Term Paper on "Organizational Transformation: A Multi-Dimensional View"

Term Paper 4 pages (1271 words) Sources: 3 Style: MLA

[EXCERPT] . . . .

Organizational Transformation: A multi-Dimensional view

Many organizational theorists have stressed is absolutely essential to have representatives from finance, accounting, marketing, and operations to redesign a company's transformation process. No matter how strong the talent within each department, every individual sector of the company will inevitably be subject to some degree of tunnel vision. In short, every department will believe that its own field of specialty and the paradigm through which it views the current market and the company's future is the most important one. An example of this might be a marketing department that has come up with a unique and innovative promotions opportunity, such as employee pricing, that may boost sales and satisfy the department's data regarding demand, but costs the company too much in the long run for it meet a crucial financial 'bottom line.' A contrary example might be provided by an accounting department that has discovered a way to slash costs, but will eliminate certain aspects of the company's current line of cars that are crucial to the company's image when marketing its product. These are just two hypothetical examples of how organizational decisions regarding customer demand or pricing cannot be confined to the expertise of individuals from the department directly responsible for making specific decisions. When an entire organization is being restructured, the change must be comprehensive and holistic, not simply directed by one vocal group of people.

At GM specifically, different areas of corporate interest have often been in conflict. Although its recent financial woes with its labor unions have gotten the most press, and are exercising the most notable drain upon its resources, many auto industry analysts trace its current problems back to 1984, when former Chairman Roger Smith nearly drove the company into bankruptcy. "Back in the mid-1980s, GM failed spectacularly when it introduced an all-new line-up of mid-size coupes. They hit the market just as buyers started switching, en masse, from 2-doors to sedans and SUVs" (Einstein, 2002:1). An over-emphasis on financials and operations yielded insufficient attention to marketing data about shifts in consumer buying trends. Although GM rebounded by introducing popular lines of SUVs in the 1990s, even in 2002, one auto industry analyst warned: "Once the king-of-the-automotive-hill, controlling as much as half the American marketplace, GM [has] suffered steady declines in share, margins and earnings, its plants some of the automotive world's least efficient" (Einstein, 2002: 1). Consumers were buying fewer GM cars, and GM factories were inefficient in their standard operating procedures -- both issues had to be addressed for the company to become profitable.

What conflicting objectives might you anticipate from each area?

So why do conflicting objectives between departments in an organization undergoing the same crisis ensue? Take the concept of "lead time," or the number of months or years it takes to get a car into production once a company has frozen its basic design (Einstein, 2002:2) Operations might want to reduce this time as much as possible, but marketing might want to keep the time plan more flexible, so alterations can be made in the car's style to reflect sudden changes in demand, like a sudden desire for smaller or more fuel-efficient cars because of a spike in gas prices. Finance and accounting departments might be pleased at the revenue saved through lead time reduction, but might also be resistant to acquiring new types of machinery to make production more efficient, for fear that such efforts may not pay off in the recent bottom line.

Thus, conflicts can occur because of three reasons:

Temporal differences in departmental focus. Marketing departments may focus on the upcoming sales figures in the next season, finance and accounting may focus on the need to show a good return on investment in the upcoming statements to shareholders. Operations may take a long-term view in… READ MORE

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