You are the CEO of a conglomerate with many businesses in many industries in many geographic regions.
a) Discuss what Goold and Campbell Style you are likely to adopt( justify your selection)
b) How do you manage synergies in the portfolio
c) How do you ensure companies you acquire fit into your Heartland' in the Goold, Campbell, Alexander Parenting- Fix matrix? Specifically outline how you intend to add value to the acquisition you make.
(A)
Conglomerates face the challenges involved in managing multiple activities in multiple markets. One such challenge involves determining the best corporate style to manage these units in order to add value, and potentially more value than other parents could add and prevent these businesses being handicapped by the centre. Essentially, putting one's eggs in different baskets" may reduce the risk in the overall portfolio but requires that the firms management possess the strong capabilities necessary to successfully execute this strategy. This in mind, the Goold and Campbell style that I would adopt is the strategic control style based on
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Because the company has many unrelated businesses, in many industries and in many geographic regions, it is quite unlikely that corporate centre management would be adept at the capabilities required to manage these businesses. Most corporate managers have experience in only one industry (or a few) and none realistically can be an expert in the wide variety of unrelated industries represented in a conglomerate. The business units' management is close to the markets in the different regions, familiar with the different cultures that exists in those markets, and is more likely to have intimate specialist knowledge of their particular businesses. They also need to be flexible and nimble at business-level decision making. As such at the centre we will focus on financial control, which does not require a lot of rich, industry-specific knowledge. Therefore the centre will impose a strict financial discipline of the sort GE's former chairman and CEO, Jack Welch imposed on all divisions- "Either become the world's top one or two in your industry, or expect your unit to be sold". Otherwise our corporate managers will experience information overload. The organizational structure will therefore be decentralized with substantial divisional autonomy. We will have little influence in developing strategies and there will not be a formal review of long term plans. We will only agree and monitor short-term financial targets for the businesses and provide support to the businesses in helping them to grow.
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
...le the business units to prepare strategic plans and budget and submit them to senior management to review and approve. This will benefit the company because in an unrelated diversified corporation, business unit managers have a greater influence in developing their strategies and budgets as they, not the corporate office, possess most of the information about their respective product/market.
The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values. These problems often come up in the dissatisfying results of spectacular mega-mergers. The lack of success and synergies in such mergers is often based in a clash of completely different cultures, values, and styles, which make it difficult to establish effective common systems and structuresBased on the case study, extensive research and annual reports of AT&T the writer has mapped AT&T in the different domains. AT&T should strive to attain a perfect circle as close to the centre as possible, which indicates total synergy, order and equilibrium. Where the circle is skewed drastic change is needed as it moves closer to the outer ring of chaos:
Corning shifted their focus from a domestic and exporting company to a multinational manufacturing company. The lack of specialization and ambiguous leadership imposed by the Houghton family faced the problem of a required organizational structure change. However, changing the corporate structure while imposed by these demands led to an inefficient structure hybrid structure that refuses to give specialized responsibilities to MacAvoy as a Chief Operating Officer, as he has to not only watching over operations globally, but is solely in charge of the North American market, creating an inefficiency with the Chief International Officer.
Cooper Industries has been expanding through diversification since 1996. Cooper’s requirements to acquire a company has three major components. The target company must be:
Organizational structure can be defined as the “formal arrangement of jobs within an organization” (Robbins & Coulter, 2009, p. 185). Having a defined and unified structure helps employees work more efficiently. Jacques Kemp, former CEO of ING Insurance Asia/Pacific, realized this need early on in his role. The company had been performing well and recently acquired another insurance company to become “one of the largest life insurance companies in Asia-Pacific” (Schotter, 2006, p. 4). However, Kemp’s proactive personality led him to seek out ways to achieve more efficient coordination between the regional office and business units (Robbins & Coulter, 2009). Kemp noticed that “most business unit managers did not even know the current corporate standards” and he began searching for a way to manage the managers (Schotter, 2006, p. 5). ING Insurance Asia/Pacific’s organizational structure was mechanistic and fairly well structured, but for a company that had recently been involved in a major acquisition and was divided across 12 geographically dispersed markets there was a great need to tweak this structure to unify the company (Schotter, 2006). If I had been in Kemp’s position as CEO, I would have made modifications to the organizational chain of command, formalized business processes, and used technology to stimulate collaboration amongst the region to help this company overcome organizational design challenges.
The company has diversified so much that it has lost its core competency. Also, the acquired businesses are irrelevant in nature. The tool business needs a ‘Business to Business’ type of marketing. However, some of the firms are ‘Business to Consumer’ (e.g. Bakery Business, Dry cleaning store chain) and ‘Business to Government’ (e.g. Firm engaged in Defence research work) as well. So, lack of integration of the business is one of the key issues we need to address.
Blue Nile is one of the largest jewelry companies that sell jewelry products online. Blue Nile was formed in the year 1999 (Arthur, 2007). It is recognized as the company with the largest volume of sales in the world. It was recognized by internet retailer, a US magazine, as established in terms of size more than three largest jewelry retailers that conduct their businesses online. It has won several business awards in its historical times. It has also been ranked as the leading company in internet based customer service by consumers in 2002. It is the only jewelry company known to have received this award. Blue Nile has been selling wedding and engagement rings to more than 80,000 partners between the year 2000 and in the mid 2006. Internet retailer also recognized Blue Nile as the leading with the best web in 2007. In 2006 it also received an award from Kiplinger’s as leading best online jewelry retailer.
In today's business environment, there is sustained pressure for companies to maximize productivity in order to be competitive in the marketplace. Many businesses are moving a variety of activities, such as manufacturing and product development, to countries with low labour costs. They are also opening up sales channels in many new markets. The resulting global organizations need to structure themselves, so that they can effectively manage operations across numerous locations. This paper looks at how the organizational structure of a global company influences decision-making at the regional level, and how this can affect the business performance. This paper will:
Ensign PC 2004, ‘A resource based view of interrelationships among organizational groups in the diversified firms’, Strategic Change, Vol. 13. pp. 125-137.
“People always overestimate how complex business is. This isn’t rocket science. We’ve chosen one of the world’s most simple professions.” In Jack Welch’s words, business is simple. A leader needs to supply his employees with the information, the resources, the vision, and the atmosphere to succeed and reward them when they do. Welch does not concern himself with the details of GE’s many business units; he only needs to ma...
The General Electric Company (GE) is organized with its chief executive officer, shareowner, and board of directors on the top of the pyramid, followed by their executive leaders and corporate staff. GE’s Board of Directors ensures the company serves the interests of shareowners and other key stakeholders with the highest standards of integrity and compliance. Serving equally as tough critics and wise counselors, they provide in-depth oversight of the major strategic issues of the company (General Electric Company, 2012). The authority officially vested in the board of directors is assigned to a chief executive officer (CEO), who occupies the top of the organizational pyramid (Bateman & Snell, 2011). There chai...
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Paul Walsh, CEO of Diageo, works alongside his management team on the executive committee of Diageo. The majority of business operations are done at their headquarters in London, United Kingdom. The management structure of Diageo is diverse and they have several executives responsible for various tasks throughout the company. On the next page, I have attached a visual aid to illustrate the management structure of Diageo and hi...
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