Strategic management is a vital element of any company’s functioning and existence, which is why it needs to be supported by all means possible. For this reason, the connection between the efficacy of strategic management implementation and organization’s characteristics such as its structure and design need to be explored further. In their study, Ruth M. Abuga and Jared Deya examine the connection between these variables, thus contributing to the improvement of strategic ,management by exploring the opportunities for organizational structure and design updates. Due to the meticulous and detailed analysis technique used in the article, its conclusions can be considered a legitimate and vital contribution to strategic management and the development of organizational structure and design.
The process of formulating and implementing a management strategy explored by the authors is linked directly to the experiences of multiple companies in the current economic setting. Due to the issues observed in the modern economic setting, the development of a competitive management strategy is quite challenging for most firms. Therefore, the reconsideration of the organizational structure and the effects that its design has on the creation and implementation of strategic management is critical to a company’s performance.
The study by Abuga and Deya should be credited for its detailed approach to structuring an article, with a clear introduction and a literature review, an accurate problem statement, a definition of the quantitative methodological approach, a thorough discussion, and a coherent conclusion. Specifically, the authors delineated that “human resource capability had an inverse effect on competitive advantage” (Abuga and Deya 253). The attempt at embracing the connection between the financial and organizational aspects of the management process appears to be the key strength of the article, whereas the use of purposive sampling prevents from getting a diverse result, thus weakening the research.
Overall, due to the coherent methodology and the comprehensive review, the authors have managed to connect the organizational design to the opportunities of improving strategic management approaches. Therefore, the study has become an important addition to the exploration of the organization structure and design area of business management. Nonetheless, further research addressing the subject matter on a more comprehensive scale will be needed for improved approaches for strategic management.
Work Cited
Abuga, Ruth Moraa, and Jared Deya. “Effect of organizational structure on strategy implementation: A case study of Safaricom Kenya Ltd.” International Academic Journal of Human Resource and Business Administration, vol. 3, no. 5, 2019, pp. 247-254.
Modern enterprises risk facing cash flow issues at different stages of their development. Such a situation is frequent in the contemporary environment, especially for small businesses. A single coffee shop represents such an enterprise category, meaning that the likelihood of cash flow problems is to be considered. First of all, such a business may experience a lack of cash reserve for emergencies. Coffee shops are highly dependent on a stable supply of resources, such as coffee beans, sugar, cream, and syrups. Accordingly, it is required to purchase them in a continuous manner in order to ensure the uninterrupted functioning of the enterprise. Under these circumstances, it becomes difficult to form a cash safety net that would become necessary if unplanned expenditures arise. Thorough budget analysis, discipline, and planning will allow the management to create at least a small reserve that will help the enterprise through its financial issues.
Second, an increase in overhead expenses may also entail cash flow problems for a coffee shop. More specifically, rent payments present the highest risks in this regard. It is normal for an enterprise to seek the best value in terms of location. It should be well-visited, convenient, attractive at a reasonable price. Nevertheless, some owner may overrate their projected revenues, determining the acceptable rent by the highest income threshold.
As a result, increased overhead expenses apply additional pressure on the enterprise. Evidently, such a situation should be prevented, as resolving this crisis might require the coffee shop to relocate. Finally, in small businesses, employee theft is a rather common occurrence. This matter is highly delicate, and its resolution requires either enhanced control that may disturb workers or the establishment of positive, trusting relationships with them.
Organizational Design
The flaws in organizational design pose serious long-term risks for young enterprises. Small organizations are especially susceptible to the delayed impact of improper organization and imprecise distribution of duties. In this situation, the involvement of each member of the leadership is rather sporadic, responding more to immediate necessities than long-term requirements. As a result, once the enterprise grows and becomes more important, these organizational flaws are revealed, entailing a crisis of leadership. Evidently, as the new project is launched, its founders are eager to proceed to actual operations. They dedicate a lot of time and effort to the creation of the enterprise, and their involvement can often be conditioned by convenience rather than purpose. As in many other cases, the prevention of the crisis of management is better than cure.
Prior to the actual launch of a business, it is necessary to outline the primary areas of responsibility. In other words, each manager needs to understand their duties and span of control since day one. For example, if one of the founders is to be responsible for financial matters, he or she should concentrate on them exclusively without interfering with other affairs. This way, each aspect of the enterprise will remain consistent.
On the other hand, the reality of the discussed situation rarely presents a chance to reimaging prior decisions. In most cases, the crisis of leadership emerges when an enterprise has already gained considerable pace and complexity of the organization.
Under these circumstances, it may be useful to benefit from external expertise. A seasoned manager who was not involved with the foundation of the enterprise can provide valid, fresh insight into the current issues. Having obtained an objective evaluation, the founding entrepreneurs will be able to make the necessary adjustments. It is vital to optimize the distribution of duties, aligning the policies and rules in accordance with the uniform perspective. In the end, external expertise may become the best solution by counteracting the inevitable biases of the founders in regards to their enterprise.
Organization training design is an activity that involves six key steps, namely, organization analysis, laying out training program objectives, creating a detailed lesson plan, creating a before, during and after matrix, evaluation rating and doing cost benefit calculations.
The outcome of the design process is a training program whose integration into an organization facilitates the realization of the organization’s mission as it is outlined in its mission statement. According to WebFinance, a formal definition of an organization is a social unit made up of people who systematically work together with unity of purpose to achieve collective goals that reflect the mission of the organization (2010, 3).
For the synthesis project, the process of organization training design is applied to Netsoft, a private sector company. Netsoft is a global telecommunications company that has it’s headquarter in the United States.
It has one of its branches in Kenya, Netsoft Kenya, where a submarine fiber optic communications cable is to be installed that will link Africa with the rest of the world. The fiber optic cable is to bring a world of opportunities not only to the country but to the continent as well. Netsoft wants to seize this opportunity and increase its dominance in Africa’s internet market as a strategic move towards increasing its earnings.
However, its five-telecommunication engineers in Kenya are not conversant with fiber optic technology that is already in use in the rest of the world (Kenya is a third-world country).
The engineers are, however, individuals with high academic qualifications and with vast experience in telecommunication and its related fields. Thus, considering these facts the top management of the company has commissioned a one-day training program to teach the Kenyan engineers on fiber optic technology.
Discussion
Organization analysis
According to Miller and Osinski, organization analysis is one among the three levels of the needs assessment phase of designing an organization’s training and development program (2002, 2).
The other two levels as given by the authors are task analysis and individual analysis whereas the other phases of designing an organization’s training and development program are instructional objectives (2nd phase), design (3rd phase), implementation (4th phase) and evaluation (5th phase) (Miller and Osinski, 2002, 1-2).
The purpose of the needs assessment phase is to aid a training manager set the objectives of the organization’s training program. Therefore, by the end of the needs assessment phase the training manager has to have established if the training program is necessary and if it is, what is it on and who are the participants.
It is the idea that a properly conducted needs assessment phase reveals no conflicts between the interests of stakeholders and the objectives of the organization’s training program.
The objective as to why organizational analysis is undertaken is to improve the efficiency, performance and output of an organization (Wikimedia Foundation, Inc., 2011, 1).
To achieve this objective the analysis procedure assesses the organization’s systems, capacity and performance in an aim to create an understanding of the behavioral relationships, structures and technology in place and in use in an organization (Wikimedia Foundation, Inc., 2011, 1).
