Downsizing: Corporate Restructuring Strategy

Downsizing: Corporate Restructuring Strategy Downsizing or layoff is a widespread strategic decision and change practice since 1970s and during the economic downturn in the year 2007 it became a more common phenomenon. In 2001 alone fortune 500 companies reportedly cut a total of 1040466 jobs and one predicts that by 2015 a further 3.3 million jobs will be outsourced. Changing patterns in reasons cited for job loss support this impression of the rising importance of restructurings. Differences in factors such as the state of the economy and the signal sent by job loss could make the process of downsizing and the effects of job loss differ between restructurings of healthy organizations and downsizing due to financial distress. Recent companies to pursue downsizing include American Express, Alcoa, Motorola, HP, Dell, Lucent to name a few. DOWNSIZING APPROACHES There are many kind of approaches in downsizing. The reasons for the firm to undertake such approaches also varies. As documented by Palmer et al,. they include restructuring, closing or selling of a business unit, cost reduction, cost savings, increased productivity through greater efficiency and effectiveness and coping with external pressure including recessions and economic downturn, economical change, increased competitive pressures through greater globalization of business and technological change. Multiple strategies may be associated with downsizing beyond the simple cost cutting approach. For instance, after the terrorist attack on united states on September 11,2001, Praxair Inc. a supplier of speciality gases and coating the United States, experienced a downturn in productivity. They announced the need to reduce their worldwide workforce by 900 employees as well as the need to restructure their business to cater to products where demand was increasing. To this end they simultaneously downsized and invested in two new product plants. Sometimes employees are the last resort for cost cutting and thus the company follows downsizing. For example, in the end of the second quarter of 2001 Charles Schwab company was hit by a major economic downturn in commission based revenue. This company has hired a lot of workforce during the boom period of the business cycle. So they had an overabundance of staff and finally realised the need to restructure and downsizing was their last resort of cost cutting. As a result by the end of 2003, the company has reduced nearly 25% of its workforce and significantly decreased the staff bonuses in a move to save the company from its declining profit. But downsizing will not necessarily lead to gains in productivity unless and until its complemented with other business strategies. For example , a research in 1990 showed that expected increase in profits did not increase in two out of three cases through cost cutting by downsizing. This research showed that share prices may initially rise with the announcement of cost cutting by downsizing but often fall, trading at or below the market over a two year period. TYPES OF DOWNSIZING There are mainly three types of downsizing. They are as follows: Retrenchment Downscaling Downscoping The above three strategies are further elaborated below: (1) RETRENCHMENT: it is a corporate strategy by which the firm centralizes or specializes its operations to maintain and improve the productivity and profit. It can brought about by removal of unnecessary jobs and amenities or reengineering process. This finally helps in gaining competitive advantage and improve the economies of scale. If a company or government follows the process of retrenchment, it decreases the money which is outgoing and the expenditures or have a new focus so that they can become more solvent financially.Retrenchment is a general strategy of cutting back the cost and a useful approach towards the layoff process. Companies usually use the strategy of retrenchment through two approaches. One of them being reducing the overall expenditure by decreasing the workforce, closing of offices and branches which are not performing according to expected profit, freezing hiring and cutting salaries. As the firm centralizes the operation it may move its head quarters to a favourable place where the operating cost is lowered or easy availability of raw materials is possible. It can also streamline its process and decreasing the quality of materials used in production. The other approach of the company is by downsizing in non profitable market, i.e. following the process of downsizing in the market segment which is not performing well currently and in turn building upon its operations in market which has proved to be profitable in long run. This usually happens when the non profitable market becomes saturated or obsolete for the sole reason of new and improved technology and modernization. There are basically five major activities that take place for retrenchment: Turnaround: there are two strategies to do it. Firstly the company can consolidate the operation and secondly it can contract its operations by cutting cost of labour and marketing. Captive company : for a captive company to perform well they can be an exclusive supplier to a giant company. Its future is held by another big company Divestment : it mainly involves in removal of a portion of the business. It may sell, close or spin-off any strategic business unit, a product line or any operating division. They actually downsize their scope of business functioning. Liquidation: The process is simple. It is done by Taking the book value of assets, subtracting depreciation and selling the business. There can be potentially viable assets which are lost in the process. Bankruptcy: this is when the company looses its total profit. It is a legal protective strategy. There can at least be a possibility of turnaround if the company declares itself bankrupt to its loyal customers. (2). DOWNSCALING: the process of downscaling involves permanent alterations to employment and tangible resource capacity. The decrease in resources decreases the necessity of workforce