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Restructuring involves simplifying, shrinking, or downsizing an organization's operations to loweroperating costs. Restructuring can be done by eliminating product teams, shrinking departments, andreducing levels in the hierarchy, all of which result in the loss of large numbers of jobs of top, middle,or first-line managers, as well as nonmanagerial employees. Modern IT's ability to improve efficiencyhas increased the amount of downsizing in recent years because IT makes it possible for feweremployees to perform a given task. The positive effects of restructuring lie primarily in a reduction ofoverhead costs. Restructuring, however, can produce some powerful negative outcomes. It can reducethe morale of remaining employees, who worry about their own job security. And top managers ofmany downsized organizations realize that they downsized too far when their employees complainthey are overworked and when increasing numbers of customers complain about poor service.AACSB: Analytical ThinkingBlooms: UnderstandDifficulty: 2 MediumGradable: manualJones - Chapter 01 #108Learning Objective: 01-04 Distinguish between three kinds of managerial skill, and explain why managers are divided into different departments to perform theirtasks more efficiently and effectively.Topic: Management130.What are the four building blocks of competitive advantage? How can organizations increase theirefficiency and productivity?The four building blocks of competitive advantage are superior efficiency; quality; speed, flexibility,and innovation; and responsiveness to customers. Organizations increase their efficiency when theyreduce the quantity of resources (such as people and raw materials) they use to produce goods orservices. In today's competitive environment, organizations continually search for new ways to usetheir resources to improve efficiency. Many organizations are training their workforces in the newskills and techniques needed to operate heavily computerized assembly plants. Similarly, cross-training gives employees the range of skills they need to perform many different tasks; and organizingemployees in new ways, such as in self-managed teams, lets them make good use of their skills. Theseare important steps in the effort to improve productivity.AACSB: Analytical ThinkingBlooms: RememberDifficulty: 2 MediumGradable: manualJones - Chapter 01 #109Learning Objective: 01-06 Discuss the principal challenges managers face in today’s increasingly competitive global environment.Topic: Competitive advantage