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the image created by these scandals. In the board’s view, these problems had to be corrected immediately. The person to whom the board would look for direction in these matters was the new president – Dale Keats.

Dale was fully aware of the university’s problems and various groups’ expectations. When interviewing for the position, he met with representatives from student, alumni, faculty and administrative groups. Prior to accepting the presidency at Wingate, Dale devoted considerable thought to how he would deal with the school’s problems. His primary conclusion was that through effective strategic planning, the university could address its current difficulties and chart a successful course for the future. Now that he was on the job, Dale was prepared to initiate the strategic planning he believed to be crucial to Wingate’s health and effectiveness.

Questions for discussion

1.What are the entrepreneurial, engineering, and administrative problems facing Wingate University?

2.Based on information in the case, does Wingate currently have a sustainable competitive advantage? Justify your position with points from the case.

3.What issues should Dale Keats examine in efforts to formulate a strategy for Wingate?

V.Implementing the Strategic Planning Process

Unplanned planning may be worse than no planning at all. Managers should

consider seriously the potential gains and losses associated with planning and make clear and fully expressed decisions about how much investment it deserves and how it can best be performed. To be realistic, managers should expect resistance to planning. This resistance may surface or appear for several reasons, including individual’s concerns about potential losses in their status within the organization and a fear that they may lack skills required to participate successfully in strategic planning.

Managers should be prepared to minimize the effects of any planning resistance, involving people actively in strategic planning and discussing various benefits that will come as an additional advantage to the organization and its individual members because of planning.

Planning effectiveness tends to be increased through active participation of a wide range of people: boards of directors, task forces and planning professionals, planning

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coalitions, outside consultants, top-level managers, first-level managers, nonmanagerial people within the company, and key parties from outside the organization (important customers), for example. An effective plan is adaptable, backed by proper authority, and coordinated so that its components are mutually supportive. Traditionally, it has been argued that effective strategic plans are highly explicit. But in fact there can be some ambiguous or unclear things. Developing strategic plans that are not highly explicit allows time for consensus to build among parties whose participation is necessary for effective implementation of strategic plans.

Management by objectives (MBO) is used as a part of strategic planning intended to align employees’ goals with actions required to implement various strategic plans i.e. to bring employees’ goals in agreement with what they are doing to implement plans across the entire organization. The MBO process includes three major steps: goal setting, implementation and review, and performance appraisal. In the goal-setting step, managers and subordinates agree upon goals which the employee is held accountable for achieving. The implementation and review step covers the time period in which employees complete milestones or important events related to accomplishment of their goals. During this step, managers and employees review achievements to verify or confirm that agreed upon goals will be reached. In the final step – performance appraisal – intended and actual performances are measured and examined. Outcomes from the appraisal are used to determine the employee’s training needs, future job assignments, and the employee’s compensation package.

Questions for discussion and review

1.What fears might managers have that would cause them to resist strategic planning?

2.What groups of people can be involved in implementing strategic plans?

3.Why is it important for chief executive officers, middle-level managers, and firstlevel managers to participate actively in strategic planning process?

4.What are the main characteristics of effective strategic plans? Describe them.

5.How can management by objectives be of value in the strategic planning process?

Problems for Action

1. Assume that you overheard the following comment: ”I have worked as a firstlevel manager in the company for over eight years. Never, I do want to emphasize the word never, have I seen a situation where a so-called planning professional does anything but get in the way of developing and implementing plans. I think those people are useless!”

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Prepare an argument indicating how planning professionals can be of value when conducting strategic planning.

2. Handling a Merger

Your company is considering merging with another who you frequently work with on large export projects. You work in similar but complementary rather than competitive areas of business and the merger would, therefore not create redundancies.

What do you tell your staff about possible changes in their work, and how the merger can influence their performance, and what advantages and disadvantages for the company you see from this merger?

Case Study: Mosley Robotics

Jay Mosley, founder and president of Mosley robotics, was accepted by his colleagues in the computer industry as an electronic genius. In addition, Jay had demonstrated unusual abilities as a promoter-entrepreneur by assembling a research and development firm whose products were patents, consulting services, and highly specialized electronic and mechanical components of the robots used to manufacture computer chips.

Mosley attributed much of his success to an ability to attract talented research scientists and high-level technicians to the firm. Mosley Robotics was particularly successful during its first three years of operation. During that time its mission was clear, and its 20 to 30 scientists and technicians worked as a team to produce models of products that were in demand. The following four years, during which time the firm experienced dramatic, sometimes even chaotic and turbulent, change, Mosley Robotics grew to over 200 employees and became a manufacturing firm of some importance in the industry.

The firm’s key personnel, including Jay himself, were challenged primarily by ideas and research. Even Juan Delgado, the production vice president, was far from being the typical manager. With a Ph.D. in electrical engineering, Delgado’s interests in the technical aspects of his work overshadowed (заслоняли) his interests in what he saw as the more routine work of managing the firm’s production processes. Nevertheless, Mosley was convinced that Juan’s position had to be filled by an individual with a strong technical background.

Manufacturing was marginally profitable. Product quality was superior, but design changes, made to incorporate the latest ideas from the research and development group, destabilized the production process and lowered efficiency continually. Mosley

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realized that better integrating mechanisms have to be developed. However, he was also convinced that any significant changes in the firm’s structure and reporting relationships that might be initiated to deal with the issues should not disturb the organization’s creative, rapid-response capabilities. Jay believed that the ability to respond quickly to anticipated technological changes in the industry was the distinctive competence that resulted in a sustainable competitive advantage for Mosley Robotics. Jay held a strong conviction that if a traditional bureaucratic structure evolved within his firm, the consequences would be negative and serious.