operating them and thus the process of downsizing is easy and viable for sustaining the company. It improves the competitive advantage of the company and reduces the firms economies of scale. It can also involve improvement in the competitive market share of the firm. This strategy is actually followed by firms who are facing increased competition in the market place and wants to improve the efficiency by implementing changes in the workforce. (3). DOWNSCOPING: when the form divests operations and activities or markets in which it operates. This is usually achieved by decreasing the vertical and horizontal integration. If a firm has over diversified its operations it can use the corporate strategy of downsizing to improve its performance. The strategy helps in refocusing the organizations core business. It involves two main processes. Firstly reducing the level of diversification by divesting the business which are not related to its core competency. Secondly selectively removing workforce units and employees who do not contribute to the strategic objective of the organization. The assets of the firm which are unproductive are spun-off or sold. It helps the firm to achieve the optimal level of diversification. The process of refocusing also reduces the information processing requirement of the top management. The emphasis of the firm is more on strategic control rather than financial control. It is reducing the diversity o f business in its portfolio. European firms use more of downscoping as compared to the United Statess firms. One of the best examples of downscoping can be the Tata group who have restructured its business to retain only 91 of its 250 business. The company has tried to build a more focussed approach without actually abandoning the best traditional manufacturing process. CHALLENGES IN DOWNSIZING There are certain challenges the organization has to face while the process of downsizing is being implemented. They are explained as follows: Survivor syndrome : this is mainly observed in employees who are retained in the organization after the downsizing process has been done. They feel guilty that they are still in the organization when their valued work colleagues are and employed. They suffer from low morale and feel that they also can get laid off in future. Particularly when they are not involved in the organizations restructuring process they feel left out and dissociated. Managing such survivors effectively is a major challenge Due diligence: there can be questions in the organization regarding the necessity of the downsizing in the organization if the process is unplanned or non selective. This may lead to damage of the employee-employer relationship in the organization. Employee retention: loss of important and skilled employees can occur due to unplanned downsizing. Sometimes the retained employees become unsure about their future in the firm and reconsider their decision to stay back with the firm. Loosing these employees can greatly affect the productivity of the firm. Cultural adjustments: downsizing leads to significant cultural change. For example the subcultures of the firm may be broken down by restructuring and downsizing and disruption of informal networks may occur. So the management must pay more attention to reintegrate the culture and formulate new strategic decisions Communication: the company should make sure that they convey and communicate the future of the present employees and also the market situation they are presently in. they should communicate their future strategy and vision to the shareholders, employees and the customers. Choice of restructuring technique: downsizing is not always the most viable technique for restructuring. Many companies do not seek initial alternative to it. The decision of using any substitute method should be analysed properly before carrying on the process of downsizing. DOWNSIZING IN THE PHARMACEUTICAL INDUSTRY There has been major downsizing and lay off in the pharmaceutical companies over the last few years. From the year 2007 when the recession started nearly 80,000 jobs in pharmaceutical industry is lost. The recent consolidation of the industry, e.g., Merck-Schering, Pfizer-Wyeth and Roche-Genentech suggests that many more biotechnology and pharmaceutical jobs may be lost over the next year or so. Companies like of Amgen, Genentech, Gilead are lacking funds to maintain its operations in the down economy. There is a lack of venture and private equity capital which is ultimately leading to cost cutting by reduction in work force. Xenoport, a San Jose based pharmaceutical firm has announced that it will downsize 222 person from its existing workforce in the next few months. The company executives claim that this downsizing is necessary as the US Food and Drug Administration failed to grant approval to the leas drug candidate. The move will help the company save nearly $15.6 million annually and in turn invest them on future drug development. Another firm named Exelis which is based in San-Francisco will cut down its workforce by 40% to have more focus on development of the late stage drug candidate. This biotechnology firm wants to reduce their cash expenditure by nearly $90 million in the year 2011 and wants to focus on anti cancer drugs like XL184, XL147 and XL765 development. It has been less than a year when the company has announced a $1.0 billion deal with Sanofi-Aventis in which $140 million was invested by Sanofi in order to license two of its major oncology drug candidates. Finally, BNET compiled a top biotech layoff list for 2009. The notables that made the list are shown below. Sepracor (530). The layoffs represented 20 percent of Sepracors workforce, and another 410 contract sales reps also got the axe. The restructuring apparently worked and Dainippon Sumitomo Pharma the company later in 2009. Allergan (460). This represented a five percent reduction in the companys workforce. Genmab (300). Arzerra (ofatumumab) the companys leukemia drug won FDA approval a week before layoffs were announced (go figure). But Genmab wanted to cut manufacturing