In organizational training design, the theory and models underlying organizational analysis are customized so that the outcome of the procedure is concepts that form a strong basis on which to successfully implement an organizational training program.
At the end of an organizational analysis procedure that is part of an organization training design, it is fundamental that 10 things be known.
The first is how the content of the training program affects the relationship between the organization’s employees and its clients. The second is the degree to which the organization’s suppliers, partners and clients need to be informed about the contents of the training program. The third thing is how well the training programs augment with the strategic needs of the organization.
The fourth thing is whether to devote the organization’s resources to the training program. The fifth thing is what input is necessary from the organization’s mangers and peers in order for the training program to succeed.
The sixth thing that needs to be known is the features of the organization’s internal environment that can hamper the success of the training program. The seventh thing that needs to be known is whether experts can be found who can aid in the formulation of the training program and who enlighten on the correlation between it and the business needs of the organization.
The eighth thing that has to be known at the end of the organization analysis procedure that is part of an organization training design is the perception that employees have towards the training program. The perception should be described either as a waste of time, an opportunity, a reward, a punishment or even a combination of these.
The ninth thing that has to be known is the section of people in the organization who are interested in the success of the training program. The tenth thing that needs to be known is whose support is critical to the success of the training program.
In addition to these 10 things, Miller and Osinski point out that an organization analysis procedure should also identify global markets that are growing and economy state and its impacts on organization’s operating costs and (2002, 3).
How training program aligns with Netsoft’s strategic needs
There is a need for the company to seize the opportunity presented by the submarine fiber optic cable as this is essential in aiding the company realize its mission which is to become a global leader in telecommunications.
The training program equips Netsoft’s Kenyan engineers with the knowledge and skills for designing, implementing and administering fiber optic networks. This paves the way for the company to assert its dominance on Africa’s internet market. Thus in this way the training program aligns with Netsoft’s strategic needs.
Features of work environment that might interfere with the training
A feature of the work environment that may interfere with Netsoft’s training program is lack of up-to-date training facilities. Considering that the training is to take place in third-world country getting state-of-the-art facilities to conduct the training can be a challenge.
Another feature of the work environment that may interfere with the training is poor organizational culture at the branch. It is possible that the organizational culture in place at the company’s Kenyan branch does not encourage or motivate its employees to learn new things and thus this might be a considerable hindrance.
How employees will perceive training program
The engineers and the other employees in Netsoft’s Kenyan branch should perceive the training program as an opportunity. If the training program is a success it is the green light for the company to make strategic moves that will enable it assert its dominance in the African Internet market. This means more earnings for the company, which in turns means likely salary increases for the engineers and other employees in Netsoft Kenya.
Persons or groups interested in the success of the project
The top management of Netsoft is interested in the success of the training program. This is because from it they can take hold of the opportunities presented by the submarine cable and make huge profits for the company at minimal costs.
Training objectives
The second key activity in organizational training design is setting the objectives of the training program, which can be thought of as sub-goals (SIL International, 1999, 1). The objectives of the training program are a byproduct of the needs assessment phase. To create a learning atmosphere it is very helpful that the participants of an organization’s training program understand the program’s objectives.
The objectives of an organization’s training program capture for each individual training activity in the program its purpose and expected outcome. Depending on a number of factors that include the structure of the organization’s training program objectives can be set for the various training sessions and the overall program.
It is imperative that trainees not only understand but as well accept and commit to realizing the training objectives set for a given organization’s training program especially when the objectives double up too as the organization’s goals.
A training needs analysis is undertaken so that an organization’s employees can appreciate the need for a training program as well as why they need to learn. Thus, this is why it is a sound recommendation that the training objectives be a derivative of a training needs analysis.
In addition to streamlining the learning process, training objectives facilitate the identification of certain outcome types that when measured evaluate the effectiveness of an organization’s training program.
The first of the three components of a training objective is a statement, which clearly describes to an employee what he or she is expected to do. The second of the three components of a training objective is a statement, which describes to the trainees the acceptable performance quality or level.
The third of the three components of a training objective is a statement that describes to an employee for a given outcome the conditions under which he or she has to perform in to achieve it. It is important that a training objective always describe performances that are observable and measurable.
Donald Kirkpatrick’s Four Level Evaluation Model is a useful procedure for judging an organization’s training program (Big Dog & Little Dog’s performance Juxtaposition, 2010, 1).
The constituents of the model are four levels, namely, reaction, learning, behavior and results. In the reaction, level of the evaluation procedure a measurement is done of how the participants of an organization’s training program react to the process of learning, that is, their perception towards the program. The measurement is done with the aid of attitude questionnaires that are filled by the participants.
In the reaction level of the evaluation procedure measurement of three aspects is done. The first is the extent to which participants change their attitude resulting from the organization’s training program.
The second is the extent to which participants have improved their knowledge resulting from the organization’s training program. The third is the extent to which participants have increased their knowledge because of the organization’s training program. In the performance level of the evaluation procedure testing is done to determine the participant’s capabilities to utilize the skills they have acquired on the job place.
In some cases, performance evaluation is done through observation only. In the results, level of the evaluation procedure the effectiveness of the organization’s training program is measured.
Objectives of Netsoft’s training program
Using Kirkpatrick’s four level evaluation framework two reaction level objectives for Netsoft’s training program are:
Create an understanding of what fiber optic technology is
Enable participants appreciate its importance in realizing company’s strategic needs and mission
The three behaviors are:
Understanding
Appreciation
Pro-activeness
The three criteria are:
Verbal quiz
Paper quiz
Observation
The three conditions are:
Teaching facilities are sufficient
Participants agree that they have understood course material
Quiz is the same for everyone
Using Kirkpatrick’s four level evaluation framework two learning objectives for Nestsoft’s training program are:
Participants are able to explain the underlying concepts of fiber optic technology
Participants can outline the strengths and weaknesses of the technology
The three behaviors are:
Competency
Understanding
Mastering
The three criterions are:
Verbal quiz
Paper quiz
Observation
The three conditions are:
Teaching facilities are sufficient
Participants agree that they have understood course material
Quizzes are the same for everyone
Using Kirkpatrick’s four level evaluation framework two performance objectives for Netsoft’s training program are:
Participants are able to successfully design, implement and administer fiber optic networks
Participants are able to troubleshoot faulty fiber optic networks
The three behaviors are:
Competency
Understanding
Mastering
The three criterions are:
Practical test
Verbal quiz
Observation
The three conditions are
Teaching facilities are sufficient
Participants agree that they have understood course material
Quiz and test is the same for everyone
Using Kirkpatrick’s four level evaluation framework two results objectives for Netsoft’s training program are:
Training program yields an acceptable ROI
Training program yields an acceptable CBR
Detailed Lesson Plan
A detailed lesson plan contains a variety of components. These include course title, lesson title, lesson length, learning objectives, target audience, room arrangement, materials and equipment needed, evaluation and assignments as well as comments from the trainer (Wikimedia Foundation, Inc., 2011, 1). The course title is the subject heading of the field the trainer intends to teach.
The course is derived from wide field of knowledge or specialization. The degree of extend of the content of a subject vary from one course to another. The inclusion of course title is important to the lesson plan because it communicates to the trainee the overall scope of knowledge to be covered by the different lesson sessions in that course.
Lesson title states the scope of content to be covered in a single lesson session. The contents of a lesson title are a subset of course title. Lesson sessions act as building blocks of a course. Depending on the scope and complexity of title it can be divided into several lessons which are convenient to both the trainer and trainee. One of the main importances of having a lesson title is to delineate the content to be covered during the lesson.
