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Industrial Technology

Structural factors

Restructuring

This unit of work addresses aspects of the following syllabus outcomes:

A student:

H1.1 investigates industry through the study of business in one focus area

H1.2 identifies appropriate equipment, production and manufacturing techniques and describes the impact of new and developing technologies in industry

H7.1 explains the impact of the focus area industry on the social and physical environment

Extract from Stage 6 Industrial Technology Syllabus, Board of Studies NSW 2008.

Introduction

As the business environment changes, so must individual organisations. Businesses and organisations need to constantly examine their business practices and structures to ensure they continually improve if they are to survive in a rapidly changing world.

Managers are responsible for the structural changes that take place within any business organisation. Structural change, commonly called restructuring, refers to changes made in how the business is organised. Any restructure must be based on the analysis of accurate data such as production statistics and financial records and fully researched prior to commencement.

The need for restructuring

Businesses need to restructure for many reasons. Over recent years the need for changes in business structures have included:

Managing the restructure

Research and careful management of the change process are essential for success in any restructure. Managers need to have a clear understanding of what they wish to achieve and how they are going to achieve it prior to them starting any restructure. This vision should be shared with all stakeholders to gain a sense of common purpose and understanding.

The most successful restructuring process will occur when those involved in the restructure are involved in developing the new structure and given ownership of as much of the process as possible.

The specific processes used by managers in any restructure will vary depending upon the aim and extent of the restructure. They may implement processes such as the principles of Total Quality Management, the Australian Quality Council’s PDSA 9 Step Improvement Process or “Paradigm Zero” change.

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Australian Quality Council’s PDSA 9 Step Improvement Process

ome change management processes and their benefits are available in detail online at http://www.cap.nsw.edu.au/QI/qi_models.htm (external website). Follow the link to Driving Excellence.

The 9-Step Process is designed for minor or major changes to existing structures. The process uses the following nine steps to implement successful changes to business practices:

  1. Select an opportunity for improvement
  2. Select the team
  3. Study the current situation
  4. Analyse the causes
  5. Develop a theory for improvement
  6. Implement the improvement
  7. Study the results
  8. Standardise the improvement
  9. Establish future plans

Detailed information of this process (external website)

“Paradigm Zero”

This change management process is often used in situations where major restructuring is needed or when dealing with the introduction of new technologies and materials. Such situations often require a completely new structure rather than simply a change to an existing one. This process will become more common as the rate of change and development in our society increases. The process is outlined in the following steps:

  1. Disregard all existing structures and solutions (“paradigm zero”)
  2. Select a team
  3. State the team’s desired outcomes
  4. Decide appropriate structures and processes to deliver the outcomes
  5. Only then overlay current and appropriate organisation, techniques and structures.

Options when restructuring

Many options are available to managers when restructuring. Over recent years the main changes in business structures have included:

Additional information on business structures and their advantages and disadvantages can be found on the following websites.

Business Structures in Australia (external website)

Business Structures (external website)

Use a Business Studies textbook from your school library or a web search to complete the following activities.

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Activity 1

Briefly describe the differences between business amalgamations and a joint venture.

Answer

Activity 2

What does the term “outsourcing” mean?

Answer

Activity 3

Give two examples of manufacturing industries that use outsourcing.

Answer

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