Strategic Redirection (Corporate Restructuring Strategy).

This study researched the phenomenon of strategic change at the corporate level among large manufacturing firms. Shifts in strategic direction were measured using changes in the importance of the firm's dominant business activity or core business. This measure for strategic redirection captures changes in the mix as well as emphasis of businesses within the firm's portfolio. Four factors: Nature of the Core Business; Performance Crisis; Cash Flow; and Changes in Top Management; were examined as possible motivators for strategic redirection. Data from secondary sources was collected for a r and om sample of 200 of the largest firms. Bivariate statistical techniques were used to analyze the association between these variables. This study describes the phenomenon of strategic redirection in both single and multi-business firms for the 1973-1981 period. A new concept by which to describe dramatic strategic change at the corporate level has been defined and measured. Strategic redirection is a widespread phenomenon occurring within both single business firms and multi-business firms resulting in an overall decreased emphasis on the core business. In examining several factors, it was found that the firm's overall financial performance was not associated with strategic redirection. Core industry growth rate was also not significantly different for redirected versus non-redirected firms. However, dependency on the core business can act as a major impediment to strategic redirection. In addition, core business relative profitability within the portfolio was a strong indicator as to the direction of strategic change. Unfavorable economic conditions by themselves are not solely responsible for strategic redirection. This study provided evidence of a strong predictive association between top management characteristics and strategic redirection. A change in managerial leadership as evidenced by a new management team coming from a different perspective than the preceding team and a consolidation of power are important precursors to strategic redirection. These results infer that the role of the chief executive in the strategic process deserves special attention in the consideration of the future strategic direction of the organization.PhDManagementUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/160891/1/8600573.pd