This avoids the chances of veering of from the intended content. Lesson length in a lesson plan details the duration which a single lesson will last. The lesson length will be determined by a number of factors: availability of time, complexity and scope of the subject and cost of executing the lesson.
When deciding on the lesson length, there is need to determine when trainers are to avail themselves while the program is on course, the time constraints on the trainees, program breaks for snacks, lunch and dinner as well as opportunities for practice and feedback. Some lessons may last full day while others are part time.
Learning objectives are the thematic areas within a lesson the trainer intends to communicate and be grasped by the trainees. It is important to factor in the lesson plan the genre of the target audience. The target audience determines the level of communication and interaction between the trainer and trainees.
The prerequisites encompass trainee and instructor. Trainee prerequisites refers to possible preparation requirements, necessary skills or the scope of knowledge needed to be trained on prior training sessions or successful completion of tests or certificate or degree programs. Instructor prerequisites points towards what is needed to be done to prepare for the session as well as other educational qualification necessary for the trainer.
Before the lesson execution the room arrangement of the trainees is another important component to consider. For instance, the room could be arranged in fan-shape so that the trainees can clearly see the trainer as well as their peers. Fan-shape is also suitable for role play exercises that entail working and organization into groups of two or three. In the lesson plan the trainer ought to include the materials and equipments required.
These materials and equipments act as aids to training and enhance the ability of the trainer to relay information effectively.
The assortment of materials and equipments in any given set up vary, but, they may include a video cassette recorder (VCR), pens, overhead projector, transparencies, and VCR tapes with titles of the lesson. In the case of evaluation and assignments, role plays could be instituted. Comments imply on the overall appraisal of lesson outcomes and remarks on the way forward.
Detailed lesson plan for Netsoft’s training program
The detailed one-day lesson plan for Netsoft’s training program is shown in appendix A.
Before, during and after matrix
The before, during and after training matrix is a table-like structure that serves two purposes. The first purpose is that it facilitates the diagnosis of problems that are associated with transfer of training. The second purpose is that it serves as an assurance that the transfer of training activity was done to completion.
The constituent elements of the matrix are the training manager’s, trainer’s and the trainee’s responsibilities before, during and after learning has been transferred. Each of these elements is entered into its appropriate cell in the before, during and after training matrix. Figure 1 in appendix B shows an empty before, during and after training matrix.
Before, during and after matrix for Netsoft’s training program
The before, during and after matrix for Netsoft’s training program is shown in appendix C
Evaluation rating
By doing evaluation rating, a rating form is useful in measuring the behavior of individual participants in an organization’s training program. The rating form is usually accompanied with a corresponding rating scale.
The rating form usually has a number of items for which the participants of the organization’s training program get graded for. The measuring process of the evaluation rating activity usually has its designated period in which to measure the behaviors of the participants.
In an example of an evaluation rating procedure it may be required that the sensitivity (which is the behavior) of a manager be measured using data collected for 3 months. Sensitivity in this case may be defined as the manager’s perception of the personal problems, needs and concerns of others.
The rating scale may be
to represent always,
to represent usually,
to represent sometimes,
to represent seldom and
to represent never.
To measure the behavior (sensitivity) a question can be put forward as to how many times in the three months the manager has elicited the perceptions, feelings and concerns of other individuals? Using the rating scale the answer to this question can be 1 to imply that the manager over the past 3 months always elicited the perceptions, feelings and concerns of other individuals.
Evaluation rating for Netsfoft’s training program
The evaluation rating done here for Netsoft’s training program follows a 60 days assessment of level 3 (performance) objectives. In this rating, the behaviors to be measured are competency, understanding and mastering. Competency is how well vast a participant is with fiber optic technology. Understanding is how well a participant synthesizes the various concepts of fiber optic technology.
Mastering is how well a participant retains the knowledge he or she as acquired on fiber optic technology. These three behaviors are measured on a scale of 1 to 3 such that 1 represents poorly, 2 represents fairly and 3 represents well.
Depending on how a question is answered, a participant can only score one of these ratings. After answering all the questions, the average is taken and the participant’s level of competency, understanding and mastering determined.
For competency the questions to be asked are:
What is fiber optic?
What is fiber optic technology?
Which are the concepts that underlie the technology?
For understanding the questions to be asked are:
Explain the fundamental concepts underlying fiber optic technology
Explain are the advantages of the technology?
Explain are the disadvantages of the technology?
Explain the standards that govern fiber optic technology
For mastering, the questions to be asked are:
Name the advantages of the fiber optic technology
Name the disadvantages of the technology
Name the networking standards that govern the technology
Cost benefit calculation
In the doing cost benefit calculations stage of the organizational training design two important values are determined which are the Benefit Cost Ratio (BCR) and the return On Investment (ROI). These two values are calculated from the costs that an organization as incurred to successfully complete the training program and the benefits it has yielded.
The BCR is a ratio that gives the magnitude of correlation between the costs an organization as incurred to the successfully complete the training program and the benefits it has yielded (Investopedia, ULC, 2011, 1). It is given as the quotient of the total benefits and total costs of an organization’s training program.
The ROI, sometimes given as a percentage, is a performance measure that evaluates the efficiency of an organization’s investment, which in this case is the training program (Investopedia, ULC, 2011, 1). The ROI is given as the quotient of the net total benefits realized from an investment and the total costs of the investment. If the ROI is to be given as a percentage, 100 multiply the quotient.
Cost Benefit calculations for Netsoft’s training program
From the data given in part F of the synthesis project, the BCR for Netsoft’s training program is, BCR = Total benefits/Total costs = 329,201 / 164,863 = 1.9968. From the data given in part F of the synthesis project, the ROI for Netsoft’s training program is, ROI = ( Net total benefits/ total costs) 100 = ((329,201 – 164,863) / 164,863) 100 = 99.6816%.
Conclusion
The report’s main conclusion is that organization training is important in helping a company achieve its mission and goals and thus each stage of the organization training design process should be carried out properly. The goals to be attained as a result of an organization’s training program should be in line with the strategic needs of the organization in which the program is implemented.
The analysis of the OAD case regarding two companies enables the students to understand the importance of management style in the overall performance of the organization. Those who will analyze the details pertaining to the case will come to realize that the management of a particular organization is dependent on leadership and management style of the top executive and how he or she deals with the different factors that affect the organization (Wasson, 2006, p.12).
In this particular case it is important to focus not only on the management style of the two leaders but also on the different factors that contributed to the outcome of the bidding war. It is of great importance to learn from the lessons that can be gleaned from this study, especially when it comes to developing strategies to ensure the sustainability of the company.
It can be argued that ACME was at the right place at the right time and they benefited from high demand of electronic products. But in an instant the circumstances can change so quickly and it may not favor them the second time around.
Background
Both Acme and Omega came from the same parent company. When the parent company was bought by a Cleveland manufacturer the buyer had no interest in the electronics division of the said company. Thus, this division was subsequently divided into two smaller companies based on the location of their respective manufacturing facilities. Thus, the facility located in Waterford, Pennsylvania became the Acme Electronics Company while the facility located in Erie became the core component of the Omega Electronics Company.
The two investors retained the core personnel that were working at the time when they bought their respective businesses. But Acme promoted its general manager to President while Omega hired an outsider, to fill in the position of president of the company.
