Corporate restructuring has many meanings which vary from firm to firm but in general terms restructuring means that the structure of an organization is reorganized in order to better deal with those internal and external forces. Commonly those forces are treated in restructuring process, that are acting as a hindrance in the way of business growth. The major aim of restructuring is to increase the stakeholder’s wealth and thus restructuring ensure all the actions needed to be taken to accomplish the aim of shareholder’s wealth maximization (Gilson, 2010). As a result of restructuring the firm may improve its financial performance with the help of increased profitability but the ultimate outcome of restructuring depends on the nature of market in which that particular organization operates.
Ways used for restricting in mature and cyclical markets
Caterpillar has experienced a boom in the demand for its products which resulted in marvelous financial performance of the firm as high profits were recorded by the firm for many years. All this indicates that market for Caterpillar was mature enough (Powell, et al., 2007). Most of the competitors of Caterpillar were ready to accept the decrease in profitability but there were some firms belonging to Japanese origin that were not ready to accept the price cuts. Irrespective to the fact that firm has a considerable position in the market and can afford premium prices, the performance of the firm was worsened due to the recession prevailing in the market of United States of America.