BUS 475 Wk 5 - Practice: Organizational Design

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BUS 475 Wk 5 – Practice: Organizational Design

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BUS 475 Wk 5 – Practice: Organizational Design

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Strategy and Structure

This case analysis addresses the interdependence between firm strategy and organizational structure. It covers the attributes of the types of organizational structure and notes major benefits of each type. In order to drive performance so as to gain and sustain competitive advantage, a firm’s organizational structure must align with its strategic intent. Be sure to familiarize yourself with the concepts in section 11.2 of the textbook. The concepts exemplified by this case reinforce Learning Objective 11-5.

Read the minicase below and answer the questions that follow.

Minicase

Every organization needs to have structure in order to accomplish goals and strategic objectives. If a firm’s structure does not fit its strategy, then performance can be weakened. The level of formalization, work specialization, and the degree and span of control are all elements of an organizational structure that vary depending on the type of strategy being pursued. There are four primary types of organizational structures, and each structure has strengths and weaknesses. It is a managerial responsibility to ensure that the organization is structured properly since the size and complexity of the firm evolves over time. Whether the pursuit is a specific business-level strategy (such as differentiation) or a corporate-level strategy (such as related diversification), it is the firm that is best able to match its structural design to its strategic goals and corporate culture that will have an advantage.

Here, we look at how two successful firms have matched strategy with structure while keeping the corporate culture intact: W. L. Gore and Zappos. When Bill Gore founded W. L. Gore, it was a small firm operating out of his basement. In the beginning, a production line was set up in Mr. Gore’s backyard. The firm had a simple structure, with Mr. Gore making all of the important strategic decisions and running the day-to-day operations. As it grew larger and the amount of products increased, the firm was restructured a few times, evolving into a functional organization and finally into a multidivisional (M-form) organization. However, during each transition, the firm’s informal culture and open communication channels stayed intact and W. L. Gore was able to retain a flat structure that reinforced its innovation competencies. It is estimated that the company has launched over 1,000 successful products, ranging from Gore-Tex to dental floss to guitar strings.

Zappos, the leader in online shoe retailing, began primarily as an organic and simple organization with a unique culture whose primary mission was to deliver the ultimate in customer service. As the firm grew, the complexities of managing an e-commerce business, including managing cash flow, led to the firm being acquired by Amazon in 2009. However, the management team at Zappos required that the agreement permit the firm to continue operating as completely independent, with its own management structure, products, and strategies. It is now a wholly owned subsidiary. Zappos is currently structured as a separate business unit (SBU) under Amazon’s multidivisional structure. This allows Amazon the ability to organize and control many different product lines in diverse geographic areas while still allowing business units like Zappos the ability to pursue its own business-level strategic pursuits. Known for its “Zapponian” culture, the company has continuously been named one of the best places to work.

As discussed in the case and the text, W. L. Gore and Zappos adopted new organizational structures during periods of growth. In general, most firms follow a predictable pattern of structural change. Which of the following best exemplifies this pattern?

Multiple Choice

simple to functional to multidivisional structures

ambidextrous to functional to matrix structures

functional to simple to matrix structures

global to functional to multidivisional structures

simple to matrix to functional structures

As discussed in the case, W. L. Gore eventually adopted a cooperative multidivisional organizational structure. Which of the following is not a reason why this type of structure is advantageous for firms like W. L. Gore?

Multiple Choice

It supports a related diversification corporate strategy.

It encourages SBUs to remain productive.

It allows Gore control with cooperation focus.

It best supports a firm with low organizational complexity.

Suppose that a small company that makes a standardized product is experiencing an increase in sales even though it has a small geographic footprint. Currently, the founder makes all of the strategic decisions but is beginning to feel overwhelmed. She has decided to pursue a cost-leadership strategy going forward. In order for the firm to achieve its goals, which of the following business-level structures should the firm adopt?

Multiple Choice

an ambidextrous functional structure

a centralized functional structure

a flexible organic structure

a centralized multidivisional structure

a simple structure with the founder’s imprint

Which of the following scenarios would justify a firm using an organizational structure that supports centralized decision making?

Multiple Choice

Success requires creativity and innovation.

It is in a rapidly changing industry.

It has many unrelated businesses.

It competes on costs and economies of scale.

It sells differentiated items to unique market segments.

Concerning strategy and organizational structure, which of the following is false?

Multiple Choice

A multidivisional firm loses the ability to be flexible.

The size of a firm influences its structure.

Structural effectiveness depends on support across the firm.

Decentralization typically increases innovation.

Structure should be decided after strategy.

