Business Management

The Importance of Restructuring in Change Management for Organizational Sustainability

Restructuring is an integral part of change management. In conditions of uncertainty and risk, the entrepreneurial structure is influenced by many factors, such as economic and technological changes, which can have a negative impact and even oust it from the relevant market.

However, by undergoing a process of transformation, companies can overcome competitive pressures and mitigate risks. This process is known as change management.

What is Change Management?

Change management can be defined as a broad concept that includes strategic management and anti-crisis management. Change is a concept that is part of the totality of concepts characterizing movement and development.

Change is understood as the emergence or destruction of the properties of an object, an increase or reduction of its parameters, its displacement or transformation, or transition to another form.

Changes – in relation to a certain object – can be classified as internal and external, qualitative and quantitative, partial and systemic.

In ancient and medieval philosophy, the objects of change were mainly interpreted in the image and likeness of things included in the daily practice of a person. In this aspect, changes were perceived in relation to stability, preservation, constancy of form and composition of things.

If stability characterized the identity of a thing itself, then changes fixed the differences of things in relation to themselves, becoming something else.

In this sense, changes were interpreted as the potentiality of a thing for a different being, for reincarnation, and transformation.

Looking at the philosophy and science of modern times, changes in things have become determined under the strong influence of the ideas of classical dynamics as the movement of bodies, reduced, in fact, to the movements of the material points.

In this regard, the initial characteristics of change turned out to be associated with the analysis and description of external and quantitative changes.

The development of sciences related to life, society, and human beings has established a close relationship between change and conservation, resilience, and the mode of existence of biological and social systems.

Changes in a system or objects can be interpreted as expressions of its enduring being and the preservation of its vital certainty.

Systems or structures of objects are now seen as coordinated and interconnected changes that ensure stability in the dynamic form of an object or the interaction between objects.

This shift in understanding change was influenced by the development of “non-classical” objects of physics, biology, and social science, which are fictitious and are constantly undergoing changes.

Importance of Restructuring in Change Management

Changes are viewed as the starting point for the cognition of an object. The fixation of an object through a change in the cognitive situation creates the prerequisites for a change in cognition itself, to its movement along the path of describing the stable forms of the object.

In the context of society’s relationship with nature, change becomes more and more meaningful as self-change of society.

Changes in social and natural systems determine the task of self-change in society’s production, technical, political, economic, cultural, scientific, and mental structures. The ability to self-change is essential for the existence of society and an individual human person.

This ability gives a person the opportunity to preserve his new qualities, his participation in the processes of being, and commensuration with these processes of forces and forms of his life.

The main problem of leadership in construction organizations is the task of adapting them to the dynamically changing external environment, ensuring its economic stability.

Change management is defined as the management of changes in the organization to maintain its economic stability. Identifying the close relationship between change and sustainability is crucial.

Monitoring Economic and Financial Condition with Change Management

Change management allows us to diagnose and monitor the economic and financial condition of the organization, study the external and internal environment, ensure the current financial stability of the organization, identify the impact of ongoing changes, establish functional relationships, and determine the boundaries of the area of stability, behind which crisis phenomena occur in the organization.

As the first aspect of possible changes in the organization, it makes sense to consider the restructuring of companies.

The comprehensive transformation of the organization’s activities consists of changing the structure of production, assets, liabilities, as well as management systems, in order to increase sustainability, profitability, competitiveness, and overcome unprofitability and the threat of meekness.

It is important to note that restructuring is not necessarily tied to the legal status of the organization.

It is crucial that restructuring options are constantly considered and are in the arsenal of every corporate manager since Russia is already experiencing the second wave of mergers and acquisitions in recent years.

  • The first wave was caused by the debt crisis, 1998 devaluation, devaluation of assets, and a switch in demand for domestic consumption.
  • The second wave is caused by high prices for oil and significant export earnings.

Companies, especially those in the export sector, have created significant cash reserves and are striving to invest them in other industries. Russian companies cannot avoid the tendency to increase capital if they want to be competitive both locally and internationally.

Integration Processes and their Importance in Public Economy

The content of the restructuring includes such a phenomenon as an integration process.

As mentioned above, the formation of new relationships ownership creates the basis for integration processes that are implemented through a system of transactions, the development of ownership schemes, and changes in the capital structure.

In this sense, integration can be considered as another effective form of organization of the public economy.

Traditionally, integration is understood as a state of connected entities through rational economic interaction via and harmonization of conflicting economic interests. But for the purposes of this study, this general concept of interest graces can be detailed as follows.

Integration is a state of connectedness of various subjects goods of the market through the organization of rational economic actions through the use of a system of transactions, relations of equity, and changes in the structure of capital in order to ensure its sustainability and competitiveness in one or more segments market cops.

This definition will be understood by the term “integration” in the course of further research.

Examples of associations that arise in the course of integration processes are such organizational and economic forms of monopolization, such as concerns, holdings, financial-industrial groups, and many others.

The relationship between them can be additionally regulated by formal or informal small cartel agreements. But in order to comply with the antimonopoly legislation, the real level of monopolization is hidden, as a result of which it does not become a legal fact.

Latent processes of monopolization can be described using integration processes that occur both with education and without the formation of a legal entity.

Thus the concepts “integration” and “integration processes” are more adequately described the current economic situation than the old economic sky terms. The open economy factor has become one of the most important for local organizations.

Therefore, the starting principle for determining the development of integration processes should become a formation of such associations, which, according to their capabilities, could be equivalent to the market structures of world trade.

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Tofunmi is a BA, MBA, and experienced Researcher in Business Administration and Management. He possesses outstanding communication, leadership, conflict resolution, organization, and teamwork skills. He enjoys teaching and reading books on startups, business, personal finance, investment, and more.

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