Chapter 08 – Structuring Organizations for Today’s Challenges
8-85
NOTES ON CRITICAL THINKING EXERCISE 8–2 (continued)
President
Administrative
Assistant
Vice President
Production
Vice President
Finance
Vice President
Marketing
Vice President
Research and
Development
Personnel Of-
ficer
Marketing Man-
ager— Region
A
Marketing Man-
ager— Region
B
Marketing Man-
ager—Region C
150 R&D
employees
30 sales
employees
40 sales
employees
30 sales
employees
Production
Manager—
Product A
Production
Manager—
Product B
Production
Manager—
Product C
Quality
Control
Officer
200 pro-
duction
employees
200 pro-
duction
employees
200 pro-
duction
employees
PEABODY RESEARCHERS, INC.
Possible Organization Chart
Chapter 08 – Adapting Organizations to Today‘s Markets
8-86
Name: ___________________________
Date: ___________________________
critical thinking exercise 8-2
HOW DO ORGANIZATIONS GROUP ACTIVITIES?
The Internet has greatly increased access to information about organizations. Corporations use
their websites to communicate with investors, customers, and the general public. Just by visiting the com-
pany’s site you can usually discover the organization’s chain of command and approach to departmentali-
zation. Go to the websites for each organization below and identify the primary organizational units.
(Hint: Look for the “Corporate Information” or “Investor Relations” sections.) Based on that information,
speculate on the type of departmentalization used.ix
1. Coca-Cola Company
Primary Organizational Units:
Type of Departmentalization Used: __________________________________
2. The Walt Disney Company
Primary Organizational Units:
Type of Departmentalization Used: __________________________________
3. The United Methodist Church
Primary Organizational Units:
Type of Departmentalization Used: __________________________________
Chapter 08 – Adapting Organizations to Today‘s Markets
8-87
4. Kraft Foods
Primary Organizational Units:
Type of Departmentalization Used: __________________________________
5. Boeing
Primary Organizational Units:
Type of Departmentalization Used: __________________________________
Chapter 08 – Adapting Organizations to Today‘s Markets
8-88
bonus
cases
bonus case 8-1
STRUCTURAL COLLAPSE: RESPONSIBILITY AND ACCOUNTABILITY
To publicize its newly opened nightspot, a major hotel instituted weekly “tea dances” in the lobby
of the hotel. A local band played 1940s-era music while dancers competed in friendly contests. On a Fri-
day night in July, the band was playing Duke Ellington’s “Satin Doll” when two skywalks spanning the
lobby of the year-old hotel collapsed. Sixty-five tons of concrete, metal, glass, and dance spectators
plunged four floors to the sidewalk below, killing 114 persons and injuring 216 others.
The investigation after the collapse revealed that the collapse resulted from poor judgment and a
series of events that, in combination, produced a disastrous result. The study showed a history of over-
sights, misunderstandings, and safety problems plaguing the 40-story, 780-room luxury hotel during con-
struction and for months after its opening.
Mishaps aren’t uncommon on big projects, of course. But this huge project, which was built on an
accelerated schedule, encountered a series of accidents and near-accidents during construction. At one
point the building’s owner dismissed its general contractor and barred an inspection company from bid-
ding on future company projects.
The hotel was erected using the “fast–track” method, a fairly common procedure in which con-
struction proceeds before all drawings are complete. With a $40 million construction loan outstanding and
all building costs soaring, the owner wanted the hotel up and open as quickly as practical.
Design changes are common on fast-track projects, making clear communications more critical
than usual. The owners of the building had circulated a 27-page procedures manual explaining the proper
channels for design changes and approved drawings. But the procedures weren’t always followed, and
other mistakes slipped in. Because some connections were misplaced on the drawings, for instance, work-
ers installed a sweeping cantilevered stairway without fully attaching it to a wall.
The investigation found that the skywalks fell as a result of a design change made during a tele-
phone call between the structural engineering company and the steel fabricator. Stress calculations would
have shown that the redesigned skywalks were barely able to support their own weight, let alone the
weight of dozens of dance spectators. However, court depositions of the two engineers who made the tel-
ephone redesign indicate that each person assumed it was the other’s responsibility to make new calcula-
tions, and neither did.