In the former it was the promotion of someone who has known the electronics business for a very long time especially when it comes to the projects that both Acme and Omega are competing against. On the other hand Omega hired someone from a research laboratory. This professional background would play a major role in the development of Jim Rawl’s leadership philosophy that he utilized in dealing with the problems he encountered at Omega.
The different approaches to hiring the top leader of the company can help explain why Acme surpassed Omega in all aspects of the business. Acme is more profitable than Omega. Acme can hire more people than its rival. This means that it is able to secure more contracts and expected to work on more projects as compared to Omega. However, both companies will be tested when they come across a project that forced them to build from scratch.
Linkage to OAD
This case relates to the issue of organizational structure (Daft, 2007, p. 99). It highlights the pros and cons of two types of organizational structures: the organic versus the mechanistic structure of corporate governance. It is important to tackle this issue and based on the details of the case there are certain ramifications if a leader chooses organic over mechanistic form of management.
In this particular case the author made a clear argument that there is no method that can be used to deal with any specific issue or problem that would crop up in the course of a business cycle. However, there are principles that can be observed based on how Rawls and Tyler dealt with the situation. In the end management styles and leadership principles are overly dependent on the context of the issues that the leader has to deal with.
Compare and contrast the management styles of Acme and Omega.
Omega utilized an organic management style. This is based on the philosophical beliefs of the CEO Jim Rawls. It requires a certain leadership philosophy to develop a management strategy that relies more on networking and maintaining close relationships with co-workers.
It is easy to understand why many leaders prefer this management style as opposed to the more formal method utilized in big corporations. In most cases, organic management styles are common in small firms. Due to the size of the company the CEO can afford to use a more personal approach. A more technical term is the utilization of a flat structure as opposed to the hierarchical structure found in most firms (Baligh, 2006, p.15).
The second reason why an organic style is chosen over a mechanistic form of management has something to do with the history of the firm. In the case of Omega, the company was an offshoot from a bigger firm. Jim Rawls was an outsider and therefore he has not mastered the form and function of an electronics company.
His former job required him to oversee an electronic research laboratory. Although a research firm focused on developing cutting-edge technology for the electronics market has many things in common with an electronic manufacturing firm it can also be argued that these two are worlds apart.
The laboratory background of Jim Rawls also explains why he utilized a flat structure and insisted that he did not believe in the importance of organizational charts. In the laboratory there is a greater need for collaboration because engineers and scientists are dealing with theoretical problems and issues that they have never encountered beforehand. Thus, they need to build professional working relationships that entail sharing of information.
John Tyler on the other hand believes in creating an organization that is managed like the military. Precision and speed is of utmost importance in a manufacturing facility. An electronics laboratory can afford to make mistakes and can afford to have slight delays in their projected goals.
This is based on the fact that the laboratory does not have a clear deadline when it comes to the delivery date of their products. People working in the laboratory do not have to worry about the cost of the experiment because they are paid to produce experimental results. But there is nothing experimental with a manufacturing firm. The sub-contractors like Acme and Omega are expected to deliver on time and with lowered costs.
How do the differences between the companies’ management styles explain the way they coordinated the production of the prototypes?
These two types of management styles were heavily contrasted when Acme and Omega were faced with a new challenge. In the past they had to manufacture printed electronic circuits. But at the decade of the 1960s came to a close, printed electronic circuits was about to be taken over by integrated circuits.
As a consequence both Acme and Omega had to find new markets to be able to utilize the full power of their manufacturing facilities. In 1966 a photocopier manufacturer asked both companies to submit 100 prototypes of an internal memory unit that is built into the copier. This project requires the use of integrated circuits.
Both companies where treading into uncharted territories and in order to deal with the new challenge Jim Rawls and John Tyler knew they had to start from scratch. How they complied with the requirements provided a glimpse into the inner-workings of a mechanistic and organic management styles.
It is interesting to find out that Omega edged out Acme in the production of 100 prototypes. Omega passed the test with excellent results. Acme on the other hand failed miserably and their reputation was close to tatters. The explanation can be seen in how effective the organic management style can be when faced with a new problem.
The secret of Acme is in its efficiency. But efficiency as demonstrated in this study is borne out of routine. In other words, Acme was able to surpass Omega for many years because John Tyler, the head of the said firm had a clear understanding of the industry. The same thing cannot be said of Jim Rawls who was relatively inexperienced when it comes to this particular industry.
Although, Acme had an excellent track record it soon became evident that new projects, with new requirements require an organic management approach in the initial phase. John Tyler used a more mechanistic method in dealing with the problems of a tight schedule and unreliable suppliers.
John Tyler was in unfamiliar territory for probably the first time in his life as the head of an electronics company. They had to deal with other companies that they know little about. This unfamiliarity is the reason why they did not know that the main supplier of a memory chip shuts down during the holidays.
Jim Rawls on the other hand succeeded because the lack of formal structure enabled his engineers and other employees to share ideas. The purchaser may have problems with their suppliers but an engineer who is not part of the procurement departments happens to know of an alternative component that they can use.
John Tyler and his management style prevented his people to share ideas that are crucial when it comes to developing prototypes. Jim Rawls understood this perfectly because in his previous job he was familiar with the requirements of developing a prototype.
If Omega was so much more effective than Acme, why didn’t it win the final contract?
Omega came on top and defeated Acme in the said bidding war. However, the final contract was awarded to Acme. Part of the reason was that Acme already built a reputation when it comes to efficiency. It can be argued that Omega also demonstrated its ability to become efficient especially in the way they handled the delivery of the 100 prototypes with zero error. Nevertheless, there is one particular factor that worked in favor of Acme. The industry experienced high demand. Therefore, the client cannot afford to simply rely on one company.
The electronics boom of the 1960s enabled these two companies to continually share a significant portion of the market. In the long run this was beneficial to Acme because they were able to correct their mistakes. The mechanistic approach enabled them not only to become efficient but also cost-efficient.
What changes would you recommend to Acme and Omega?
Based on the case, it would be best if the leaders realize the importance of using both organic and mechanistic approach (Wesson 25). In the event that a prototype is needed, the organic management style is well-suited for this project since it would be the first time that the company has to deal with the specific requirements of such an assignment.
On the other hand when the firm has already made the necessary adjustments then it would be best to utilize a mechanistic approach. This is important because both Acme and Omega will encounter significant changes in the future and both must learn to adapt to changing needs of the industry (Landy & Conte, 2010, p.296).
Do you think Acme and Omega should merge to better compete in the future?
It is not advisable for these two companies to merge. The differences in leadership philosophy are too significant to be bridged. John Tyler will never be able to work under Jim Rawls. He seems to believe that he knows more about this industry as compared to his competitor. On the other hand a merger will enable both companies to reach a high-level of efficiency.
A merger enables both companies to create a competitive advantage over other firms. These two groups can secure a significant portion of the electronics manufacturing market in their respective region. But for this to succeed, Acme has to absorb Omega in order to prevent conflicts in leadership styles.
Conclusion
This case study demonstrates the need to be flexible especially when an organization is faced with a new challenge. Due to the need to build a prototype, Acme was forced to tread into unfamiliar territory. As a result they were unable to setup a process that would have enabled them to work more efficiently.
Omega on the other hand used the organic approach to solve a problem, a technique familiar to Jim Rawls because he used to work in an electronics laboratory. But in the long run the weakness of this approach was made evident. It is important that both leaders appreciate the strengths and weakness of both management styles in order to develop a sustainable business model.
