Traditionally mergers and acquisitions are perceived to be the ways of restructuring an organization.
Mergers and acquisitions include inter corporate sell offs and spin offs. Moreover, it also includes management buy-ins, management buy-outs and leveraged buy-outs. All of the mentioned forms of restructuring are used with an aim to enhance shareholders wealth.
Other forms of restructuring include downsizing, outsourcing, and closures. Management incentives schemes are also used to restructure the firm and it is based on the share options.
Financial engineering based on share buy-backs and substitution of debt with equity is also a way to restructure the organization.
Among all the mentioned ways of restructuring, mergers and acquisitions have become more popular in the last few years (Ahmadjian, et al., 2005). The cumulative value which was spent on mergers and acquisition by overall commercial and industrial sector amounts to £241 billion from the year 1976 to 1995. Similarly £481 million was spent by the companies on plant and machinery (Haggard, et al., 2003).
So it can be said that new model which was formed by Caterpillar had a profit centered focus. As far as economic perspective theory is concerned then it be said that the new model of Caterpillar which was developed after restructuring has remained very successful (Boone, et al., 2003). On the basis of fact that a great loss of profit amounting to $2.4 billion in the year 1992, the firm managed to report a positive profit in the year 1993. In the year 2004 the profits of the firm amounted to $2 billion worth which can be taken as a success of its restructuring programs.