Edward Pfrang, then chief of the structures division of the National Bureau of Standards and a
participant in the investigation, says, “One thing that’s clear after . . . [this] failure and a few others is that
there isn’t a clear-cut set of standards and practices defining who is responsible in the construction pro-
cess.”
discussion questions for bonus case 8-1
1. Who was responsible for the collapse? Explain.
2. Identify several key time points at which the problem could have been corrected.
Chapter 08 – Adapting Organizations to Today‘s Markets
8-89
3. Is this a failure of planning, organizing, leading, or controlling?
notes on discussion questions for bonus case 8-1
1. Who was responsible for the collapse? Explain.
Identifying who is to blame is the function of the legal system. Clearly, many people shared in the
blame, but not necessarily legally. Such a case shows the dangers of trying to get a project done quickly
instead of safely.
2. Identify several key time points at which the problem could have been corrected.
safety considerations don’t take place at any one time. They must be in mind at all times.
3. Is this a failure of planning, organizing, leading, or controlling?
This failure occurred at all three stages: (1) At the planning stage because the project was hurried.
(2) At the organization stage because responsibility was not made clear. (3) At the control stage because
Chapter 08 – Adapting Organizations to Today‘s Markets
8-90
bonus case 8-2
CREATING CROSS-FUNCTIONAL TEAMS
The Direct Response Group (DRG) at Capital Holding is a direct marketer of life, health, proper-
ty, and casualty insurance. In the past, it sold a mass-produced product to a mass market. Over time, how-
ever, sales slowed, profits eroded, and the company decided it had to refocus its efforts. That meant, for
one thing, selling to particular, identifiable customers and giving those customers a customized prod-
uct/service package that was world class, enabling the company to compete globally.
An analysis of the corporate culture showed that people were more concerned with pleasing their
bosses than pleasing the customer. People hoarded information instead of sharing information because the
people with information had power. The information system had to be changed to encourage sharing.
Organizational change began with a vision statement that emphasized caring, listening to, and sat-
isfying customers one-on-one. To accomplish that goal, the company formed a cross-functional team to
study the sales, service, and marketing processes and completely redesign those functional areas. The idea
was to have a world-class customer-driven company. That meant gathering as much information as possi-
ble about customers.
Frontline customer-contact people were empowered with user-friendly information systems that
made it possible for one contact person, working with a support team, to handle any question that custom-
ers had. Management used external databases to get detailed information on some 15 million consumers.
The combined internal and external databases were used to develop custom-made products for specific
customer groups.
The whole company was focused on satisfying customer wants and needs. That meant changing
processes within the firm so that they were geared toward the customer. For example, one case worker is
now attached to each customer, and that case worker is responsible for following an application through
the entire approval and product design process. Previously, many people handled the application, and no
one person was responsible for it.
A pilot program was started whereby a customer-management team was formed to serve 40,000
customers. The team consisted of 10 customer service representatives and their support team (a marketer,
an expert in company operations, and an information systems person). Employees are now rewarded for
performance, and merit raises are based on team performance to encourage team participation.
discussion questions for bonus case 8-2
1. Are traditional bureaucracies set up to provide custom-made products to individual consumers?
Could they be, or is it always better to have customer-oriented teams design such products?
2. Anyone who has worked in team situations has discovered that some members of the team work
harder than others; nonetheless, the whole team is often rewarded based on the overall results, not
individual effort. How could team evaluations be made so that individual efforts could be recog-
nized and rewarded?
3. What service organizations, private or public, would you like to see become more customer ori-
ented? How could this case be used as a model for that organization?
4. What are some major impediments to implementing customer-oriented teams in service organiza-
tions?
Chapter 08 – Adapting Organizations to Today‘s Markets
8-91
notes on discussion questions for bonus case 8-2
1. Are traditional bureaucracies set up to provide custom-made products to individual consumers?
Could they be, or is it always better to have customer-oriented teams design such products?
Traditional bureaucracies are organizations that have many layers of management who set rules
and regulations and participate in all decisions. Such an organization, by definition, would be unable to
swiftly respond to customer needs. Decision making needs to be placed close to the customer, not in suc-
cessive layers of management.
2. Anyone who has worked in team situations has discovered that some members of the team work
harder than others; nonetheless the whole team is often rewarded based on the overall results,
not individual effort. How could team evaluations be made so that individual efforts could be rec-
ognized and rewarded?
Team contributions are team contributions and difficult to isolate as individual efforts. In fact, the
3. What service organizations, private or public, would you like to see become more customer ori-
ented? How could this case be used as a model for that organization?
The chances are that almost every student’s list will contain (1) the U.S. Postal Service and (2)
your school. This case shows that the entire organization must be committed to the customer-oriented
4. What are some of the major impediments to implementing customer-oriented teams in service
organizations?