Reference List
Baligh, H. (2006). Organization Structures: Theory and Design, Analysis and Prescription. New York: Springer.
Daft, R. (2007). Organization Theory and Design. OH: South-Western Cengage.
Landy, F., & Conte, J. (2010). Work in the 21st Century: An Introduction to Industrial and Organizational Psychology. New York: McGraw-Hill.
Wasson, C. (2006). System Analysis, Design and Development: Concepts, Principles, and Practices. New Jersey: John Wiley & Sons.
In the book, ‘Levers of organization design’ Simons (2005, pp. 1-15) explores the tensions of organization design (strategy and structure, accountability and adaptability, ladders and rings, self-interest and mission success), which are driving the proper design and functioning of various organizations.
Here, the author notes that various forces, including new technologies, globalization, competition, and the enhanced capabilities of workers are threatening the stability and growth of different organizations in the twenty-first century as opposed to earlier years.
Unfortunately, Simons (2005, p. 1) notes that despite the significant changes in the current market, managers are still holding the critical role of decision-making, which has not changed as much over the years. In conclusion, the author notes that there is the need to balance the tensions of organization design in order for managers to align their organizations relative to the current changes in the market (Simons, 2005, pp. 1-15).
Article Analysis
Organizational design can be defined as a system of accountability that governs the delegation of duties according to positions as well as legitimizing the rights of workers who are charged with the responsibility of setting goals, instructing, receiving information, or influencing others (Simons, 2005, p. 17). This also defines the structure that has been used by various organizations over the centuries.
However, starting the twenty-first century going forward, it is obvious that significant changes in the operating environment of organizations is changing or expected to change. As a result, considering that the effects of organization design are long-lasting, the importance of organization design is extending far beyond managers and CEOs.
This implies that for anyone who is responsible for initiating the achievement of goals through giving instructions or assigning resources to other people, it is important to understand the implications of one’s choices, and this includes organization design.
Accordingly, the future of organization design is now pegged on how well people understand the unique challenges and tensions facing different design choices. This will also include understanding the dynamics of the four tensions of organization design. For instance, the tension between strategy and structure will drive both organization design and organizational crises.
It is obvious that markets are changing very fast with the focus shifting towards customers. Consequently, new technologies coupled with decreasing prices are limiting the product life-cycles while increasing competition. Therefore, a good organization design must reflect the changes inherent in the market, which means that the structure should follow the strategy.
On the other hand, the tension between accountability and adaptability entails the need for managers to shift their roles from monitoring compliance toward managing accountability for results. This approach will ensure that workers have the role of setting result-oriented goals (Simons, 2005, pp. 1-15).
Further, increased accountability will increase tension in workers considering that they have to experiment and adapt to the new working environments. Here, managers have the role of encouraging their workers to look for new ideas and test them by providing resources for innovation.
Most importantly, as opposed to the pyramid design of monitoring accountability, the tension between ladders and rings will ensure that organizational design reflects the ability to influence decisions both vertically (ladders) and horizontally (rings).
Finally, the tension between self-interest and mission success will seek to bring together different personalities sharing different interests in order to get them working toward a common goal, mission success.
This will also entail addressing the inherent assumptions about human behavior (Simons, 2005, pp. 1-15). Ultimately, an organization that will achieve to balance the four tensions of organization design stands a better chance of claiming a larger market share in the twenty-first century going forward.
Reference
Simons, R. (2005). Levers of organization design: How managers use accountability systems for greater performance and commitment. USA: Harvard Business School Press.
Organizational design is a framework that an organization applies with the objective of realizing its vision. This process involves coordinating various structural components of the organization in a certain manner. The paper will focus on literature review of organizational redesigning by narrowing down to departmentalization, specialization, spans of control, centralization and decentralization, and chains of command as evidenced by various scholarships in the field.
Summary and analysis of scholarships in the field
In most instances, the success and failure of an organization are attributed to its design or management’s ability. According to Johnson et al. (1973, p.144), an excellent organizational design should be flexible, economical, simple, and acceptable. Various theories have been put forward concerning organizational redesigning.
The major theories of organizational redesigning are the neoclassical and classical theories. Scholars like Weber and Taylor put forward the classical theories. According to this school of thought, organizational redesigning should be founded on high organization efficiency. To the scholars, organizations can perform best when their design is grounded on efficiency.
In fact, Dobbin (1994, p.138) posits that organizations that will adopt inefficient designs will soon be eliminated by the environment. Changes in the spans of control, departmentalization, chains of command, and centralization and decentralization should always target on improving an organization’s efficiency.
The second category of scholarship is the neoclassical school of thought that comprises theories that were put forward by Sapru, Argyris, Wissest, and McGregor. According to this school of thought, organizational design should be centralized on basic human needs and people’s ability of self-expression (Taylor, 1911).
Organizational redesigning should enable human beings involved in the organization to express themselves and have their basic needs fulfilled. To these scholars, the most important thing about organizational redesigning is to be people-focused. Analysis of these scholarships reveals that organizational redesigning is imperative to the development.
Moreover, some organizational designs are more efficient and effective in relation to others. Johnson et al. (1993) affirm that the major determinant of the level of success of a certain organizational design is the level of skills that the designer has and the management quality. In some instances, it depends on both the management skills and managerial operation skills.
From deeper analysis, one will further realize that the key building blocks of a good organizational design are flexibility, reliability, simplicity, acceptability, and design. These elements can further be summarized into design functions, operations, and design functions. The design functions involve flexibility, simplicity, and reliability.
Design and operation functions involve acceptability and economy. However, there exist great links between the two major functions. For example, economy and reliability will depend on simplicity. In addition, both the classical and neoclassical theorists agree that organizational design must be geared towards achievement of organizational goals.
A cordial relationship and acceptance of the preferred design must exist between the designers and the implementers. Johnson et al. (1973) also say that an organizational design may be good though the implementers can easily fail it. Lawrence and Williams (1967) affirm that, in organizational redesigning, differentiation should enable various tasks that fit together to coexist.
Moreover, human resources that work together having similar knowledge and skills should be put together. Lawrence and Williams (1967) further note that departments that are coordinated by their functions should also be put in one line.
Finally, analysis of these scholarships portrays that, in both classical and neoclassical theories, tasks are allocated based on functions. In fact, the major role of organizational redesigning is to plan, allocate responsibilities, and to structure power.
Relationship between scholars and their schools of thought
There exist a link between scholars behind the classical and the neoclassical theories. Although one school of thought focuses on efficiency as the other focuses on people, the two theories aim at achieving organizations’ vision. In fact, Daft and Armstrong (2009) assert that the classical scholars propose that organizational designs should enable the proper functioning of both bureaucracy and scientific management.
Both of these are meant to promote efficiency. According to Weber (1968), organizational design should focus on creating jurisdictions for its human resources. This argument means that, for organizations to attain a good level of efficiency that the classical school of thought proposes, various functions should be designated.
Weber says that, with bureaucracy, the occupants of top offices become the leaders of the people under them. This strategy promotes checks hence efficiency. The classical theorists also pose it that all people who are involved in the implementation of this design must be trained on how to perform their duties.
This exercise ensures that there is reduced wastage from scrap and errors. Training also promotes efficiency in that well trained workforce will avoid repetition of similar duties. The classical school of thought also argues that efficiency is achieved through time management. When every person in the design implementation process is trained, there is no time wastage and no time for correction and or induction.
