ROMSO Cyprus Knowledge Base

--- CONTENT ---
Restructuring (or reorganization; ) in the economy is the fundamental restructuring of an economic entity, which goes beyond the change in the organization of structure and processes, and also business restructuring.

General
The term restructuring comes from reorganization research and includes all profound changes that are intended to interrupt the continuous development of a system. Suitable economic agents are enterprises, other associations of persons or states with their subdivisions. A distinction can be made between strategic, structural, performance and financial restructuring. The restructuring includes all forms of profound change in the company. Restructuring in companies is usually caused by a previous corporate crisis or serious weaknesses; in the case of states and subordinate local authorities, restructuring is also referred to internationally ( ), if in the case of highly indebted states a debt restructuring ( ) or a debt cancellation ( ) is meant.

Restructuring or “restructuring” is also used synonymously as a euphemism for the dismissal or even mass layoff of employees of a company or authority.

Measures
The scope of the restructuring ranges from “simple reorganisations in the area of orderly change” to serious financial restructurings in the sense of a restructuring of capital relations”. A distinction is made between financial and organisational measures intended to bring about a turnaround of affected economic entities. Financial measures include, in particular, austerity, redundancies, budgetary freezes, consolidation, cost reduction, moratorium, outsourcing, reorganisation, debt relief, deferral, debt restructuring or provisional budget management. Organizationally, business model change, business process optimization, lean management as an expression of a leaner management process and lean production as an attempt to streamline production processes come into consideration. It also includes changes in organisational and business structures and changes in production or economic structure. Restructuring can also cover the process chain of the data processing structure used, the manufacturing technology, the production depth, supply and distribution chains as well as horizontal and vertical integration.

Many of these measures are largely of an internal nature, and an external level is achieved when the operation is split/transfer/changed. Outsourcing is a classic case of operational splitting, the transfer of operations is a restructuring at company level, while the change of operations is a restructuring at operational level.

All measures have in common the cost reduction. This usually focuses on personnel costs,