rationalization

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Rationalization

The process of reorganizing and overhauling a company's operations, policies, and anything else needed to make the company more efficient. Rationalization is thought to be more widespread than a reorganization; it may involve closing some operations while expanding others. It usually involves a shift in investment or other policy. Rationalization is intended to improve a company's profitability.

rationalization

the restructuring of a firm or industry to enable it to become more efficient or to reduce OVERCAPACITY. In some cases this may involve the firm in closing high-cost plant and concentrating production in larger, more modern plants; or it may involve the streamlining of a firm's organizational structure and reducing overhead costs. In the context of an industry rationalization may require firms to merge, or inefficient firms to leave the industry leading to higher levels of MARKET CONCENTRATION. See PRODUCT RATIONALIZATION. DIVESTMENT.

rationalization

the reorganization of an industry (or firm) in order to enable it to use its resources more efficiently Rationalization usually involves the closure of high-cost plants (either through the merging of firms or their exit from the industry), which then allows output to be concentrated in plants of MINIMUM EFFICIENT SCALE and enables a better ‘balance’ to be achieved between industry supply and demand by eliminating EXCESS CAPACITY. Within a firm, rationalization may involve streamlining its organizational structure in order to reduce overhead costs. See also PRODUCTIVE EFFICIENCY, ORGANIZATIONAL SLACK.
References in periodicals archive ?
Having the right products in the product portfolio requires the company to have a formalized management product rationalization process.
The product rationalization process is a management process that ensures products offered in the product portfolio can perform at the level expected from the enterprise's investment.
During 1997 Summit expanded its production base in core areas through a combination of successful property acquisitions, asset rationalizations and an active drilling program which resulted in total expenditures of $88 million.
As part of Summit's rationalization program in 1997, dispositions of non-core assets totaling $51 million were concluded, including dispositions at Sturgeon Lake, Dunvegan, Manir, Pine Creek and Hays in Alberta, and Viewfield and Cantal in Saskatchewan.
cost savings of more than A$600 million have been realized from efficiency gains and asset rationalizations.
Management expects to reduce leverage to a range between 45%-50% by fiscal 1998, with debt reduction from continued asset rationalization and improved cash flow from cost improvements.
The benefits we expect from the successful execution of these manufacturing rationalizations will be an important element in achieving these goals.
Billing, Norcen's President and Chief Executive Officer, said, "Combined with the internal restructuring, these asset rationalizations have given us a solid start towards simplifying the Company's operations as well as its balance sheet.