The supervisors can perform their duties effectively. In addition, classical theorists purport that, when organizational designs follow their argument, employees will exploit their full working capacity because, they are well trained and supervised. This effort will surely lead to efficiency realization.
Finally, when this school of thought is applied, the organization’s rules and regulations are likely to be followed. Weber (1968) argues that bureaucracy enables the workforce of certain organizations to stick to the organizations’ rules. In comparison, the neoclassical school of thought focuses on people and self-expression. This school of thought is also referred to as human relations.
Scholars claim that the theories put their basic concerns on the human resources in organizations. According to Weber (1968), the neoclassical perspective is to ensure that leadership, free expression, and employee morale are prioritized in organizational redesigning because the human resources of all organizations have an internal environment that affects how they behave.
The conditions that a certain organization accords human resources will determine how they respond to duties. This school of thought is for the idea that, if organizational designs were people-focused, they would always meet their objectives. In fact, Weber (1968) says that proponents of the neoclassical school of thought are completely opposed to the classical school of thought proposed by scholars Weber and Taylor because their scholarship focuses on structures and not human resources.
The argument is that structures alone cannot yield effectiveness as people can. To the scholars of the neoclassical school of thought, efficiency can only be realized if the organizational designs begin by focusing on people, as opposed to efficiency devices. According to Weber (1968), organizational designs should focus on better treatment of people as resources.
When organizations focus on the human resources, they are able to achieve their ambitions and to meet their needs thus acting as a motivation the workforce that yields better results. The neoclassical theorists pose it that, when employees’ welfare is well managed, teamwork is achieved. In fact, according to Weber (1968), when an organizational design allows its workforce to interact freely, a sense of belonging is nurtured thus reducing the rate of turnover.
Weber (1968) argues that proper leadership and counseling in organizations can promote a free environment through communication. On their side, the classical theorists claim that the neoclassical theorists emphasize only on the social aspect. To them, organizations are majorly set up to meet certain production objectives, which should guide redesigning.
Complexities of organizational change process
Changing the design of an organization is a complex undertaking because organizations comprise both internal and external environment. People in the organization will all require their values, needs, and preferences to be considered during restructuring. Every organization is unique in a certain way. The way organizations are led, the way decisions are made, and the way employees interact vary from one organization to the other.
An organizational design that perfectly works for one organization may completely become dysfunctional in another. Every organizational designer should realize that, regardless of the school of thought that an organization applies, various organizational functions have to be altered. Redesigning results in changes in the process of decision-making, leadership, and communication structures.
Unfortunately, if the design adopted fails, all decisions in the organization flop. Moreover, communication fails with leadership becoming questionable. Therefore, organizational redesigning in both schools of thought should consider various issues. To begin with, the size of the firm should be considered. The design that a firm adopts should be consistent with its size.
Complex organizations may adopt complex designs like the matrix design while small firms ought to adopt simple designs. According to Weber (1968), information flow in a small organization is simple while that of a large organization is complex. The process of decision-making is also complex in large organizations. Secondly, the environment of the organization should be considered.
Large organizations have wide environments both internal and external. Johnson et al. (1973) affirm that redesigning large organizations requires the understanding of the whole environment including the implementers. Therefore, different designs present different organizational images. Thirdly, the differences in operations and resources should also be considered in organizational redesigning.
Various organizations have varying resource bases implying that their redesigning ability and ability to implement new designs are different. Since redesigning requires finances, the financial position of the organization is a factor to consider. Small sized firms require fewer resources to redesign since they are not complex while large firm requires huge financial base.
At this point, the ownership of the organization may also present another complexity in the process of organizational redesigning. A sole proprietorship will be different from a partnership, and a government owned organization because the process of decision making in a sole proprietorship is quicker compared to partnerships and government organizations. These organizations will therefore take different times to redesign.
Conclusion
In conclusion, literature review of organizational redesigning indicates that various schools of thought have been put forward to address the issue of organizational redesigning. The theories may be classical or neoclassical. The classical theories focus redesigning on efficiency while neoclassical one focuses it on people and self-expression.
The process of designing and implementation of organizational design is complex. The level of complexity is based on the size, environment, and decision-making process of the organization.
Reference List
Daft, R., & Armstrong, A. (2009). Organization Theory and Design. Toronto: Nelson.
Dobbin, F. (1994). Cultural Models of Organization: The Social Construction of Rational Organizing Principles. Oxford: Basil Blackwell.
Johnson, R., Rozenzweig, J., & Kast, F. (1973). The Theory and Management of Systems. New York: McGraw-Hill.
Lawrence, P., & Williams, J. (1967). Organization and environment; managing differentiation and integration. Boston: Division of Research, Graduate School of Business Administration, Harvard University.
Taylor, F. (1911). The principles of Scientific management. New York: Harper Brothers.
Weber, M., (1968). Bureaucracy. In Economy and society: an outline of interpretive sociology. Berkeley: University of California Press.
Etisalat is an international telecommunications firm based in the UAE. Many recognize it as a formidable force in data and voice services across the Middle East, Africa and Asia. The organization’s net revenue illustrates this; on this basis, the company lies among the top 150 most profitable organizations in the world.
Structural arrangement of the organization
The company has a combination of the area-division structure and the product structure. Under the area division model, the organization divides its entities on the basis of their geographical regions. Through such an approach, the firm can analyze the profitability of each area and thus curve-out a strategy to correct cases of non-delivery. The firm also has a product structure that splits resources on the basis of service portfolios.
Some of them include data services, telephones, mobile network services, internet, sim-card manufacture, training services, financial management and many more (Etisalat, 2011). The company chose this approach owing to the need for greater standardization and specialization. It can also identify the non core or unproductive business services that it can eliminate. Shown below is an organizational chart for the firm.
Forces for change and the obstacles to change in the organization
Currently, the telecommunications sector in the UAE suffers from an oversupply. It is quite difficult for the firm to increase its penetration levels because of this fact. The degree of competition is a force for change because the company needs to innovate in order to ensure its survival. Etisalat faces a lot of competition in its international tariffs.
The company’s competitors and other VoIP providers are causing the company to revisit its international tariffs. The prevalence of rigorous regulations in the international calls sector created these changes. Therefore, the organization needed to respond to these alterations in country regulations. Competition was not just limited to international tariffs; it also grew rapidly in the mobile data sector.
Many rivals dwelt on smart phones, and this meant that the company’s voice revenue reduced dramatically. The need to increase its voice revenue was also a force for change.
Increased competition also emanated from the fact that Etisalat was no longer a monopoly in the UAE telecommunications market. Five years ago, a key service provider entered the market, and nothing has remained the same. This company now needs to guard it market share as it has been losing it to the new entrant (George-Cosh, 2010).
Customers also required greater flexibility in connectivity arrangements. These needs applied to almost all product segments; television services, broadband services and fixed voice services. The organization needed to meet these needs promptly. However, it had to increase flexibility in a way that would not strain the consumers’ telecommunications budgets.
The UAE is a high-growth state; it works on developing its economy through different sectors and channels. However, in order to achieve these benefits, the country must have a strong infrastructural base. The communications sector is imperative because it can facilitate greater transmission of oral and written information in voice and data services.
Businesses now require greater convergence between data and voice, and since the Telecommunications Regulatory Authority in the UAE allowed this convergence, then Etisalat needed to respond by giving clients an integrated network.
