Downscoping: How to Tame the Diversified Firm

Hardcover | September 1, 1994

byRobert E. Hoskisson, Michael A. Hitt

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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 paththrough 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 theycompete, 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, diversifyinginternationally 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, includingproviding 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 specific guidelines for maintaining competitiveness will be essential reading for managers involved in corporaterestructuring.

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From Our Editors

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 Michae...

From the Publisher

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 paththrough the maze. The authors show that when a ...

From the Jacket

Downscoping provides a strong description of restructuring alternatives and their resulting tradeoffs. Its specific guidelines for maintaining competitiveness will be essential reading for mangers involved in corporate restructuring.

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

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Format:HardcoverDimensions:224 pages, 9.57 × 6.38 × 0.79 inPublished:September 1, 1994Publisher:Oxford University Press

The following ISBNs are associated with this title:

ISBN - 10:0195078438

ISBN - 13:9780195078435

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Table of Contents

I. Problems of Competitiveness1. Diversification, Multidivisional Structure, and Restructuring2. Strategic Control and M-form Implementation3. Corporate Governance and Diversification4. Acquisition Strategies and Innovation5. Corporate Refocusing and Global Strategic CompetitivenessII. Restructuring Solutions6. Restructuring Managerial Incentives7. Leveraged Buyouts and Debt as a Restructuring Alternative8. Downscoping9. Restructuring and the Unrelated Strategy10. International Diversification11. Implementing Restructuring and Exercising Strategic Leadership12. Learning from the Past and Looking to the FutureIndexes

From Our Editors

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, f

Editorial Reviews

"Hoskisson and Hitt present a wealth of scholarship and engaging examples on contemporary management of the diversified firm. Executives and academics who are concerned about the coherence and global competences of corporations will read and benefit greatly from Downscoping."--Donald C.Hambrick, Columbia University