A business, which has a product that runs in a cyclical and mature market, will eventually not have the ability to ‘grow’ anymore as it will reached the ‘top’. Therefore to continue making its business profitable, increase shareholder value and work more effectively they under go corporate restructuring.
This is a process used in all sorts of firms, from small to big, and has many kinds of corporate activities, based on the transfer of assets.
In this essay, I will discuss the impact of corporate restructuring in a mature and cyclical product on its market …show more content…
In 1996, Zantac reached $1.6 billion sales, and was already contributing to half the profit of Glaxo Wellcome. Later, the sales decreased, as its patent expired and generics such as ‘Pfizer’ were found in the market; therefore there was no more competition and no more differentiation. Zantac was going through a decline.
As said previously, cutting costs is inevitable during restructuring; here using acquisition, and over 7000 employees lost their job. ( Froud Johal Leaver Williams, 2006 : 189 )
The result not being as successful as they had wished, even after the creation of two new drugs, a merger seemed inevitable, to keep their profits high.
So, in 1998, there was a hypothesis of a merger between Glaxo Wellcome and SmithKline Beecham and was later completed in 2000, as a $70 billion deal, which lead to GlaxoSmithKline (GSK).
Not only did it have positive effects on Glaxo as it increased its market performance, indeed