SMA case prep

8/10/2019 SMA case prep

1/5

Organizational Design Session #4 Case Readings

SMA: Micro-Electronic Products Division

SMA Overview & Operations HQ for almost all divisions were in Switzerland

Plants and sales offices established globall b!t b!l" of decisionma"ing occ!rred inSwitzerland

$acetoface meetings and informal comm!nications were central to the org c!lt!re Somewhat f!nctional rather than solel %rod!ctdesigned organization& 'hile %lants were viewed

as %rofit centers( ma)or sales transactions and decisions regarding new %rod!cts were made at ahigh level in the organization& Divisions had minor sales forces and limited m"t efforts *d!e tonat!re of %rod!ct+

$oc!s on microelectronics and mechanical %rod!cts with a strong em%hasis on the im%ortance ofR,D *more - as a . of sales than com%etition+

/rowth at an average of 01. d!e to !ni2!e technologies( ca%abilities( and strength inman!fact!ring

3imited com%etitive threats *S5 advantages6 technical "nowhow( invested ca%ital( %atents+ icro7lectronic Prod!cts Division *7PD+ was one of eight divisions in S5

History of MEPD Timeline 0891:s saw demand increase for highl reliable com%onents *%artic!larl with telecom com%anies

and %ostal agencies+& 7;%anded one %lant and o%ened another id0891:s saw a shift in demand6

7PD foc!sed on serving the new commercial electronics m"t as well as other newmar"ets

3everaged R,D and mfg abilities to enter mar"ets 2!ic"l and establish strong %ostions

089< b!ilt %lant in $rance 08990881 $ierce com%etition among firms led to falling %rices( %ress!re on costs and 2!alit&

anagers at 7PD felt the were now in a commodit b!siness while having significant %ress!re

to meet !ni2!e c!stomer re2!irements 08980881 Poor %erformance was a reflection of increased com%etition co!%led with %erceived

lower f!t!re demand 0881 half of 7PD:s sales were to O7s who bo!ght the com%onents in large vol!me for their

%rod!cts while the rest of the sales were to distrib!tors who resold the com%onents in smaller2!antities

MEPD Management Pre-199 Pre0899( 7PD was headed b =acob 5mman been with division since its infanc

5n entre%rene!r who foc!sed on e;%erimentation( the desire to grow( and fostered anintense wor" %ace

ade almost all of the "e decisions Res%ected et feared& 5!thoritarian manner

i;ed reviews of his stle *!nnat!ral gro!% feel( lac" of cohesiveness in the gro!%( etc+ =acob was ver interested in the field of Org >ehavior *after all( who isn:t+ he attem%ted to

im%lement O>t%e %rograms to im%rove mgmt stles( gro!% effectiveness( im%rovement ofinterf!nctional coordination( etc& Program was s!%%osed to last three ears b!t =acob diedbefore f!ll im%lementation

?he new head of the division was /!ido S%icht *serio!sl+( a director in cor%orate R,D hediscontin!ed the O> %rograms


2/5

MEPD Management in 199 /!ido lac"ed line e;%erience b!t had a relevant bac"gro!nd in R,D for the entire com%an(

which incl!ded %ro)ects for the 7PD division& His %romotion to @P of the division wasconsidered somewhat !n!s!al& Re%orted directl to S5 %resident&

Considered bright( artic!late( 2!ic"thin"ing( wellli"ed

@er o%en in his decisionma"ing( involved %eo%le in the %rocess @iewed as a %oor listener( too soft on %eo%le( not involved eno!gh( too wim% *avoided

conflict+ 5bilit of division to meet target goals was in 2!estion high growth was e;%ected of the division

and %eo%le within 7PD loo"ed to new %rod!cts as a ma)or so!rce of both new vol!me and%rofits

MEPD!s Organi"aion Str#$t#re %ner '#io 0A11 em%loees( selfcontained m!ltif!nctional organization ?wo differences bBt 7PD and the other divisions6 0+ /!ido s%lit o!t the mar"eting , sales

f!nctions and A+7PD had their own R,D in addition to the com%anwide gro!% /!ido also6

oved division HQ to >ienne( Switzerland with the other divisions Consolidated the mar"eting gro!%s centralization Re%laced "e managers and c!t the mar"eting %lanning f!nction m%roved service to c!stomers via mfg im%rovements and ? develo%ments