As Mosley Robotics grew, and competitors multiplied, its problems increased. In seeking solutions to the firm’s problems and evaluating its environmental opportunities, Jay conferred most often with his two senior executives, Susan Chan, financial vice president, and Roger Pajot, director of research. On several occasions, Mosley Robotics had been asked by prospective customers to enter the business of manufacturing customized computer chips. Chan’s intensive study of such an action suggested that the market could be a highly profitable one. However, Jay was not convinced that the firm should enter the customized chip market. He did not opposed entry into this market, but since he voiced no enthusiasm for it, the possibility of manufacturing customized chips failed to materialize, along with many other such suggestions.

Deeply concerned that all of her research regarding entry into the customized chip market had been for naught and convinced that Mosley Robotics was floundering, Susan Chan accepted a position with a competitor. Jay tried to persuade her not to leave, but to no avail. “Jay,” she explained, “Mosley Robotics is in my blood, and I have loved working with you. But I like to know that I have a future, and as long as all of this company’s plans are in your head and subject to your whims, I’m not sure that I or anyone else has a future in this company.” Mosley, deeply shaken by Susan’s resignation and by the truth she had forced him to face, decided that a more formal approach to planning was required. That decision led to a series of questions. The top question was, “How do we start?”

Questions for discussion

1.How could you explain the success of Mosley Robotics during the first years of its operation?

2.How could they achieve the competitive advantage on the market?

3.What fears might Mosley have that would cause him to resist the opportunity of entering the customized chip market?

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4.Why is it important for chief executive officers, middle-level managers, and first-level managers to be actively involved in a strategic planning process?

5.What kind of research, what kind of analysis should be done by the managers of Mosley Robotics before working out the strategic plan for their future development?

VI. Division of Work and Organization Structure

A bureaucracy is a rational, systematic, and precise form of organization in which rules, regulations, and techniques of control are defined precisely. Problems associated with bureaucratic organization form include suppression of initiative, overuse of controls, and growth for its own sake. Bureaucracies may also lead to a morality in which people are concerned more about pleasing top-level managers than performing useful work.

Departmentalization is the grouping of work or individuals into manageable units. The most common forms of departmentalization are function, product, customer, territory, and process.

A matrix organization is an organization structure which consists of a project structure superimposed on a functional structure. The matrix manager must achieve results through employees who are also responsible to another manager.. Matrix organizations respond quickly and are flexible, but create problems of uncertain authority and power struggles.

The opposite of a bureaucracy is an adhocracy, an organization structure characterized by temporary teams of workers who move from project to project. That system stresses open supportive leadership and participative decision-making and goal-setting. The manager is a linking pin between the manager’s own subunit and higher-level managers. This structure decreases major differences in authority between upper and lower members of the organization.

Choosing the best organization structure is dependent on such factors as the organization’s strategy and goals, technology, size, the stability of its environment, and the characteristics of its people. Another aspect of structure is choosing the appropriate form of control, or number of organization members reporting to one manager. Choosing this appropriate form depends on the capabilities of the manager and the subordinates, and the similarity of work activities supervised.

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Key factors in making different structures effective include selecting an appropriate size, the leader playing a task and interpersonal role, tactful handling of suggestions, an appropriate mix of members, and careful planning and implementation.

Questions for discussion and review

1.Draw a matrix structure and a non-bureaucratic structure for a hypothetical organization. Explain the difference.

2.In what way does a business school use a matrix structure?

3.What are the important things you would want to know before choosing an organization structure?

4.What factors can benefit the effective structures?

Problems for action

1. Assume that your manager has said to you, “Our company is suffering from poor coordination. The right hand doesn’t know what the left hand is doing. We are paying for this problem in wasted motion and customer dissatisfaction. I’m particularly concerned about the poor cooperation between manufacturing and marketing”.

Make a concrete proposal for remedying these problems.

2. Utilizing Production Capacity

You have recently invested heavily in new technology system for your production line. Despite an advertising campaign, home sales have remained static and your new machinery is running at under-capacity.

What are the possible courses of action that you could take in order to use your machinery at a more economic rate?

Make recommendations which will improve the efficiency of marketing department’s work and allow to better the cooperation between marketing and production departments.

Food Merchants, Inc. is a locally owned chain of ten supermarkets that has done business in its city for over 60 years. In recent years, statewide and national chains have gained an increasing share of the grocery business in the city. Nevertheless, Food

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Merchants has continued to grow slowly in both gross sales and profitability. Two years ago, the president of the chain retired after 21 years of service. The new president chosen was Kate McElton, the former operations manager of a large, competitive supermarket chain.

During a recent staff meeting, McElton had a surprise announcement. The president informed the supermarket managers that the supermarket was long overdue for a change in organization structure. McElton said “After two years in this post, I have decided that Food Merchants is not responsive enough to compete successfully in today’s rapidly changing food shopper’s environment. We are too conventional, i.e. traditional in the way we do business and the way we are organized. I see the need for change, but I want to confer with you before we make any changes. My general thinking is that our organization structure slows us down. Look at this chart I have placed on the overhead projector.

“Notice that I have presented an overview of the organization structure of our supermarket chain. Our policy manual presents more details. I would like you to think about a revised organization structure that will help us take better advantage of opportunities. The opportunities I refer to are such things as garden stores, freestanding specialty stores in nearby locations, fast food restaurants, and theme restaurants. We do have a fine advertising and marketing departments, but our marketing efforts rarely lead us into new markets. Instead, we aim at increasing our market share of something we already do well. Sometimes our marketing strategy is so bland, i.e. it lacks taste, initiative, intuition, that all it amounts to is lowering the price on food.

As we design a revised structure, we must take cost into account. As you know, the retail food business runs very slim margin profits. We therefore cannot justify lavish