Business Restructuring: A Journey of Innovation and Business Performance Optimization

In today’s volatile economic landscape, corporate restructuring has become a vital strategy for businesses to adapt, grow, and overcome crises. While most restructuring projects bring some level of value, only about 26–30% achieve sustainable success, highlighting the need for a clear plan and disciplined execution. This article defines corporate restructuring, analyzes its role, proposes appropriate timing, outlines effective implementation steps, and offers strategic planning insights to optimize business performance.

What is Corporate Restructuring?

Corporate restructuring is the process of reorganizing and reconfiguring a company’s structure, operations, or business model to overcome internal weaknesses, improve operational efficiency, and enhance competitive advantage. This process can be comprehensive—covering strategy, organizational structure, and finance—or focused on specific areas such as human resources, processes, or debt.

Example: During the 2008 economic crisis, Ford Motors restructured by streamlining operations and focusing on core products, enabling a strong recovery. Restructuring is not merely about “prolonging survival”—it can serve as a powerful lever for exceptional growth.

The Role of Corporate Restructuring

Benefits:

• Improved Business Efficiency: Restructuring helps optimize processes and reduce operational costs. For instance, McKinsey has helped corporations cut costs by 20% through process improvements.

  
  

• Enhanced Competitiveness: Companies can enter new markets or improve products. Samsung restructured to become a global technology leader.

  
  

• Better Financial Health: Debt reorganization or capital mobilization helps companies avoid liquidity crises. For example, Novaland restructured its bond debt to navigate difficulties in 2023.

  
  

• Market Adaptability: Restructuring enables companies to keep up with trends, such as digital transformation in the Industry 4.0 era.

Challenges:

• Risk of Failure: Many restructuring projects fall short due to unclear strategy or employee resistance.

  
  

• Cultural Conflicts: Structural changes may cause internal tensions.

  
  

• High Costs and Long Duration: Especially for large enterprises, restructuring requires significant investment and time.

Analysis: Restructuring is a powerful remedy—but must be applied at the right time, with a detailed plan and alignment from leadership to employees.

When Should a Company Restructure?

Timing depends on business size, condition, and the scope of restructuring. Suggested timelines:

Small and Medium Enterprises (SMEs):

3–6 months for departmental restructuring (HR, processes)

6–12 months for comprehensive restructuring (strategy, finance)

Large Enterprises:

12–24 months, due to complex structure assessments and cultural integration

Urgent Crises:

1–3 months for short-term measures (debt restructuring, cost cutting)

12–18 months for long-term strategies

Example: Apple underwent a 2-year restructuring (1997–1999) led by Steve Jobs, streamlining products and focusing on innovation, transforming the company from near-bankruptcy to market leadership. In contrast, Vietnamese SMEs typically take around 6 months to restructure processes such as retail supply chains.

Recommendation:

Companies should begin restructuring upon signs of stagnation (e.g., 10% continuous revenue decline, 15% cost increase, or loss of market share). Avoid hasty execution—9% of restructuring projects result in long-term damage due to poor preparation.

Six Steps for Effective Corporate Restructuring

To ensure success, follow this six-step process:

1. Identify Issues and Set Goals

Analyze business status (financial, operational, HR) to uncover root problems such as high costs, outdated processes, or lack of strategy. Set specific goals—for example, increasing profit by 20% or reducing operating costs by 15%.

Tip: Use SWOT analysis to evaluate strengths, weaknesses, opportunities, and threats.

2. Develop a Strategic Plan

Build a restructuring plan based on the SMART model (Specific, Measurable, Achievable, Relevant, Time-bound). Key components may include debt restructuring, streamlining operations, process improvements, or digital transformation.

Tip: Consult experts to ensure plan feasibility.

3. Financial Assessment and Due Diligence

Examine financial statements, debt structure, and cash flow to assess liquidity.

Example: If long-term debt exceeds 50% of equity, prioritize debt restructuring.

Tip: Use management dashboards for real-time financial performance tracking.

4. Organizational and Human Resource Restructuring

Design a new organizational model, reassign roles, and train staff to adapt to changes.

Example: Focus manpower on core departments such as sales or R&D.

Tip: Communicate early with employees to reduce resistance and ensure benefits compliance per Decree 148/2021/NĐ-CP.

5. Implementation and Monitoring

Roll out the plan in phases. Monitor effectiveness using KPIs (revenue, cost, productivity). Adjust if deviations arise—for example, optimize processes if costs exceed budget by 10%.

Tip: Use project management software to track progress and automate reporting.

6. Review and Optimize

After 3–6 months, evaluate restructuring outcomes using metrics such as profit, market share, or employee satisfaction. Continue refining strategies for sustainable growth.

Tip: Conduct internal surveys to gauge cultural integration.

Strategic Planning for Successful Restructuring

An effective restructuring strategy should integrate the following elements:

1. Long-Term Vision

Focus on sustainable goals—e.g., increasing revenue by 15% over 3 years or becoming a market leader in 5 years.

Example: Hyundai restructured to become a global top 3 car manufacturer by 2025.

2. Financial Optimization

Reorganize capital structure, prioritize equity over bad debt.

Example: Real estate firms may use equity swaps to repay debt, as advised by consultants.

3. Digital Transformation

Leverage technology to enhance processes, such as ERP (Enterprise Resource Planning) systems for supply chain management.

4. Talent Development

Conduct in-house training to upskill staff and align with the new model.

Example: Zappos fostered a strong corporate culture through training, bonding employees like family.

5. Risk Management

Build contingency plans for risks such as labor disputes or market fluctuations. Ensure compliance with laws like the 2020 Enterprise Law to avoid legal issues.

Successful Strategy Example:

Ford Motors restructured in 2008 by focusing on fuel-efficient vehicles, cutting costs by 30%, and digitizing production. This led to 25% growth within five years post-crisis.

Conclusion

Corporate restructuring is a key to overcoming crises and unlocking sustainable growth. With a six-step process and well-planned strategy, businesses can optimize performance, strengthen competitiveness, and thrive in the marketplace.

W&A Consulting is your trusted partner. Our team of experienced professionals not only leads your restructuring journey but also helps shape your future, creating sustainable growth momentum.

👉 Discover our services in detail here

Contact us for registration and detailed consultation:

☎️ +84 93 594 8688

📧 Email: nam.phan@waco.com.vn

🌐 Website: https://www.waconsulting.vn/

📌 18th Floor, Vincom Center Đồng Khởi, District 1, Ho Chi Minh City

🏢 2nd Floor, Saigon Paragon Building, Tân Phú Ward, District 7, Ho Chi Minh City