CASE ANALYSIS

By Filza Faisal 8197

Siraj Rafiq 8501
Miqdad
Anum Bukhari 4718
Case 13
Philips, N.V.
Charles W.L.Hill
 Q1) How did the environment that Philips faced change during the
1960s and 1970s? What were the implications of those changes?

 Reduction of trade barriers due to emergence of European

Economic Committee and General Agreement of Tariffs and
Trade (GATT)
 Sony and Matsushita started production in Japan
 To cut down their costs, the companies had to achieve
economies of scale
 Innovation increased due to decrease in product lifecycles
 Dominant global designs needed to have a competitive
advantage
 Q2) What was the structure followed by Philips during 70’s and 80’s?
 

 Multi domestic or divisional structure was followed by

Philips
 National organizations had a sense of local responsiveness to
satisfy local needs
 Country specific strategies was implemented
 The power, strategies, decision making was restricted to the
respective companies
 Little coordination with the head quarters
 3) Why did Philips have low profits during the 1970s? Why did this
situation persist during the 1980s?

There was a lack of alignment between strategy, structure and

environment.
 National organizations were responsible for marketing, manufacturing
and strategizing
 Product divisions were responsible for new product development.
 Dominance of national organizations
 Biasness of board members at the headquarters.
 Dominance brought duplication of manufacturing facilities and lack of
coordination brought inappropriate marketing and slow production of products.
 Head office staff was working for their own interest which brought
inertia.
 Q4) What must Philips do to survive? What kind of structure it should
adopt? Explain.

 Reduce cost by coordination, which will also eliminate duplication of

work.
 Products should be manufactured at a single location.
 Coordination will bring innovation.
 Philips should do strategic alliances with others to share the costs and
risks associated with the new products
 Product divisions should have more power than national organizations,
which will bring marketing and R&D together.
 Conflicts should be reduced.
 Headquarters bureaucracy should be reduced.
 Q5) Identify the sources of inertia within Philips. How can inertia be
overcome?

 The Eindhoven bureaucracy should be reduced.

 More authority should be given to product divisions.
 Due to organizational design and culture, the heads national organizations
resist a decrease in their power.
 Lack of diversified people
 Requirement of Leadership in the headquarters so that product divisions’
work is not ignored.
 Structural change is required, which is achieved by placing product
divisions’ heads in the main management group
Case 3
Continental Can Company of
Canada, Ltd.
Paul R.Lawrence
revised by john P.Kotter
 INTRODUCTION
 Continental Can Company of Canada, Ltd. (CCC) is
about a routine mass-production organization that is
experiencing conflict between the manufacturing and
sales departments. Manufacturing has all the power,
and managers are rewarded for reducing costs and
increasing efficiency. They have no incentive to be
responsive to the needs of the sales department. Sales
are declining somewhat and quality is going down.
The issue is how to change the way the company
operates and improve its effectiveness.
 Q1) What kinds of organizational design choices has CCC made about the four
design challenges (A. Vertical Differentiation, B. Horizontal Differentiation, C.
Integration Mechanisms, D. Standardization-Mutual Adjustment)?

Vertical Differentiation:
 Levels in the hierarchy (5 Levels and 500 employees)
 Span of Control (Wide)
 Relatively tall structure
 Monitoring and coordinating activities
 Centralization
Horizontal Differentiation:
 Few multiple departments . All manufacturing.
 Low level of horizontal differentiation and complexity
 Functional structure as manufacturing and sales a separate units
 Geographic structure at company level.
 continue
Integration Mechanisms
Integrating mechanisms include:
 Budget
 Bi-weekly production control meetings
 Formal budget meetings once a month
 Some unscheduled meetings

Standardization—Mutual Adjustment
 Budget
 High level of Standardization
 Common goal towards efficiency not effectiveness.
  
Q2)Given these design choices. How would you describe CCC’s approach to
coordinating and motivating employees?

 It has a tall, highly centralized, highly standardized and

simple functional structure.
 Mechanistic structure
 Top-down communication
 Authority relationships are clearly defined
 High level of personal supervision and control
 Q3) Are CCC’s organizational structure and design choices appropriate?

Given Continental Can Company’s efficiency driven

approach a mechanistic structure is the most
appropriate choice keeping in mind:
 Routine mass-producing technology
 low-cost strategy
 relatively routine, stable environment.
 mass-production technology
 Low level of skills and participation expected from its
workforce.
 Q4) What problems are occurring in the St. Laurent plant?

The basic problems are:

 Conflict and lack of integration between manufacturing and
sales
 Falling sales and a lack of response to customer needs
 Deteriorating product quality
 Lack of cooperation and trust between foreman and
schedulers
 Q5) Why are these problems
occurring?
The main reasons of the problem are
stated below:
A. Subunit orientation
B. The budget
C. Incompatible goals
D. Structure
Q6) Draw a diagram of the key roles in the plant to show where problems are occurring.
 
 Continue..
Problem Area 1: Reporting authority of Fox and District Sales
Manager.

Problem Area 2: Needs of sales are not being met.

Problem Area 3: Quality is falling

 Q7) What changes should be made to the way the St. Laurent plant is operating to solve its problems?
 

Two of the main recommendations are stated below:

Changing the budget.
• The budget should be relaxed.
• Sales related goals should be added.
• Increase in product quality
Changing the structure.
• A sales manager could be assigned who reports to Fox and to the
district sales manager.
• Fox and the district sales manager both respond to the same
corporate executive.
• Sales, production control, and quality control can band together
THANKYOU ….