This essay is an effort to shed light on the facts associated with restructuring particularly on the scenario of mature and cyclical markets that drive restructuring of an organization. The case study of Caterpillar is analyzed to explore different implications of restructuring, particularly its impact on financial performance. Finally the conclusion is derived on the basis of facts and figures to judge whether restructuring has resulted in the betterment of financial performance or not.
Outcomes of Caterpillar’s Restructuring
The firm had undergone from a detailed consolidation and restructuring since 1982 but the financial conditions of the firm are not that much improved. It can be proven with the help of fact that firm still in the year 2014 operates in the mature and cyclical market. After 1994 many acquisitions took place on the part of Caterpillar and all were aimed to regain its position in the market. On the whole 25% of the total profits of the firm were allocated to its financial divisions during that period (Porter, 2004).
On the basis of above mentioned facts and figures it can be concluded that mature markets in which Caterpillar operated forced the firm to go for restructuring. The internal structure of the company had many flaws and restructuring was much needed in order to overcome them. Internal problems played important role in motivating the firm to restructure but the major reason behind it was a mature market. The organization restructured itself to better sustain the labor costs. The deployment of labor was undertaken to cope up with the external factor of competition. The labor saving which were expected by the firm to be realized was not up to the mark. On the whole, restructuring remained successful in having positive impacts on the profitability of the firm but it also caused some negative impacts on the labor policies being followed by the firm.