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Restructuring in the Siemens Company and the Impact of These Changes to the Companys Profit

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There are a number of financial restructuring by the Siemens Company some of these changes are evident from the listing of Siemens stock in the NYSE, there was also an introduction of DM5 shares, the aim of these restructuring was to attract more investors to invest and also make the company shares more attractive to the investors. The listing of the company shares in NYSE was also aimed at publicizing the company because the company was not well known in the US, however, there were major mergers and acquisitions and these are evident from the acquisition of Plessey in 1991 and the acquisition of Rolm in 1992.in 2001 also there was the acquisition of Atecs Mannesmann and acquisition of VA technologies in 2005, Froud (2000) states that in 1980 there was an increase in mergers and acquisitions which had different motives, he further states that in the short term the shareholders of the acquired company tend to gain but in the long run they lose.

A study by Bowman (1999) showed that the average performance improvement of financial restructuring was greater than the average performance yielded by the other two restructuring modes, for this reasons, therefore, the company was accruing to these benefits through its financial restructuring actions. In 1998 the economic value added measure was introduced, this involved determining the performance with the cost of internal and external capital, this means that a company’ s performance was determined by the extent to which it would earn its cost of capital whereby divisions that did not meet this criterion were to be fixed, sold or closed.

Most of Siemens competitors followed this concept and were able to record higher profits than Siemens, the medical equipment division recorded losses over the years but the fixing option was preferred by the company. Managers incentives were also introduced whereby top managers income were based on share prices and performance, as a result in 1999 top managers income comprised of a fixed and variable component and over 200 managers had a 40% fixed income and a 60% variable income that depended on performance.  

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