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1. Hilton was doing well but held large debt and needed capital for expansion.By going through the LBO, Hilton was able to expand and restructure its finances while maintaining most of the C-level employees. In addition, Blackstone Group was able to profit from the 11-year venture in the tune of $1.32 billion. (Gragya, 2020) Noting this, how else would you suggest firms might engage in an LBO for mutual benefit?

2. At the core of the restructuring, the trend is the concept that some activities inside a businesss value chain are more perilous to the success of the businesss strategy than others. Walmarts organizational structure is designed to ensure that its impressive logistics and purchasing competitive advantages operate flawlessly (Lombardo, 2019). Walmart is able to sell retail at lower prices by effectively managing their daily purchasing and logistical efficiencies between separate stores. They are able to sell the same merchandise other competitors have purchased for the same price but at lower prices. Coordinating daily logistical and purchasing efficiencies among separate stores lets Walmart lead the industry in profitability yet sell retail for less than many competitors buy the same merchandise at wholesale. For example, one of the strategies discussed this week was Downsizing which is removing the number of employees, mainly middle management, in a company. One of the outcomes of downsizing was increased self-management at the operating levels of the company. This causes the employees who remain behind to take on the additional workload as a result of the cutbacks. The result was that the remaining managers had to give up a good measure of control to operating personnel. Spans of control, traditionally thought to maximize at below ten people, have turned out to be much higher due to information technology, running lean and mean, and allocation to lower levels.

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Restructuring is a strategy through which a firm changes its set of businesses or its financial structure (Hitt et al., 2017). The ultimate goal of the restructure is to increase value for the stakeholders. Downsizing, downscoping, and leveraged buyouts are three types of restructuring strategies. Downsizing involves reducing the number of employees and possibly reducing the number of operational units (Hitt et al., 2017). The coronavirus pandemic led many companies around the world to reduce their personnel and operating units. In October 2020, due to a decline in commercial airline sales brought on by the Covid Pandemic, Raytheon Technologies was one of many companies to downsize its workforce when it laid off 15,000 employees and 4,000 contractors (Gould, 2020). According to Hitt et al., (2017) Downscoping refers to divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firms core businesses. Downscoping can be used to reduce diversification and hone in on their core competencies. By eliminating its oilfield services and health care businesses GE is a real-world example of a company that has used downscoping to focus on its core business (Bomey, 2018). A restructuring strategy whereby a party (typically a private equity firm) buys all of a firms assets in order to take the firm private is known as a leveraged buyout (LB0) (Hitt et al., 2017). This restructuring approach can be used when a business is in financial distress or as a means to expand operations or develop resources. An example of a leveraged buyout took place in 2007 when Hilton Hotels were purchased for $5.5 billion in cash and $20.5 billion in debt by Blackstone Group (Blokhin, 2021, para. 3). Hilton was able to improve its financial issues through refinancing at a lower rate and Blackstone sold Hilton gaining close to $10 billion in profit (Blokhin, 2021).