Final answer:
The process whereby a firm reorganizes to gain competitive advantage, leading to position modifications or eliminations, is known as restructuring. Mergers and acquisitions are common scenarios leading to restructuring, alongside offshoring and outsourcing, to improve efficiency and focus on core competencies.
Step-by-step explanation:
A method of creating competitive advantage in which a firm reorganizes its operating and management functions, often resulting in positions that are modified, combined, or eliminated, is commonly referred to as restructuring. This approach can emerge during times of mergers, acquisitions, downsizing, offshoring, or outsourcing. In these scenarios, companies may need to merge departments, which leads to the elimination of duplicate positions and can cause stress for the employees due to cultural changes and job insecurity. Mergers and acquisitions often create a competitive advantage by allowing companies to expand, become more efficient, acquire new product lines, or eliminate rivals, although they come with the risk of staff reductions and culture clashes. Additionally, firms may resort to offshoring to access cheaper labor markets or to outsourcing to cut internal costs and focus on their core competencies.