Question: David Javier was reviewing the consulting firm’
David Javier was reviewing the consulting firm’s proposed changes in organization structure for Rhinebeck Industrial (RI). As Javier read the report, he wondered whether the changes recommended by the consultants would do more harm than good for RI. Javier had been president of RI for 18 months, and he was keenly aware of the organizational and coordination problems that needed to be corrected in order for RI to improve profits and growth in its international businesses. Company Background Rhinebeck Industrial was started in the 1950s in South- ern Ontario, Canada, by Robert Rhine, an engineer who was an entrepreneur at heart. He started the business by first making pipe and then glass for industrial uses. As soon as the initial business was established, however, he quickly branched into new areas such as industrial sealants, coatings, and cleaners, and even into manufacturing mufflers and parts for the trucking industry. Much of this expansion occurred by acquiring small firms in Canada and the United States during the 1960s. RI had a conglomerate-type structure with rather diverse subsidiaries scattered around North America, all reporting directly to the Ontario headquarters. Each subsidiary was a complete local business and was allowed to operate independently so long as it contributed profits to RI. During the 1970s and 1980s, the president at the time, Clifford Michaels, brought a strong international focus to RI. His strategy was to acquire small companies worldwide with the belief that they could be formed into a cohesive unit that would bring RI synergies and profits through low cost of manufacturing and by serving businesses in inter- national markets. Some of RI’s businesses were acquired simply because they were available at a good price, and RI found itself in new lines of business such as consumer products (paper and envelopes) and electrical equipment (switchboards, light bulbs, and security systems), in addi- tion to its previous lines of business. Most of these prod- ucts had local brand names or were manufactured for major international companies such as General Electric or Corning Glass. During the 1990s, a new president of RI, Sean Rhine, the grandson of the founder, took over the business and adopted the strategy of focusing RI on three lines of business—Industrial Products, Consumer Products, and Electronics. He led the acquisition of more international businesses that fit these three categories and divested a few businesses that didn’t fit. Each of the three divisions had manufacturing plants as well as marketing and distribution systems in North America, Asia, and Europe. The Industrial Products division included pipe, glass, industrial sealants and coatings, cleaning equipment, and truck parts. The Electronics division included specialty light bulbs, switchboards, computer chips, and resistors and capacitors for original equipment manufacturers. Consumer Products included dishes and glassware, paper and envelopes, and pencils and pens. Structure In 2010 David Javier replaced Sean Rhine as president. He was very concerned about whether a new organization structure was needed for RI. The current structure was based on three major geographic areas—North America, Asia, and Europe—as illustrated in Exhibit 6.12. The various autonomous units within those regions reported to the office of the regional vice president. When several units existed in a single country, one of the subsidiary presidents was also responsible for coordinating the various businesses in that country, but most coordination was done through the regional vice president. Businesses were largely independent, which pro- vided flexibility and motivation for the subsidiary managers. The headquarters functional departments in Ontario were rather small. The three central departments— Corporate Relations and Public Affairs, Finance and Acquisitions, and Legal and Administrative—served the corporate business worldwide. Other functions such as HR management, new product development, marketing, and manufacturing all existed within individual subsidiaries and there was little coordination of these functions across geographic regions. Each business devised its own way to develop, manufacture, and market its products in its own country and region. EXHIBIT 6.12 Rhinebeck Industrial Organization Chart 
Organizational Problems The problems Javier faced at RI, which were confirmed in the report on his desk, fell into three areas. First, each subsidiary acted as an independent business, using its own reporting systems and acting to maximize its own profits. This autonomy made it increasingly difficult to consolidate financial reports worldwide and to gain the efficiencies of uniform information and reporting systems. Second, major strategic decisions were made to benefit individual businesses or for a country’s or region’s local interests. Local projects and profits received more time and resources than did projects that benefited RI worldwide. For example, an electronics manufacturer in Singapore refused to increase production of chips and capacitors for sale in the United Kingdom because it would hurt the bottom line of the Singapore operation. However, the economies of scale in Singapore would more than offset shipping costs to the United Kingdom and would enable RI to close expensive manufacturing facilities in Europe, increasing RI’s efficiency and profits. Third, there had been no transfer of technology, new product ideas, or other innovations within RI. For example, a cost-saving technology for manufacturing light bulbs in Canada had been ignored in Asia and Europe. A technical innovation that provided homeowners with cell phone access to home security systems developed in Europe had been ignored in North America. The report on Javier’s desk stressed that RI was failing to disperse important innovations throughout the organization. These ignored innovations could provide significant improvements in both manufacturing and marketing worldwide. The report said, “No one at RI understands all the products and locations in a way that allows RI to capitalize on manufacturing improvements and new product opportunities.†The report also said that better worldwide coordination would reduce RI’s costs by seven percent each year and increase market potential by 10 percent. These numbers were too big to ignore. Recommended Structure The report from the consultant recommended that RI try one of two options for improving its structure. The first alternative was to create a new international depart- ment at headquarters with the responsibility to coordinate technology transfer and product manufacturing and marketing worldwide (Exhibit 6.13). This department would have a product director for each major product line—Industrial, Consumer, and Electronics—who would have authority to coordinate activities and innovations worldwide. Each product director would have a team that would travel to each region and carry information on innovations and improvements to subsidiaries in other parts of the world. The second recommendation was to reorganize into a worldwide product structure, as shown in Exhibit 6.14. All subsidiaries worldwide associated with a product line would report to the product line business manager. The business manager and staff would be responsible for developing business strategies and for coordinating all manufacturing efficiencies and product developments worldwide for its product line. This worldwide product structure would be a huge change for RI. Many questions came to Javier’s mind. Would the subsidiaries still be competitive and adaptive in local markets if forced to coordinate with other subsidiaries around the world? Would business managers be able to change the habits of subsidiary managers toward more global behavior? Would it be a better idea to appoint product director coordinators as a first step or jump to the business manager product structure right away? Javier had a hunch that the move to worldwide product coordination made sense, but he wanted to think through all the potential problems and how RI would implement the changes. EXHIBIT 6.13 Proposed Product Director Structure 
EXHIBIT 6.14 Proposed Worldwide Business Manager Structure 
Questions 1. Which of the three organizational problems—separate reporting systems, business self-interest, no technology transfer—would you address first? Explain. 2. What do you see as the pros and cons of a new head- quarters’ international department to coordinate across geographic regions? 3. Do you support the proposal to reorganize into a worldwide product structure? What implementation challenges do you foresee? Explain.