and late-stage clinical work to refocus on antibody discovery. Oscient Pharmaceuticals (280). Oscient cut about 100 jobs in February, 2009 to entice acquisition partners. When that didnt work, the firm cut another 180 in June as it dumped the sales force for its two marketed products. Cornerstone Therapeutics later picked up Oscients antibiotic Factive during bankruptcy. Amylin Pharmaceuticals (200). After cutting 340 jobs at the end of 2008 amid declining diabetes drug sales and regulatory delays, Amylin eliminated 200 sales reps in mid-2009. The above represents one of the largest lay offs in 2009. It was earlier considered that life science wont be affected by the downturn of the economy. But contradictory to the popular belief it is one of the hard hit sectors. Most of the companies are following the downsizing with the mixture of junior and senior employees. But during major lay-offs most of the downsized employees are not experienced. Entry level employees are also downsized for the process of cutting cost. Pharmaceutical companies require nearly 15 years for the drug development process. There may be many critical decisions to be made during the process. For taking such decisions more experienced and expert employees are required and without their suggestions they can not actually render the drug development process to complete. The ability to take proper decision and the corporate knowledge is not observed in the entry level employees. It might take those years to understand the complexity of the process. So mostly the sales level employees are suffering from the downsizing effects. To summarize it, the fact that choosing the employee to be laid of is very crucial in pharmaceutical industry. They should not loose experienced workforce a s it might lead to their loss of efficiency of operations and competitive advantage in the market. The current lay-offs of the industry can increase the drug stock prices for short term period but the future of such measures in the long term is still uncertain and cannot be predicted. CONCLUSION: Downsizing can be fairly costly strategic decision. For example it has been calculated that the total cost of the retrenching of a single employee who earns around $ 30,000 is around $7,000. the process of downsizing can have major pschycological and emotional effect on the employee. The employee may loose his/her morale and efficiency to work better elsewhere. There can also be social effect on both those who remain in the organization and those who leave. For these reasons the smartest companies make sure that they address the right issues in right ways before they jettison jobs and further explore alternatives for their operations before they restore to downsizing as their corporate strategy.

Kinship System in Foraging and Horticultural

I have chosen to write about the San Tribe because their ways are very intriguing to me. The San or also known as the â€Å"Bushman†, are located in the Kalahari Desert. These tribes have lived in this area for around four thousand years. They have a diet of primarily nuts, fruits, melons, and berries. Since their women gather about eighty per-cent of the food for their unit there is more of these fruits and other things than there is meat. Their men gather meat about once or twice a week and accountable for about twenty per-cent of the food which is meat of some kind. San is a group of people who know how to enjoy their lives since only gathering food two or three times a week they spend the rest of their time on leisure activities. These activities could include any of the following, visiting one another or just sleeping. (Lee, 1979) When you do not have to get more and more you can enjoy what you have and not have to over work yourself and it would have to b4e more comfortable for your body with less strain and worry. The San is a Ban society and their livelihood comes from foraging, which is hunting and gathering what they require to survive. These Nomadic tribes of kin people travel over the land year after year to prime locations for known where they gather food and water and not only do they survive they are a thriving community. They travel in small independent communities that break apart and then rejoin other members at different times. They tend to live in the most marginal environment in the world. Their community is a reciprocal unit in the fact that they have an exchange economical system. Among the kinship group, there is a form of giving of services and goods in a mutual agreed upon atmosphere. This is not only among the family unit but also by the completely camp residents and visitors alike share in the quantity of food available equally. The collectors distribute the food in either a raw or a prepared portion and then distributed around to each. You can find a constant flow of nut, berries roots as well as melons around the fireplaces of each resident all given to meet the standard of equality (1969a’p. 58). This foraging system is an immediate return system; they must consume to stop spoilage. Woodburn, 1988) It is also a way to prevent a large amount of produce from remaining in the event of there moving about, as they tend to move constantly. This foraging system works because even as they give without expectation of exchange or immediate return there is an unwritten rules that all has even in the event there is no kill by some of the parties on a certain day. There are some times when hunters can go weeks without a kill and they must rely on the hunters that h ave luck in those times. Even though San men are widely skilled at hunting there can be different level of success but this does not have a status level on it for anyone as far as being accepted. There is a great deal of modesty in the village as the hunters return to camp upon a successful hunt. The hunter coming into camp does not give off an atmosphere of bragging; in fact, it is to the contraire. There are unspoken rules followed by the hunter as well as the others. This keeps one from feeling inferior or superior to another bringing forth feelings of jealousy. This also brings