the extensive use of computers in organizations have made it necessary for them to adopt new organizational arrangements to realize full benefits of information technology for improving Corporate Performance.

The shift in fiscal policy and the reduction of government expenditure has forced many companies, especially PSUs to identify new customers and markets. Many companies are now creating marketing departments and those with such departments are acquiring more importance and clout.

The convertibility of the rupee is proving to be particularly strong incentive for companies to focus on exports. Medium sized companies that were content to operate in the domestic market are now looking for opportunities to export.

Cost cutting and increased productivity is demanding downsizing of the workforce at both, worker and managerial levels. In the absence of a clearly defined exit policy, companies are using the voluntary retirement scheme to downsize the workforce and make structures flatters.

For the aforesaid reasons restructuring of GMR, an Indian Infrastructure organization as how they restructured their existing business to take on the competition in India as well as outside the country.

Rapid growth in several key areas has forced the Rs 30,000-crore infrastructure major GMR group to undertake a significant restructuring program that will see the essentially family governance model turning more professional.

The change is a move by the GMR group to capture the attractive opportunities emerging in the infrastructure sector, both in India and abroad. Two-thirds of the $475 billion earmarked for infrastructure development in India over the next five years will be in GMR’s areas of focus. This will be in addition to international opportunities. The operating asset block will increase multifold over the next five years,

This kind of a quantum leap places a huge responsibility on the management towards its various stakeholders. This restructuring is an important step to take the group forward, empower professional managers and develop a strong leadership base for the group.

Delhi International Airports Pvt Ltd (DIAL), urban infrastructure and highways, including the SEZ business is entrusted to one of the family members with a professional CEO. The International Business Division like Sabiha Gocken Airport project in Istanbul, Turkey is given to another family member with professional head managing day to day affairs.

Hyderabad International Airport, Delhi International Airport (DIAL) and airport business development is likewise allocated responsibility to another close relative of the family.

The globalization of business has compelled more and more companies to establish export departments. Those who are planning to globalize are dividing the world into geographical sectors and establishing regional management groups.

Economic, social, and political upheavals have gathered momentum in most parts of the globe. The response to the pressures emerging from economic reforms initiated by the government in this decade has led to massive organizational restructuring.

GMR is a typical example of beating the competition and be prepared to grab the opportunities forthcoming and also restructure the organization to get ready implementing the projects coming their way.