The Economic Implications of a Corporate Restructuring
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Avon Technical Products is a small producer of mainly non-automotive rubberized products. This producer was a division of a larger corporation, Cadillac Rubber & Plastics. Both were controlled by a British firm Avon Rubber p.l.c. On October 1, 1994, a restructuring was implemented that changed the relationship of Avon Technical Products and Cadillac Rubber & Plastics. They are now relatives under a new corporation, Avon North America. This new firm is responsible for all of the North American operations controlled by Avon Rubber p.l.c. The restructuring has benefited all of the new business units under Avon North America, but it has produced the largest results for Avon Technical Products. Avon Technical Products has been separated from Cadillac Rubber & Plastics, so that it may increase accountability, eliminate inefficiencies, and expand sales. One of the main reasons for this reorganization was to expand the non-automotive sales (Avon Technical Products) so the overall corporation could survive better during depressions of the automotive industry. Preliminary results have shown that Avon North America's reorganization has been successful. Both Avon Technical Products and Cadillac Rubber & Plastics are experiencing increased profits separately and combined, along with elevated efficiency. One of the most noticeable effects has been the increased desire for quality by all employees due to the new independence of each business unit. Before the restructuring many workers were transferred between different divisions constantly. This practice has now been terminated. All employees want their business unit to succeed because if it does not, they are out of a job. In addition there has been increased importance placed on a system of direct management. An added responsibility has been given to every employee creating an increased level of pride the workmanship. The reorganization of Avon North America has thus far lived up to its expectations. Unfortunately, it is too early to say whether or not the new structure will be beneficial for the long term goals of the corporation. Based on the ability of this corporation to withstand the transition period, it is fair to say that Avon North American is flexible enough to survive whatever problems arise. More time, analysis, and adjustments are needed to assure the future of Avon North America, but to this point, all is fairing well.