Organizing Performance: Four Vignettes Case Study Solution
Identification and Evaluation (Alternatives)
Based on the scenarios given in the case study two possible alternatives of organizational configuration option i.e. Low Price and Local Value Creation and four possible alternatives of organizational structure can be evaluated for four vignettes.
Alternative for Organizational Structure
Alternative 1: Simple Organizational structure with centralization
Pros:
- Cost Control
- Efficient production
Cons:
- Confusing for organizations with complex operations
Favourable for organizations having simple operations, low expansion policies and selling low price products.
Alternative 2: Simple Organizational structure with decentralization
Pros:
- Flexibility
- Cost Control
Cons:
- Low efficiency
- Can create confusions for organizations with complex operations
Favourable for simpler organizations with less focus on cost control and high focus on expansion.
Alternative 3: Complex Organizational Structure with decentralization
Pros:
- High flexibility
- Easy to manage operations
- Low confusions
Cons:
- High cost than simple structure
Favourable for those organizations with complex operations and less requirement of cost control.
Alternative 4: Complex Organizational structure with centralization
Pros:
- Cost and efficiency control
- Low confusions
Cons:
- Less flexibility
- High cost
Favourable for organizations with complex operations and high requirement of quality and cost control.
Recommendations
Based upon the evaluation of above alternatives and deep analysis of the vignettes, the recommendations for the organizational structure to the above stated organizations is as follows;
Walmart is recommended alternative 1, as the company has simpler operations with high requirement of cost and efficiency control.
Starbucks is recommended alternative 2 as the company has simpler operations with high requirement of flexibility to support its expansion.
HBS is recommended alternative 3, as the company has complex operations and requires an efficiency control to maintain the quality of its products and services.
Google is recommended alternative 3 as the company has complex operations with high requirement of flexibility in its structure due to its vast geographical expansion.
Alternatives for Organizational Configuration Option
Alternative 1: Low Price (Spending more on Core Operating Units than Market-Facing Units)
Pros:
- Efficient production due to high cost control
- Low per unit cost due to efficiency
Cons:
- Low expansion opportunities
- Low value proposition
- Favourable for organizations offering low price products
Favourable for organizations requiring high cost and efficiency control.
Alternative 2: Local Value Creation (Spending less on Core Operating Units than Market-Facing Units)
Pros:
- High value proposition
- High expansion opportunities
Cons:
- Low cost and efficiency control
- High per unit cost
Favourable for those organizations which focus more on expansion.
Recommendations
Based upon the evaluation of above alternatives and deep analysis of the vignettes, the recommendations for the organizational configuration option to the above stated organizations is as follows;
Walmart is recommended alternative 1, as its core competency is its lower prices and it cannot bear the effect of increasing cost.
Starbucks is recommended alternative 2, as the company is expanding and it requires a high value proposition to capture the market.
HBS and Google, however are recommended to run in between these two alternatives to support their expansion with increased value proposition through spending on market-facing units as well as to control their efficiency in their operations.
Exhibits
Exhibit A: Brief Analysis of Four Vignettes
| Walmart | Starbucks | HBS | ||
| Organizational Structure | More Centralised | Decentralized | More diverse due to complexity of operations | Diverse and decentralize due to scale of business |
| Business Strategy | Low Price Product | Expansion | Excellence and diversity | Differentiation |
| Organizational Configuration option | Low Price | Local Value Creation | Global Standard of Excellence and Dedicated Service Relationship | Global Standard of Excellence and Expert Knowledge Designs |
| Resource Allocation for Market facing units | Very High | Very Low | Moderate | High |
| Resource Allocation for Core operating units | Very Low | Very High | Moderate | Low |
Exhibit B: SWOT Analysis
| Walmart | Starbucks | HBS | ||
| Strengths | Largest retailer
Strong power on suppliers and competitors Large Scale operations |
Brand recognition as quality products at affordable rates
Largest coffee house High wealth |
Availability of wide product and service categories
Quality products and services |
Leading Search Engine
Advertising and display User Traffic Android and mobile technologies |
| Weaknesses | Low profit margins
Quality compromise |
Dependence on coffee beans
Poor World image
|
Complexity in business operations | Huge reliance on Secrecy
Declining advertising rates Dependence on advertising for revenue. |
| Opportunities | Expanding business in developing countries
Quality improvement
|
Based on expansion of supplier networks, retail stores, to emerging markets. | Expansion in other countries in terms of teaching services.
|
Android operating System
Move towards non-ad businesses
|
| Threats | Online retailers i.e. Amazon
Trend towards healthy products |
Threats from coffee bean suppliers
Failure of any level of supply chain Instability in countries |
Loss of key researchers and teachers can lead the company to compromise with the quality. | Arrival of Social Media
Injection of mobile computing in the market |
Exhibit C: Porter’s Five Forces Analysis
| Walmart | Starbucks | HBS | ||
| Competition from Substitutes | Highest | Moderate | Lowest | Moderate |
| Competition From New Entrants | Highest | Moderate | Lowest | Moderate |
| Competition From Established Rivals | Highest | High | Lowest | Moderate |
| Power of Supplier | Lowest | Low | Highest | High |
| Power of Buyer | Highest | High | Lowest | Low |
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