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Module 11: Client Assignment Notes

HP’s Organizational Design

Material Required (read the following):

Memorandum (See Memo 11).

Chapter 11 in the SMI training manual (Rothaermel: Strategic Management, 4e).

HP Form 10-K, for the fiscal year ended 10/31/2014—you will be directed to specific sections. (See PDF 1).

Information provided by SMI’s Data Analytics team. This organization has searched various sources to provide you with the information you will need to conduct your analysis.

Read Chapter 11 in the training manual, HP’s Form 10-K dated 10/31/2014 and the detailed information provided to you by SMI’s Data Analytics team.

Address the following questions for the client:

*Note: Explanations are only included after some questions to assist with understanding where necessary.

Topic: Organizing for Competitive Advantage

You have learned from your training materials that organizational design is the process of creating, implementing, monitoring, and modifying the structure, processes, and procedures of an organization. Refer to pages 1–3 of HP’s 2014 Annual Report. This report shows evidence of a focus on reorganizing for competitive advantage.

Topic: Organizing for Competitive Advantage

Reference page 4 of HP’s 2014 Annual Report. What aspect of organizational design is suggested in the “Separation” section?

Multiple Choice

Strategy implementation is already taking place.

The firm is failing to make the necessary changes.

The firm is not confronting organizational inertia.

The firm’s strategy is accommodating the structure.

HP has an organic organization.

Topic: Functional Structure

Reference the “Executive Officer” section on pages 15–17 of HP’s 2014 10-K statement. Leverage your knowledge about functional structures to determine which of the following executives are likely to have been organized to maximize their domain effectiveness as it relates to the value chain. Check all that apply.

Check All That Apply

Henry Gomez (Chief Marketing and Communications Officer)

Tracy S. Keogh (Human Resources)

Catherine A. Lesjak (Chief Financial Officer)

Jeff T. Ricci (Controller and Principal Accounting Officer)

Topic: Functional Structure

Reflect on your answer to the previous question. HP is considering initiating a ”new employee handbook” that helps explain the benefits of this form of organizational structure. You have been assigned to write a brief introduction for this handbook . . . so, what benefits does this structure provide? Refer to your training handbook for guidance on this question. Check all that apply.

Check All That Apply

It allows for a higher degree of specialization.It allows for a higher degree of specialization.

It fosters a deeper domain expertise.

It allows for a greater division of labor.

It may help generate higher productivity levels.

Topic: Functional Structure

Reference the “Executive Officer” section on pages 15–17 of HP’s 2014 10-K statement. Which executive on this list is most likely the leader of HP’s organizational functions?

Multiple Choice

Margaret C. Whitman (President and Chief Executive Officer)

John F. Schultz (General Counsel and Secretary)

John N. McMullen (Treasurer)

Michael G. Nefkens (Enterprise Services)

Topic: Structure

Reference the “Note 2: Segment Information” section on pages 99–105 of HP’s 2014 10-K statement. Of the segments around which HP’s operations are organized for financial reporting purposes, which one is not actually a reportable segment?

Multiple Choice

Personal Systems

Printing

Printing and Personal Systems Group

Enterprise Group

Enterprise Services

Topic: Structure

For the divisions of HP that have P&L responsibility, what structure has the capability to leverage the functional organizations in a way that combines economies of scale and efficient processing of information with organizational responsiveness and a decentralized focus?

Multiple Choice

matrix structure

co-opetition

cross-functional teams

functional structure

Topic: Control and Reward Systems

You have learned from your training materials that values and norms contribute directly to a company’s culture. Culture, defined as shared norms, in turn contributes to control by helping employees address unpredictable and irregular situations and problems (common in service businesses). HP believes it has a risk regarding its proper management of service businesses. HP plans to contact SMI this week to discuss potential organizational cultural mitigations that HP could put in place to help ensure that their employees pay special attention to customer service. Which of the following could be included in a list of recommendations that focus on the expression of organizational culture? Check all that apply.

Check All That Apply

Highlight customer service “wins” achieved by employees in a company email.

Celebrate customer contract renewals with a departmental pizza party.

Provide t-shirt and coffee cup giveaways that say “Customer service is my #1 priority”.

Ensure that all customer service employees practice appropriate behavior and maintain a professional attitude when dealing with customers.

Topic: SWOT Implementation: Resources vs. Time Horizon

Assume one of the SWOT findings was an internal weakness of low motivation in the sales force regarding product sales. HP has designed a new compensation system to address this motivation. In which stage of the strategy implementation framework does this action reside?

Multiple Choice

Stage 1

Stage 3

Stage 5

Stage 6