Case Study on "Indigo Indigo Books and Music"

Case Study 7 pages (2436 words) Sources: 1+

[EXCERPT] . . . .

Indigo Case Study

Indigo Books and Music Case Study Analysis

Indigo's acquisition of Chapters book retail chain and cafe' locations present dilemmas in terms of organizational structure, its implications on the efficiency and profitability of the new business, and sets the prerequisites for how technology will be used throughout the new firm. The intent of this analysis is to analyze the structure issues that need to be addressed in the acquisition of Chapters by Indigo, including an analysis of how an organization's efficiency and effectiveness is influenced by its organizational structure. Determining if a mechanistic or organic organizational structure would be best for Indigo is also analyzed, as is the effect of technology on the Indigo organizational design. Making any merger or acquisition successful relies more on the unquantifiable, cultural aspects of the two companies as each culture will communicate expectations, needs, requirements and strategies in at times significantly different ways (Cordes, Richerson, Schwesinger, 2010). Enabling and facilitating transformational leadership is often a design objective of organizational structures (Jogulu, 2010). Creating the best possible platform or framework for enabling leadership can be achieved through organizational design (Gillen, Carroll, 1985). In analyzing how the Indigo acquisition of Chapters can enable transformational leadership, the structural issues need to be combined with those of leadership, change management, and the redefining of a corporate vision and mission as well (Rijal, 2010). All of these factors will influence the organizational structure of Indigo over the long-term.

Analysis of the Case Study

When two organisations merge what types of structural issues do you think might need to be addressed?

At the most strategic level, the cultural differences need to first be addressed, followed by a re-evaluation of each dominant business process the combined companies will need to coordinate on to complete transactions, deliver services and profitably grow over time. The greater the accuracy and conciseness of process definitions across the merged organization, the greater the potential exists for collaboration and more effective knowledge sharing (Sidorova, Isik, 2010). Based on redefining the culture of the new company, re-assessing and re-defining process workflows to ensure accuracy and efficiency, the revised functional structure needs to be next defined. The functional structure of any organization influences cultural alignment and needs to support the most critical business processes and strategies the company relies on for growth (Sidorova, Isik, 2010). Only after all of these factors are in place should information systems be purchased and installed in the company, as processes need to be streamlined first before they are automated (Nicolaou, 2010).

Beginning with the culture, given the nature of the merger where the smaller, more agile and aggressive Indigo Books and Music acquired the larger and more complex Chapters retail chain, the precedence of one culture overtaking another is apparent. The cultural value of growing through rapid expansion of new services is one of the strengths of Indigo, while the ability to capitalize on economies of scale fits with the larger Chapters chain. On one culture this is a tendency to quickly react to market conditions and seize opportunities, while in the other, a greater level of stability and focus, even love of the status quo, exists. This is evident from the case study in that each company has grown because of entirely different strategies and innate strengths. In creating shared ownership of a company by employees involved in a merger it is critical to structure roles so that there is an abundance of learning and mastery of the new role available (Shim, Okamuro, 2011). The ability to create roles within the company that allow for autonomy of decision making, mastery of the new role, and a solid purpose is critical for the success of a shared culture during a merger or acquisition (Shim, Okamuro, 2011). Transformational leaders in this context also provide the basis for ensuring a high degree of autonomy, mastery and purpose throughout the merged companies, all three critical components to having employees take ownership of their jobs and development a mindset of long-term learning (Rijal, 2010).

Ms. Heather Reisman needs to take the leadership role in this regard, and seek to be transformational in how she defines each role of the merged organization to allow for autonomy, mastery and purpose. If she can accomplish this, she will be able to lead a much more successful transition of the company over time than if she left it merely to chance or attempted to force ownership of the change on employees through more too-down or mechanistically-driven organizational means (Tata, Prasad, 1992). Overcoming the resistance to change that the Chapters employees have because of the merger will be the greatest challenge that Ms. Reisman faces in the short-run. She will need to create an organizational structure that is organic and focused on open communication in order to win their trust. When companies merge it is the lack of trust, not the lack of process integration or efficiency, that most influences the success or failure of the initiative (Shim, Okamuro, 2011). Following the successful merger at the cultural level where transformational leadership is required to infuse autonomy, mastery, and purpose into roles and a platform of trust created, the leadership team will need to focus on the core strategy areas. These core strategy areas need to be evaluated at the process level to ensure coordination and collaboration happens between the two companies. The most critical process areas shared by the two companies include coordination of order management systems and pricing with book distributors, supply chain management, pricing management at the retail level across both chains, defining what marketing strategies will dominate, communicating the merger clearly so customers know the benefits to them, and also making staffing plans clear at each retail location. There are also the many process areas surrounding branding as well. In short, the process-based redefinition of the joined businesses must begin at the transaction level of ensure gross margin, pricing and profitability consistency first (Sidorova, Isik, 2010). Once the merged business can accurately and efficiently complete the more complex transactions involved in running the large retail chain, the collaboration processes including store training, cooperative marketing and branding next need to be defined. Merged retail chains often discover that their most critical transaction-based business processes must be optimized across the joined companies first before they are automated (Yeo, Ajam, 2010). Merged firms who concentrate on this aspect of process integration first obtain much higher levels of automated process performance that leads to greater profitability; they also contribute to greater levels of task ownership, lowering resistance to change (Nicolaou, 2010). Setting the foundation for trust in a merged organization needs to take into account the most mission-critical processes first, including the consolidating of order management, supplier and distribution management, pricing and retail pricing systems (Sidorova, Isik, 2010). Processes need to be cohesive for the structural integrity of a merged organization to be effective as well (Tata, Prasad, 1992).

What role do you think organisational structure plays in an organisation's efficiency and effectiveness? Explain.

Organizational structure is the prerequisite to how effective any organization is in being able to capitalize on market opportunities and mitigate threats and risks while keeping focused on its core business. Organizational structures also have a major influence on the quality and perceptual basis and insight of decisions, and the propensity for one type of leadership style to dominate over another (Christensen, Knudsen, 2010). In short, an organizational structure is at the center of how an organization operates over the long-term from a strategic, managerial and ethical standpoint (Ellman, Pezanis-Christou, 2010). Organizational structures determine which lines of communication will be open to each specific department in an organization, define the span of control, level of authority, extent of a manager's ability to move from being transactional to transformational in scope, and also define the limits of autonomy, mastery and purpose for employees (Ellman, Pezanis-Christou, 2010). An organizational structure can also significantly promote or inhibit knowledge transfer, a critical aspect of any two companies merging and being able to successfully collaborate and accomplish shared objectives (Lichtenthaler, 2010).

Finally, organizational structure has a major influence on how business processes are redefined, optimized through multiple iterations to gain greater performance, and eventually automated with information systems (Tata, Prasad, 1992). This progression of organizational structure progressing to process-based improvement, finally being automated once to the point of performance is a crucial one for the success of any merged enterprise (Rijal, 2010). Both the efficiency and effectiveness of any firm is ultimately defined by its organizational structure, as this one attribute of any organization can either be an exceptional asset to its growth or a major liability.

Would a mechanistic or a more organic structure be appropriate for Indigo? Why?

The merger Indigo has just completed with Chapters requires much communication, clarification and the establishment of trust by employees if the many processes, systems and strategies are going to work effectively in the merged business. The selection of a mechanistic organizational structure on the part of Indigo's senior management team… READ MORE

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