a reinforcement of social ties and helps to be closer knitting together of family units. You could also feel safer in the event a family member is hurt or was to become ill and could not provide their part of the food for a while.. Well I am afraid in comparison to our society there is not a great deal to say is the same as foraging. We here are more likely to let those that will not work go hungry. Of course, we have the welfare system and food pantries that do make it easier for those who do not have to get food. However, we do not work on the general idea of every one being equal those that work harder have more. The more you apply your self the more you have. We also do have leaders that can make us do things whether we want to or not. The seat belt law is an example of this. As far as kinship in our family my children and grandchildren would be considered one that I personally would share anything I have with but not all in our family feels this way. We are in a dog eat dog society and I fear it has rubbed off on most everyone. I believe if you do not work for it, you do not get it and I have tried to teach my family these same rules to live by. However, we do tend to do for our own kin folk first in taking care of them. We look out for our immediate family in providing for them and making sure, they have what they need. I remember as a child we lived in the city and my mothers family (brothers, sisters and some of their children would come and stay with us and we would help them get a job and get started. Dad owned an apartment house so they could stay in one of our apartments and we would feed them until they could do for themselves. Rules followed now are less kinship in our society in this present time.

An Evaluation of Human Productivity Using Computer and Internet

Computers are becoming an important piece of equipment in our daily life. Computers not only enable us to better achieve our tasks, but are also a way to of sharing and communicating with others around the world. Whereas computers and technology are so close together, they are giving humans a new rhythm in their lives. Both technology and Computers are more than ever present in our daily routines helping us achieve our objectives in a faster, secure and more professional way. The aim of this report is to evaluate whether Computers and Internet make people more productive. According to the information gathered, it turns out that in most cases they do in fact improve the overall productivity of people. It†s amazing how many new communications discoveries have improved the way people work, behave and conduct their lives. The term productive can be explained as â€Å"Yielding favorable or useful results; constructive. Or involved in the creation of goods and services to produce wealthy or value†. 1 Let me start by providing some of the new technological terms that have been changing the lifestyle of many people. Internet, or Information Super Highway, is aimed to improve accesses to information and corporate resources. â€Å"This communication will allow people to move faster, control communications costs, and overcome distance. It can also make your people more productive, empowering them with new tools to help meet business objectives.†2 Thanks to the Internet, people are more than ever able to share their information, thoughts and ideas faster. Another technology being used nowadays is called telecommuting. A simple explanation is that employees can now work from home, without having to go to their offices. According to many surveys, the number of people whom will adopt this working method will reach 45 millions people in the United States by the Year 2000. â€Å"Telecommuting provides me with a lot of flexibility†Ã¢â‚¬ ¦ â€Å"And it allows me to balance my work load with my personal life. I feel that I'm definitely more productive.†3 This can only be accomplished by the lower price of hardware and software available in the market today. In addition, with lower-cost high-tech home office equipment available, the approach saves employers money on office space and overhead. This is only the tip of the iceberg, compared to the endless ways of how the use of Computers integrated with an Internet connection can make people more productive. Furthermore, lower software prices together with very well designed computer interfaces can also increase the productivity of workers. I can certainly say that well-designed user interface helps me better accomplish my daily tasks at work. Why? One of the major changes in computer technology has been the development of icons instead of command driven interfaces. According to the use of Human-Computer Interaction Studies, â€Å"only 5% to 20% of user interactions typically involve help, but although this reflects a small percentage in terms of data collection it can be very substantial one in terms of effort and frustration!†4 â€Å"GUI (Graphical User Interface) also provides interface options not available in character mode. The chance that they're all irrelevant is slight; some will let you make people more productive.†5 An image is easier to be recognized by humans; thus well-designed software facilitates the tasks included in performing your job. This method yields constructive results, which is one of the definitions for productivity. In addition to that, many changes have been made in the way in which people connect themselves. The terminology LAN (Local Area Network) and WAN (Wide Area Network) are the methods used for people to connect in an office, within their houses or with friends around the world. Network Structure is related to the people working under the same building but not in the same area. The connections between different floors within a company can be achieved by using LANs. By means of LANs and WANs, people can contact their co-workers within the same building or the other side of the world by only sending them an e-mail message. Not only does this kind of information technology give people the ability to do their jobs more effectively, but also allows them to respond faster, yielding more productivity. â€Å"So, for instance, if your company has internal web sites in London, Singapore, Seattle, and New York, someone with a web browser could retrieve information from any of those sites with equal ease.