To What Extent Does a Mature and Cyclical Product Market Drive Corporate Restructuring? Use an Example to Discuss Whether Restructuring Transforms Market and Financial Performance.
To what extent does a mature and cyclical product market drive corporate restructuring? Use an example to discuss whether restructuring transforms market and financial performance.
A business, which has a product that runs in a cyclical and mature market, will eventually not have the ability to ‘grow’ anymore as it will reached the ‘top’. Therefore to continue making its business profitable, increase shareholder value and work more effectively they under go corporate restructuring.
This is a process used in all sorts of firms, from small to big, and has many kinds of corporate activities, based on the transfer of assets.
In this essay, I will discuss the impact of corporate restructuring in a mature and cyclical product on its market and financial performance, using GlaxoSmithKline (GSK), one of the largest pharmaceutical companies in the world.
Generally, a product has a life cycle, where the demand of its product is the main factor. There are four different stages. Introduction, this is when the product is launched. Then, if it enters the second level, growth, where more customers are becoming aware of its product, it will at some point reach the ‘mature’ stage, this will usually suggests that competitors have entered the market, there is no more prospective of growth, the sales becomes steady and eventually will drop with time and enter the ‘decline’ zone. (See fig.1 )
Figure 1: Product life cycle curve
Source: http://msc-ks4technology.wikispaces.com/GCSE+GP+Unit+2+Minimising+Waste+Production
This characterizes a cyclical market which is “ Generally a mature market in which volumes fluctuate around a steady level of demand” (Neale & Haslam , 1994 : 16 ). Depending on the popularity and demand, different kinds of products will remain on the market for a longer or shorter period of time.
To prevent companies from remaining or reaching the ‘decline’ zone, this is when they start using restructuring, with
A business, which has a product that runs in a cyclical and mature market, will eventually not have the ability to ‘grow’ anymore as it will reached the ‘top’. Therefore to continue making its business profitable, increase shareholder value and work more effectively they under go corporate restructuring.
This is a process used in all sorts of firms, from small to big, and has many kinds of corporate activities, based on the transfer of assets.
In this essay, I will discuss the impact of corporate restructuring in a mature and cyclical product on its market and financial performance, using GlaxoSmithKline (GSK), one of the largest pharmaceutical companies in the world.
Generally, a product has a life cycle, where the demand of its product is the main factor. There are four different stages. Introduction, this is when the product is launched. Then, if it enters the second level, growth, where more customers are becoming aware of its product, it will at some point reach the ‘mature’ stage, this will usually suggests that competitors have entered the market, there is no more prospective of growth, the sales becomes steady and eventually will drop with time and enter the ‘decline’ zone. (See fig.1 )
Figure 1: Product life cycle curve
Source: http://msc-ks4technology.wikispaces.com/GCSE+GP+Unit+2+Minimising+Waste+Production
This characterizes a cyclical market which is “ Generally a mature market in which volumes fluctuate around a steady level of demand” (Neale & Haslam , 1994 : 16 ). Depending on the popularity and demand, different kinds of products will remain on the market for a longer or shorter period of time.
To prevent companies from remaining or reaching the ‘decline’ zone, this is when they start using restructuring, with
Bibliography: : Froud, J., Johal, S., Leaver, A. and Williams, K (2006). Financializatoin and Strategy, Narrative and Numbers. New York: Routledge p109-223. Haslam, C., Neale, A. and Johal, S (2009). Economics in a Business Context. Cornwall: Thompson Learning. p92-94. Kay, J.(1993) The foundation of corporate success: How business strategies Add Value, Oxford: Oxford University Press Pearce, J. A., & Robinson, R. B. (2005). Formulation, Implementation, and Control of Competitive Strategy. USA: Prentice Hall. Peng, M, W (2009). Global Strategic Management . 2nd ed. USA: Delmar Cengage Learning. p331-337 Segal-Horn, S (1998). The Strategy Reader. UK: Wiley-Blackwell. p 270 (2010) , Andrew Witty, CEO of GlaxoSmithKline, calls on the pharmaceutical industry to do more with less—and still be innovative, The Economist , http://www.economist.com/node/17493432?story_id=17493432 , Date Accessed 20/03/11 (2009), GSK , http://www.gsk.com/responsibility/our-people/restructuring.htm Date Accessed 19 /03/11