199 (#n$tional Departments an!fact!ring6 ?hree %lants each with manager and f!ll line and staff f!nctions& Plants were

res%onsible for gross margin and were th!s %rofit centers& Plant managers wanted to be%romoted to head a division& anagers were foc!sed on %erformance as this was o%enldisc!ssed between %lants& 7PDs %lant managers were !%set abo!t %oor growth in the division

the had to c!t costs to even ma"e declining margins& Plant managers felt a lac" of ob)ectivesand direction and %!t the blame on Sales *too foc!sed on vol!me+( ar"eting *lac" of abilit to%rovide direction( generall incom%etent+( and Prod!ct Develo%ment *%rod!cts didn:t r!n well ontheir lines+

ar"eting6 ost im%ortant f!nction was mar"et develo%ment *forecasting( %lanning( form!lating

strateg+& an new %eo%le in the f!nction( often the came from Sales& ar"eting felt that S5had !nrealistic e;%ectations of them( that Prod!ct Develo%ment wasn:t res%onsive eno!gh( andthat fg was too conservative and !ncoo%erative

Sales6 7PD %rod!cts were sold thro!gh a direct sales force of A1 %eo%le as well as thro!ghdistrib!tors& ?he sales force served a large set of c!stomers in several mar"ets& ?heir%erformance was not commissionbased rather it was eval!ated on vol!me so the tended to c!t%rice to drive this& Sales disli"ed ar"eting bBc the felt the %rovided the sales force with %oorinformation and neither f!nction tr!sted the other& Sales had a terrible relationshi% with mfg d!eto iss!es over service for the c!stomer and deliver times

Prod!ct Develo%ment6 Res%onsible for e;tensions of the %rod!ct lines& Disli"es ar"eting*%rovide gro!% with !nclear %rod!ct s%ecs and don:t !nderstand com%le;it of s%ec changes+(S5:s R,D gro!% *diffic!lt to coordinate time with them+ and Sales *lac" of in%!t into new%rod!cts+

All t)at s#mme #p $learly* T)e f#n$tional areas are semi-a#tonomo#s an on!t li+e oneanot)er,

ew Pro#$t Development Pro$ess $oc!s on e;tensions of c!rrent line Significant overla% and com%lications in the %rocess diffic!lt to manage

$!nctional areas overla%%ed res%onsibilit and when one area failed to meet goalsBdeadlines( theoverall %ro)ect timeline was infl!enced& /eneral lac" of coordination

Pro.lems /oo+ing (orwar 1991


3/5


4/5

Meriwether

0asi$ overview of $ase*=ohn eriwether *=+ becomes head of the arbitrage gro!% at Salomon& a"es tons of cash betting that%rices wo!ld converge and had no %roblem %!tting !% lots of Salomon:s mone to bac" !% the bets& Hewas the first 'all Street g! to hire his team from o!tside of the Street he hired a b!nch of PhD:s withnew models and lots of calc!lators& His ver nerd gro!% became incredibl e;cl!sive( obsessive( and

almost c!ltli"e& = was wellli"ed in the com%an& Scandal occ!rred when someone o!tside the gro!%*who indirectl re%orted to =+ made a mista"e and s!bmitted a false bid to the FS ?reas!r& =defended him b!t instead of firing him( let him contin!e in his )ob as a ro!ge trader *or something li"ethat+& >eca!se of laws!its( controvers( etc( = was event!all enco!raged to 2!it& He did and while hewas later offered a %osition with the firm he decided to ta"e most of his team from Salomon and do hisown thing&

f o! want all the details( read onG&

o)n Meriwet)er!s 0a$+gro#n /rew !% on the So!th Side of Chicago& iddle class !%bringing with strong religio!s ties and a

foc!s on disci%line both in the home and at school >right and %o%!lar( g!ided b a sense of restraint

3oved to gamble from a o!ng age b!t onl when odds were in his favor& >ecame %assionateabo!t golf and !sed this to networ" in college and beond

nternal conflict between order and c!stomI and develo%ing an edgeI *see %age J for more%schobabble analsis+

>5 from F of Chicago *a to% 01 school+ in 08


5/5

= %ers!aded !%%er management to give his team a share of the team:s %rofits& Otherem%loees of Salomon became angr

T)e (all of M 5 %issed off em%loee who !sed to wor" for the /ro!% *Pa!l ozer+ confessed that he had

s!bmitted a false bid to the FS ?reas!r = too" the matter to his boss */!tgre!nd+& ?he agreed it was a serio!s matter b!t did nothing

abo!t it and let ozer contin!e in his )ob = had been somewhat naLve beca!se he tr!sted his em%loees so m!ch( he hadn:t done the

d!e diligence to ens!re that basic r!les were followed /!tgre!nd was forced 2!it the firm and = was as"ed to 2!it for the good of the f irmI which he

did =:s /ro!% remained loal to him( fo!ght for his ret!rn and event!all s!cceeded in this& = was

as"ed to ret!rn *b 'arren >!ffett( acting C7O+ albeit not in the role of coC7O = co!ldn:t acce%t this %osition he "new he:d never become C7O after the scandal %l!s his ego

had been a bit br!ised& He decided to o%en an inde%endent arbitrage f!nd and went after his old/ro!% at Salomon for reso!rces

SMA case prep

Documents

Transcript of SMA case prep