Business processes reengineering is company adaptation (organizational, managerial, financial, technical and production) to the market environment in order to increase its efficiency and competitiveness. Restructuring is directed at removal of gap between current results of a company’s activity and requirements needed for successful work at the market.
Why is it necessary to reengineer a company?
In the changing world it doesn’t matter how big or rich a company is. It must adapt to changes or close down. Significant changes in the external environment bring the need to change the paradigm – to building a new world view. Past experience interferes with adequate perception of the new situation. Globalization broadens the geographical boarders. Time becomes a new and more important limit.
Goals and motives for reengineering: - Surmounting a crisis.
- Survival:
- saving market share;
- protecting from enterprise take-over;
- achieving of financial stabilization.
- Company’s sustainable development:
- stable competitive advantages;
- adaptation to changes;
- future problems removal.
- Other motives:
- reducing risk of profits reinvestment;
- improving management;
- solving problems among subdivisions.
Entities that need reengineering: - Companies that are on the brink of collapse due to their product prices being notably higher and/or their quality/service being notably lower compared to their competitors. If these companies don’t make serious decisions, they will inevitably go bankrupt.
- Enterprises that don’t have problems at the time but predict the inevitable emergence of tough problems connected with, for example, emergence of new competitors, change of customers’ demand, change in economical environment, etc.
- Companies not having problems at the time but predicting some in the near future.
- Leading companies that practice aggressive marketing policy and aren’t satisfied with good current condition, and plan to do better with reengineering.
Depending on the customer’s goals, International Standard Franchise highlights the following principles of strategic enterprise reorganization:
- Changes in market policy.
- Changes in manufacturing process.
- Changes in product development direction.
- Cardinal changes in staff policy.
- Changes in organization structure.
- Changes in management culture.
- Financial restructuring:
- Separate assets liquidation (sale).
- Pricing policy change.
- Cost saving.
- Capital structure rationalization.
- Substitute of debt with property.
- Set-off of mutual debts.
- Set of measures for money income stimulation to the company.
 The full list of services on business standartization.
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