Has corporate restructuring produced shareholder value? Explain why or why not
Corporate restructuring is a term used to mean that act of reorganizing the ownership, legal, operational and other structures in an organization to make the firm more profitable or to better organize its present needs. On the other hand, shareholder value is described as the value that the management delivers to the shareholders because of the company’s ability to grow free cash flow, earnings, and sales over time ( Cho, & Ahn, 2017 ). Primarily, the shareholder's value mainly depends on the ability of senior management ability to generate healthy returns on capital investments and make wise investments.
The corporate restructuring at Mondelez International did not increase the shareholders’ value in the short run due to several reasons. Firstly, the stock performance and revenues have been in decline since the corporate restructuring started. Furthermore, the net revenues for the organization have been declining since 2011 (Gamble, 2017). This shows that the corporate reorganization did not help the company improve its revenues. The same decline was evident its geographic segments of Latin America, Asia Pacific, Europe, North America, and EEMEA which has been declining since 2013 with the net revenues being $35,299 million for 2013, $32,244 million for 2014, and $29, 636 million for 2015 (Gamble, 2017).
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Similarly, the company has it exit its coffee branch which was a significant source of income for the firm. Additionally, the corporate restructuring resulted in an increase in price for the commodities, exchange rate loss and elimination of the coffee business resulted in declining of 24 percent in revenue (Gamble, 2017). Although the stock had performed well since the removal of the coffees brands the net revenues and operating income were mostly negative for the most times. Further, both profit measures and the revenues have been in decline since 2013.
The measure of shareholder value from the case study indicate that the corporate restructuring in the company did not increase the shareholder's value.
Reference
Cho, H., & Ahn, H. S. (2017). Stock payment and the effects of institutional and cultural differences: A study of shareholder value creation in cross-border M&As. International Business Review , 26 (3), 461-475.
Gamble, J. E. (2017). Mondelez International: Has Corporate Restructuring Produced Shareholder Value? Texas A&M University-Corpus Christi.
