Meaning Of Business Reorganisation
Various remedial measures are available to a business enterprise facing different problems resulting in slowing down of business and profitability. Reorganisation or remedial measure is one of the solutions to such situation. Reorganisation is a process of readjustment of affairs of an enterprise in a new way in order to achieve profit and growth objectives. It is an integral aspect of business management itself. Reorganisation is necessary when the enterprise is not earning reasonably good profit due to various reasons. It is also necessary when the existing structure is inadequate or inefficient to meet the changing and growing needs of the business enterprise. In reorganisation programme, available resources of the company are re-arranged so as to raise the efficiency and profitability of the company. Reorganisation acts as a remedy to remove sickness, which is a stage when the business unit fails to operate smoothly and earn reasonable profit.
It faces financial, marketing and other difficulties. In the absence of remedial measures, a sick unit will have to be closed down. Sickness may be due to many reasons. In the process of reorganising, the existing problems/difficulties are analysed and suitable remedial measures are introduced. Such reorganisation plan for readjustment may be related to financial / technical / marketing / managerial aspects of business. In fact, reorganisation means reconstruction of the financial structure for financial stability of an enterprise.
However, in the process of reorganisation, the ownership remains unchanged. Reorganisation of an enterprise (when required) is the responsibility of the top level management. It has to consider various strategic alternatives and select the best one under the prevailing business environment. Suitable follow-up steps are also required. Reorganisation is a process of self-rejuvenation on the part of an enterprise. The purpose is to make the organisation viable and adaptable to the prevailing business environment.
Reorganisation may take any convenient form. Modernization, expansion, diversification, merger, takeover, joint venture, restructuring and even turnaround are the different forms/types of reorganisation. Thus, reorganisation means organising the enterprise as per the need of business situation. It is a type of rescue operation to avoid complete failure and closure of an enterprise.
Reorganisation is a lengthy and time-consuming activity. It involves preparation of restructuring package and its orderly execution. The services of experts are needed as different aspects are involved in the reorganising process. Adequate financial support is also necessary. The employees are expected to offer necessary co-operation during the process of reorganisation.
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