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Strategies & Market Trends : Tang's school of business management for serious investors
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From: Arthur Tang6/25/2007 6:10:13 AM
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The art of restructuring every year in the corporate world.

The efficiency of an organization is measured by the revenue achieved, divided by the number of employees. This leads to restructuring each and every year, by labor savings using computers and not human resources. Labor content is shifted from direct labor to computer controlled production equipment, which eats energy but no fringe benefit costs. The productivity in business is still cut cost and increase capacity at the same time. Quality control also improves with machines that has less down time and not wearing out quickly. Human resources in cheap labor countries has huge training costs and human error are typically 6% when best quality and cost effectiveness will only allow less than 2% returns(machine defect tolerance).

In the process of restructuring, new employees are hired and trained quickly, guided by business workflow forms they fill out. Often in underdeveloped countries, you have to provide housing and transportation. Which builds morale, in developed countries as well.

Restructuring is really about reducing the number of workers, by attrition or forced layoffs. An easier way is shifting workloads and work assignments by consolidation of tasks. This often is often governed by the emergence of new technology. Old employees retires, and new employees had to be trained. Just in time labor(part time), costs more for their efficiency, but provides more job quotas in the economy which results in increased market potential.

Once restructured, and profits grew, then expansion by starting business in new locations will be most rewarding.
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