Service organizations are quite different from product-producing organizations in that there is no
Chapter 08 – Adapting Organizations to Today‘s Markets
8-92
bonus case 8-3
OFFICE ALUMNI
While few people would describe getting laid off or fired as a “graduating” from their company,
many businesses have created social networking sites for their “alumni” as the poor economy continues to
take its toll on American jobs. Whether an employee leaves voluntarily or is shown the door with a pink
slip, companies like IBM, Lockheed-Martin, and Dow Chemical have created LinkedIn and Facebook
sites that allow former workers to keep in touch, even if they move on to competing companies.
Part of the draw of these alumni networks is to provide a centralized spot for “boomerang” em-
ployees (those who leave the company only to be hired again later). As the deepening recession forces
companies to continue laying off staff, alumni networks keep the connection between company and indi-
vidual alive. Even if a person does not end up boomeranging, alumni networks have other benefits. Ideas
and insights shared between employees new and old on the network can be mutually beneficial. Many
sites feature inside industry news and job leads. Some alumni networks even offer exclusive deals on
health insurance for former employees.
Many companies are drawn to private social networks because it allows them to track and study
the topics being discussed on the site’s forums. Using online tools and software, employers can effective-
ly map out the goings on of not only the company, but also the skills and interests of the network’s con-
tributors. These tracking methods often help companies find the proper employee to suit their needs. In
one such instance, an accounting firm used its tracking software to rehire 31 boomerangs.
As for the disgruntled employees who would rather defame their former employer rather than
boomerang back in, trolling and angry dissention appear to be rare occurrences on the alumni networks.
Many execs say that a company’s most outraged alums choose to air their grievances on sites that are not
controlled by the company.x
discussion questions for bonus case 8-3
1. Will the presence of such alumni sites help the image of participating companies?
2. How do the alumni sites serve as a research base for participating companies?
notes on discussion questions for bonus case 8-3
1. Will the presence of such alumni sites help the image of participating companies?
It seems very likely that will be the net effect. The alumni sites are similar to a customer follow–
up so highly recommended in marketing.
2. How do the alumni sites serve as a research base for participating companies?
Companies are able to track and study topics discussed on the site’s forums. This puts them in touch
with the thoughts of employees and ex-employees concerning the company and its operations.
Chapter 08 – Adapting Organizations to Today‘s Markets
8-93
endnotes
i Source: Davd A. Kaplan, “Starbucks: The Art of Endless Transformation,” Inc., June 2014.
ii Source: Matthew Shaer, “The Boss Stops Here,” New York, June 16, 2013.
iii Sources: “The Costs of the Manhattan Project,” The Brookings Institute, www.brook.edu; “The Manhattan Pro-
ject: A New and Secret World of Human Experimentation,” ACHRE Report, Department of Energy,
www.eh.doe.gov; Miguel A. Bracchini, “Appendix: Key Figures in the Manhattan Project,” University of Texas at
Austin, www.me.utexas.edu; Colonel Cole C. Kingseed, “Racing for the Bomb: General Leslie R. Goves, the Man-
hattan Project’s Indispensable Man,” Parameters, March 22, 2003; Phillip Morrison, “The Manhattan Project’s
Taskmaster,” American Scientist, November 1, 2003.
iv Sources: Craig Torres and Anthony Field, “Campbell’s Quest for Productivity,” Bloomberg Businessweek, No-
vember 24, 2010; Vivien Lou Chen and Timothy R. Homan, “Small Businesses Keep a Lid on Hiring,” Bloomberg
Businessweek, January 6, 2011.
v Source: Mehul Srivastava and Moira Herbst, “The Return of the Outsourced Job,” Bloomberg Businessweek,
January 11, 2010.
vi Source: Liz Welch, “A Third Way to Pay,” Inc., July-August 2014.
vii Source: Sarah Shannon, “Fashion Retailer ASOS Sets Up Shop on Facebook,” Bloomberg Businessweek, Febru-
ary 17, 2011.
viii Source: Leigh Buchanan, “Bizarre Hiring Rituals,” Inc., March 1, 2010.
ix The Internet is a dynamic, changing information source. Web links noted of this manual were checked at the time
of publication, but content may change over time. Please review the website before recommending it to your stu-
dents.
x Source: Stephen Baker, “You’re Fired—But Stay in Touch,” BusinessWeek, May 4, 2009.