Downscoping

Downscoping : How to Tame the Diversified Firm

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Description

Large, diversified firms face unique challenges as they compete worldwide, and corporate restructuring is one way multinationals strive for competitive advantage. Weighing the pros and cons of a variety of approaches to restructuring, Downscoping offers executives a clear, strategic path through the maze. The authors show that when a multinational conglomerate fails to compete effectively, too much diversification may be the culprit. Whether the result of weak corporate governance or poor corporate strategy, over-diversification can make managers, unfamiliar with some of the markets in which they compete, opt for safety over innovation. This risk-aversion and lack of long-range commitment to innovation lead inevitably to stagnation over the longer term. The answer is not downsizing-closing offices and laying off personnel-but downscoping: a strategic approach to restructuring. The options include incentive and compensation adjustments for executives, leveraged buy-outs and capital structure changes, focusing on core skills, diversifying internationally while focusing on businesses in which a firm has strong competencies, and buying and selling mature businesses where product development is not a great concern. Regardless of the approach, executives must exercise strategic leadership during and after restructuring, including providing strategic direction, exploiting core competencies, deeloping human capital and sustaining the corporate culture. Based on systematic research rather than casual observation, Downscoping provides a strong description of restructuring alternatives and their resulting tradeoffs. Its specific guidelines for maintaining competitiveness will be essential reading for managers involved in corporate restructuring.show more

Product details

  • Hardback | 222 pages
  • 158 x 232 x 26mm | 458.13g
  • Oxford University Press Inc
  • New York, United States
  • English
  • New.
  • line figures
  • 0195078438
  • 9780195078435

Review quote

A solid contribution...this book can provide both valuable reading and reference materials for a broad audience of researchers and practitioners concerned with the more effective management of diversified firms. * Academy of Management Review *show more

About Robert E. Hoskisson

Robert E. Hoskisson is Associate Professor of Management at Texas A&M University. Michael A. Hitt holds the Paul M. and Rosalie Robertson Chair in Business Administration at Texas A&M University.show more

Back cover copy

Large, diversified firms face unique challenges as they compete worldwide, and corporate restructuring is one way multinationals strive for competitive advantage. Weighing the pros and cons of a variety of approaches to restructuring, Downscoping offers executives a clear, strategic path through the maze. Robert E. Hoskisson and Michael A. Hitt show that when a multinational conglomerate fails to compete effectively, too much diversification may be the culprit. Whether the result of weak corporate governance or poor corporate strategy, over-diversification can make managers, unfamiliar with some of the markets in which they compete, opt for safety over innovation. This risk-aversion and lack of long-range commitment to innovation lead inevitably to stagnation over the longer term. Hoskisson and Hitt emphasize that the answer is not downsizing - losing offices and laying off personnel - but downscoping: a strategic approach to restructuring. The options include incentive and compensation adjustments for executives, leveraged buyouts and capital structure changes, focusing on core skills, diversifying internationally while focusing on businesses in which a firm has strong competencies, and buying and selling mature businesses where product development is not a great concern. Regardless of the approach, executives must exercise strategic leadership during and after restructuring, including providing strategic direction, exploiting core competencies, developing human capital, and sustaining the corporate culture. Based on systematic research rather than casual observation, Downscoping provides a strong description of restructuring alternatives and their resulting tradeoffs. Its specificguidelines for maintaining competitiveness will be essential reading for managers involved in corporate restructuring.show more