DEFINITION of 'Rationalization'

A reorganization of a company in order to increase its efficiency. This reorganization may lead to an expansion or reduction in company size, a change of policy, or an alteration of strategy pertaining to particular products.

BREAKING DOWN 'Rationalization'

Similar to a reorganization, a rationalization is more widespread, encompassing strategy as well as structural changes.

  1. Reorganization

    A process designed to revive a financially troubled or bankrupt ...
  2. Asset Rationalization

    Reorganizing a firm's assets in order to improve operating efficiencies ...
  3. Furlough

    A temporary layoff, involuntary leave or other modification of ...
  4. Vertical Integration

    When a company expands its business into areas that are at different ...
  5. Horizontal Integration

    The acquisition of additional business activities that are at ...
  6. Restructuring

    A significant modification made to the debt, operations or structure ...
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