†6 Again, this technique produces, in my opinion, favorable results not only for the user but also for the company. The aim is to make people more productive, to reduce cost and provide the best quality possible. To achieve this stage, such tools are necessary today. Not only e-mail messages make things simpler but also improve the speed in which people received/send their answers. A valid example where a user needs faster help is when a computer problem arises or you need to find out the next flight to â€Å"Spain†. Instead of calling the Telephone Company and asking for the telephone number of the carrier, one can just check the Internet for a fast, reliable information. Another example is when you need to fix your computer. You need that information as fast as you can get it. Nowadays, the use of on-line help has been proven a true value. Problems with printers, files and computers bugs can arise at any time. On-line help can easily provide that information for you or your company faster than spending time finding the number to call to customer service for help. Less time to fix the problem means more time to be productive. This example explains the ability to generate services, another explanation of productivity. Much has been said about the Internet and computers. But can computers without the Internet increase people†s productivity? I strongly believe that computers have increased the speed in which we accomplish our activities. According to many studies, my assumption is not always correct. A report states that †¦ â€Å"Information processing continues to be the principal task undertaken by America's work force. Over half the labor force is employed in information-handling activities. Overall productivity growth appears to have slowed significantly since the early 1970s and measured productivity growth has fallen especially sharply in the service sectors†¦Ã¢â‚¬ 7 But it also states that computers helped people to be more confident and therefore to feel more comfortable making decisions on their own. Computers are able to provide people with resources and material to facilitate their decision-making. They are becoming user-friendly enough for all to be able to use. This is one of the main reasons why the hi-tech companies today are facing such a state of grace, with outrageous revenues and endless room for new development of products. Many others believe that what is happening now is just the beginning and that we are entering in a new era as described by Peter Schwartz. He states that†¦ We are watching the beginnings of a global economic boom on a scale never experienced before. We have entered a period of sustained growth that could eventually double the world's economy every dozen years and bring increasing prosperity†¦Ã¢â‚¬ 8 With all this new technology emerging is not difficult to agree that much more is yet to come. If all the new technology will make tasks easier, improve quality and increase productivity, let this technology be part of the world and accessible by people. As stated before, computers are becoming a very important piece of equipment in our lives. Much can be done with computers. They are only tools that need to be driven by a smart, intelligent individual to generate the best outputs possible.

Graphic Organizers in Special Ed Classrooms

Special education students often need support in organizing their thoughts and completing multi-stage tasks. Children with sensory processing issues, autism or dyslexia can easily become overwhelmed by the prospect of writing a short essay or even answering questions about material they have read. Graphic organizers  can be effective ways to  help typical and atypical learners alike. The visual presentation is a unique way to show students the material they are learning, and can appeal to those who are not auditory learners. They also make it easy for you as a teacher to assess and understand their thinking skills. How to Choose a Graphic Organizer Find a graphic organizer thats best suited to the lesson youll teach. Below are typical examples of graphic organizers, along with with links to PDFs that you can print out. KWL Chart   KWL stands for know, want to know and learn. Its an easy-to-use chart that helps students brainstorm information for essay questions or reports. Use it before, during and after the lesson to allow students to measure their success. Theyll be amazed by how much theyve learned. Venn Diagram Adapt this mathematical diagram to highlight similarities between two things. For back to school, use it to talk about how two students spent their summer vacations. Or, turn it upside down and use the kinds of vacations—camping, visiting grandparents, going to the beach—to identify students who have things in common. Double Cell Venn Also known as a double bubble chart, this Venn diagram is adapted to describe the similarities and differences in characters in a story. Its designed to help students compare and contrast. Concept Web You may have hear concept webs called story maps. Use them to help students break down the components of a story they have read. Use an organizer to track elements such as the characters, setting, problems or solutions. This is a particularly adaptable organizer.   For example, put a character in the center and use it to map the attributes of the character. A problem in the plot can be in the center, with the different ways characters try to solve the problem. Or simply label the center beginning and have the students list the premise of the story: where it takes place, who are the characters, when is the action of the story set.   Sample Agenda Type List For children for whom remaining at task is an ongoing problem, dont underestimate the simple effectiveness of an agenda. Laminate a copy and have her affix it to her desk. For an extra boost to visual learners, use images to augment the words on the planner. (This one can help teachers, too!)