Some clients did not have access to Etisalat’s services. In other words, the company’s reach was not one hundred percent in the UAE. This meant that it needed to target a new client base with its products and service; this was also another force for change.
Many businesses are facing a lot of pressure to produce or offer their services and products in environmentally friendly conditions (Durant, 1999). Carrying out activities in a green building has become a common requirement for many companies. Furthermore, business practices now address carbon footprints and energy efficiency. Environmental concerns are, therefore, a key driver for change.
Etisalat is a profit making venture, like any other business; therefore, it needs to look for cost cutting measures at all levels. This need is even more pressing now that the UAE telecommunications market has matured. It is imperative for the company to strengthen its position in the market by increasing efficiency in its operations.
Forces for change in Etisalat
Resistance to Change
Customers’ need for greater technology
Staff hesitance, slow company response
Dealing with greater competition
Imitation, slow adoption
Maximizing technology infrastructure for development
Increased costs
Environmentally friendly business practices
Business disruptions
Greater international expansion
Unfavorable business climate
Cost cutting
Dwindling quality in services
One of the main obstacles to change in this company includes reduced service offerings that may result for cost cutting measures. Employees may fear all these new changes or may be ill prepared for new technologies. Alternatively, if customers’ needs are always changing, the company may not respond promptly.
With regard to greater competition, the rivals could imitate Etisalat’s new product innovations, and this may minimize company profitability. The need to practice business in an environmentally manner and the need to offer better technology infrastructure may cause increases in costs.
They may also disrupt company flows. All these factors can minimize the incentive to change in the firm. Lastly, the company should consider international expansion, but it may find unfavorable business conditions in a new target market.
Innovations that the organization has introduced
It can be stated that this company has attained a perfect balance between incremental and quantum changes. Its innovations fall in the incremental category because it often improves its products and services (Morgan, 2006).
The organization has achieved this by offering faster speeds for internet connectivity, better connectivity, greater reach and heightened value. It has done this by investing in fiber optic cables or by building its network infrastructures to a satisfactory level. In this regard, the firm has used existing technologies or methods that are not new to the country to alter service and product offerings.
Conversely, the company has also implemented quantum changes. In this regard, the firm has introduced new technologies that did not exist before using breakthrough innovations. One such instance was the 3D TV; another was 4G technology. These emanated from the need to respond to greater pressures in the competitive landscape.
Shown below is a summary of the two types of innovation prevalent in Etisalat
How the firm sought to manage innovation through structure, culture and organization
This company responded to the difficulties in penetration levels by developing broadband services and other value added services. Technological introduction of a new generation of handset services and tools ensured that the organization could deal with the shift in company revenue from the voice sector to the data sector. Therefore, innovation was at the heart of this company’s changes.
One of the new services offered by the organization was an initiative called ‘My Plan’. Another scheme was ‘Business Edge’. In both these arrangements, the company sought to give its post paid consumers minutes on their international calls.
Since there was a serious problem with revenue generation in the international calls department, then the organization felt that it was necessary to deal directly with this problem. Additionally, the plans also entailed provision of data bundles to clients (Etisalat, 2011). Since the UAE had a lot of competition in the data sector, then it was only natural to respond to these pressures through such an offering.
On top of these two service packages, Etisalat also created something that addressed the need for greater flexibility in connectivity and that was ‘eLife’. This package allowed consumers to utilize optical fibers in order to access television services, fixed voice services and broadband services at enormous speeds. It also launched that plan at a reasonable price for the market.
Furthermore, the company was the first to initiate 3D television. In fact, technology experts rank the UAE as one of the top five countries in the world that have achieved this fit. The firm also enhanced this need for greater flexibility by launching “Business One Super’ which is a high-speed broadband service that reaches the mass market. This has radically changed the broadband landscape in the UAE.
The organization expanded its service and product reach through a new partnership with JAFZA. It did this in order to offer customers in the Dubai free Zone some of its telecom services. Since some customers did not have access to high quality networks from Etisalat, the firm launched a Fiber – to – the – home network. It hopes to have achieved 100% coverage by the end of 2012 (Etisalat, 2011).
As a response to energy need pressures and green production business practices, the company has launched a brand of 4G technology called Long Term Evolution. In this plan, the firm has combined technology advancement with environmental friendliness.
It has selected fiber optic cables that are exceptionally energy efficient. They also have a smaller carbon footprint. The plan is still on a trial basis, but it can alter the manner in which the company does business.
All the latter responses have dealt with the company’s innovative endeavors. The forces of change also necessitated a need to alter the culture and structure in the organization too. The company changed these elements through a cost optimization program. In the plan, the firm started outsourcing some of its non core services.
Therefore, previous components covered by the international departments were no longer part of the company. Besides this, the organization implemented a cost-cutting measure to improve efficiency.
The company had to change its culture from technology leadership alone to cost efficiency and technology leadership, as well. Value creation is now a prime issue in the company. Furthermore, the business now focuses on sharing its services and infrastructure with different partners in the communications sector. It is likely that the cost optimization program will yield full results at the end of 2012.
The organization has worked on international expansion, as well. It realizes that this is the lifeblood of the company. It intends on dominating the Middle Eastern market through aggressive acquisitions. One such case was in Kuwait through partnerships with Zain.
The company has also worked hand in hand with other kinds of organizations in its existing regional branches in order to meet the needs of the local market. Etisalat is becoming a force to reckon with in the Nigerian telecommunications sector, and this is through a reorganization of the corporate culture within that country (George – Cosh, 2010).
Since this organization has a product-based and regional-based structure, then any creation of new services and products also alters its structure.
When the company introduces a new service, it often places a new body of personnel to be in charge of the product. However, most personnel come from the existing body of staff members in the institution. Most senior level staff emanate from the host countries when the firm engages in expansion strategies.
Conclusion
Etisalat is a leading telecommunications provider in the UAE. It has attained this position through continual investments in technology. Etisalat has also used new-generation products (quantum change) and systematic process-oriented changes (Incremental change) to achieve the same.
The major drivers for change are competition and a changing technological landscape. However, the company must contend with slow employee adoption and ineffective cost efficiencies. If it can tackle these resistors to change, then it will maintain its position as a market leader.
References
Durant, M. (1999). Managing organizational change. Web.
Etisalat is an international telecommunications firm based in the UAE. Many recognize it as a formidable force in data and voice services across the Middle East, Africa and Asia. The organization’s net revenue illustrates this; on this basis, the company lies among the top 150 most profitable organizations in the world.
Structural arrangement of the organization
The company has a combination of the area-division structure and the product structure. Under the area division model, the organization divides its entities on the basis of their geographical regions. Through such an approach, the firm can analyze the profitability of each area and thus curve-out a strategy to correct cases of non-delivery. The firm also has a product structure that splits resources on the basis of service portfolios.
Some of them include data services, telephones, mobile network services, internet, sim-card manufacture, training services, financial management and many more (Etisalat, 2011). The company chose this approach owing to the need for greater standardization and specialization. It can also identify the non core or unproductive business services that it can eliminate. Shown below is an organizational chart for the firm.
Forces for change and the obstacles to change in the organization
Currently, the telecommunications sector in the UAE suffers from an oversupply. It is quite difficult for the firm to increase its penetration levels because of this fact. The degree of competition is a force for change because the company needs to innovate in order to ensure its survival. Etisalat faces a lot of competition in its international tariffs.
