Rationalization

Rationalization refers to the process of restructuring or reorganizing a business to enhance operational efficiency and effectiveness. It often involves strategic changes such as downsizing, policy revisions, product line optimization, or process improvements. Unlike routine organizational adjustments, rationalization focuses on broader structural and strategic transformations aimed at improving profitability, reducing costs, and strengthening overall financial performance.

Example: A manufacturing company may rationalize its operations by discontinuing low-profit product lines and automating production processes to reduce labor costs and improve efficiency.