The company’s competitors and other VoIP providers are causing the company to revisit its international tariffs. The prevalence of rigorous regulations in the international calls sector created these changes. Therefore, the organization needed to respond to these alterations in country regulations. Competition was not just limited to international tariffs; it also grew rapidly in the mobile data sector.
Many rivals dwelt on smart phones, and this meant that the company’s voice revenue reduced dramatically. The need to increase its voice revenue was also a force for change.
Increased competition also emanated from the fact that Etisalat was no longer a monopoly in the UAE telecommunications market. Five years ago, a key service provider entered the market, and nothing has remained the same. This company now needs to guard it market share as it has been losing it to the new entrant (George-Cosh, 2010).
Customers also required greater flexibility in connectivity arrangements. These needs applied to almost all product segments; television services, broadband services and fixed voice services. The organization needed to meet these needs promptly. However, it had to increase flexibility in a way that would not strain the consumers’ telecommunications budgets.
The UAE is a high-growth state; it works on developing its economy through different sectors and channels. However, in order to achieve these benefits, the country must have a strong infrastructural base. The communications sector is imperative because it can facilitate greater transmission of oral and written information in voice and data services.
Businesses now require greater convergence between data and voice, and since the Telecommunications Regulatory Authority in the UAE allowed this convergence, then Etisalat needed to respond by giving clients an integrated network.
Some clients did not have access to Etisalat’s services. In other words, the company’s reach was not one hundred percent in the UAE. This meant that it needed to target a new client base with its products and service; this was also another force for change.
Many businesses are facing a lot of pressure to produce or offer their services and products in environmentally friendly conditions (Durant, 1999). Carrying out activities in a green building has become a common requirement for many companies. Furthermore, business practices now address carbon footprints and energy efficiency. Environmental concerns are, therefore, a key driver for change.
Etisalat is a profit making venture, like any other business; therefore, it needs to look for cost cutting measures at all levels. This need is even more pressing now that the UAE telecommunications market has matured. It is imperative for the company to strengthen its position in the market by increasing efficiency in its operations.
Forces for change in Etisalat
Resistance to Change
Customers’ need for greater technology
Staff hesitance, slow company response
Dealing with greater competition
Imitation, slow adoption
Maximizing technology infrastructure for development
Increased costs
Environmentally friendly business practices
Business disruptions
Greater international expansion
Unfavorable business climate
Cost cutting
Dwindling quality in services
One of the main obstacles to change in this company includes reduced service offerings that may result for cost cutting measures. Employees may fear all these new changes or may be ill prepared for new technologies. Alternatively, if customers’ needs are always changing, the company may not respond promptly.
With regard to greater competition, the rivals could imitate Etisalat’s new product innovations, and this may minimize company profitability. The need to practice business in an environmentally manner and the need to offer better technology infrastructure may cause increases in costs.
They may also disrupt company flows. All these factors can minimize the incentive to change in the firm. Lastly, the company should consider international expansion, but it may find unfavorable business conditions in a new target market.
Innovations that the organization has introduced
It can be stated that this company has attained a perfect balance between incremental and quantum changes. Its innovations fall in the incremental category because it often improves its products and services (Morgan, 2006).
The organization has achieved this by offering faster speeds for internet connectivity, better connectivity, greater reach and heightened value. It has done this by investing in fiber optic cables or by building its network infrastructures to a satisfactory level. In this regard, the firm has used existing technologies or methods that are not new to the country to alter service and product offerings.
Conversely, the company has also implemented quantum changes. In this regard, the firm has introduced new technologies that did not exist before using breakthrough innovations. One such instance was the 3D TV; another was 4G technology. These emanated from the need to respond to greater pressures in the competitive landscape.
Shown below is a summary of the two types of innovation prevalent in Etisalat
How the firm sought to manage innovation through structure, culture and organization
This company responded to the difficulties in penetration levels by developing broadband services and other value added services. Technological introduction of a new generation of handset services and tools ensured that the organization could deal with the shift in company revenue from the voice sector to the data sector. Therefore, innovation was at the heart of this company’s changes.
One of the new services offered by the organization was an initiative called ‘My Plan’. Another scheme was ‘Business Edge’. In both these arrangements, the company sought to give its post paid consumers minutes on their international calls.
Since there was a serious problem with revenue generation in the international calls department, then the organization felt that it was necessary to deal directly with this problem. Additionally, the plans also entailed provision of data bundles to clients (Etisalat, 2011). Since the UAE had a lot of competition in the data sector, then it was only natural to respond to these pressures through such an offering.
On top of these two service packages, Etisalat also created something that addressed the need for greater flexibility in connectivity and that was ‘eLife’. This package allowed consumers to utilize optical fibers in order to access television services, fixed voice services and broadband services at enormous speeds. It also launched that plan at a reasonable price for the market.
Furthermore, the company was the first to initiate 3D television. In fact, technology experts rank the UAE as one of the top five countries in the world that have achieved this fit. The firm also enhanced this need for greater flexibility by launching “Business One Super’ which is a high-speed broadband service that reaches the mass market. This has radically changed the broadband landscape in the UAE.
The organization expanded its service and product reach through a new partnership with JAFZA. It did this in order to offer customers in the Dubai free Zone some of its telecom services. Since some customers did not have access to high quality networks from Etisalat, the firm launched a Fiber – to – the – home network. It hopes to have achieved 100% coverage by the end of 2012 (Etisalat, 2011).
As a response to energy need pressures and green production business practices, the company has launched a brand of 4G technology called Long Term Evolution. In this plan, the firm has combined technology advancement with environmental friendliness.
It has selected fiber optic cables that are exceptionally energy efficient. They also have a smaller carbon footprint. The plan is still on a trial basis, but it can alter the manner in which the company does business.
All the latter responses have dealt with the company’s innovative endeavors. The forces of change also necessitated a need to alter the culture and structure in the organization too. The company changed these elements through a cost optimization program. In the plan, the firm started outsourcing some of its non core services.
Therefore, previous components covered by the international departments were no longer part of the company. Besides this, the organization implemented a cost-cutting measure to improve efficiency.
The company had to change its culture from technology leadership alone to cost efficiency and technology leadership, as well. Value creation is now a prime issue in the company. Furthermore, the business now focuses on sharing its services and infrastructure with different partners in the communications sector. It is likely that the cost optimization program will yield full results at the end of 2012.
The organization has worked on international expansion, as well. It realizes that this is the lifeblood of the company. It intends on dominating the Middle Eastern market through aggressive acquisitions. One such case was in Kuwait through partnerships with Zain.
The company has also worked hand in hand with other kinds of organizations in its existing regional branches in order to meet the needs of the local market. Etisalat is becoming a force to reckon with in the Nigerian telecommunications sector, and this is through a reorganization of the corporate culture within that country (George – Cosh, 2010).
Since this organization has a product-based and regional-based structure, then any creation of new services and products also alters its structure.
When the company introduces a new service, it often places a new body of personnel to be in charge of the product. However, most personnel come from the existing body of staff members in the institution. Most senior level staff emanate from the host countries when the firm engages in expansion strategies.
Conclusion
Etisalat is a leading telecommunications provider in the UAE. It has attained this position through continual investments in technology. Etisalat has also used new-generation products (quantum change) and systematic process-oriented changes (Incremental change) to achieve the same.
The major drivers for change are competition and a changing technological landscape. However, the company must contend with slow employee adoption and ineffective cost efficiencies. If it can tackle these resistors to change, then it will maintain its position as a market leader.
References
Durant, M. (1999). Managing organizational change. Web.