> What are some of the primary reasons a company decides to expand internationally? Identify a company in the news that has recently built a new overseas facility. Which of the three motivations for global expansion described in the chapter do you think be
> Do you think it makes sense for a transnational organization to have more than one headquarters? What might be some advantages associated with two head- quarters, each responsible for different things? Can you think of any drawbacks?
> Many American companies enter China through joint ventures with local firms, but China is succeeding in the United States primarily with a strategy of buying companies outright. What are some factors that might account for this difference?
> Why do you think the tension between a desire for global uniformity and local responsiveness is greater today than in the past?
> Compare the description of the transnational model in this chapter to the elements of organic versus mechanistic organization designs described in Chapter 1. Do you think the transnational model seems workable for a huge global firm? Discuss.
> Name some companies that you think could succeed today with a globalization strategy and explain why you selected those companies. How does the globalization strategy differ from a multi-domestic strategy?
> How does the desire for legitimacy result in organizations becoming more similar over time?
> The Aquarius Advertising Agency is a medium-sized firm that offered two basic services to its clients: customized plans for the content of an advertising campaign (e.g., slogans and layouts) and complete plans for media (e.g., radio, TV, newspapers, bill
> Do you believe that perceived legitimacy really motivates a large, powerful organization such as Walmart? Is acceptance by other people a motivation for individuals as well? Explain.
> Discuss how the process of variation, selection, and retention might help explain innovations that take place within an organization.
> The population-ecology perspective argues that it is healthy for society to have new organizations emerging and old organizations dying as the environment changes. Do you agree? Why would European countries pass laws to sustain traditional organizations
> Discuss how the adversarial versus partnership orientations work between you and other students in your course. Is there a sense of competition or collaboration for grades? Is it possible to develop true partnerships if your grade depends on the work of
> Many managers today were trained under assumptions of adversarial relationships with other companies. Do you think operating as adversaries is easier or more difficult than operating as partners with other companies? Discuss.
> Assume you are the manager of a small firm that is dependent on a large manufacturing customer that uses the resource-dependence perspective. Put yourself in the position of the small firm, and describe what actions you would take to survive and succeed.
> How do you feel about the prospect of becoming a manager and having to manage a set of relationships with other companies rather than just managing your own company? Discuss.
> How do mimetic forces differ from normative forces? Give an example of each.
> The concept of business ecosystems implies that organizations are more interdependent than ever before. From personal experience, do you agree? Explain.
> Assume you have been asked to calculate the ratio of staff employees to production employees in two organizations—one in a simple, stable environment and one in a complex, shifting environment. How would you expect these ratios to differ? Why?
> The first Holtzclaw Supermarkets store was started in 1977 by Sam Holtzclaw and his brother Bob. Both were veterans who wanted to run their own business, so they used their savings to start the small grocery store in Charlotte, North Carolina. The store
> Why do organizations become involved in inter-organizational relationships? Do these relationships affect an organization’s dependency? Explain.
> Compare an organic organization to a mechanistic organization. How does the environment influence organic and mechanistic designs?
> Do you think planning becomes more important or less important in a world where everything is changing fast and crises are a regular part of organizational life? Why?
> Describe differentiation and integration. In what type of environmental uncertainty do you think differentiation and integration would be greatest? Least?
> Discuss the importance of the international sector for an organization today compared to domestic sectors. What are some ways in which the international sector affects organizations in your city or community?
> Name some factors causing environmental complex- ity for a local organization of your choice, such as a restaurant or sporting goods store. How might this environmental complexity lead to organizational complexity? Explain.
> Which typically has the greatest impact on organizational uncertainty—environmental complexity or environmental dynamism? Why?
> Is changing the organization’s domain a feasible strategy for coping with a changing environment? Explain, using either Amazon or Walmart as an example.
> How would the task environment of a new Internet- based company compare to that of a large government agency? Discuss.
> Why do companies using a holacracy team structure have cultures that emphasize openness, employee empowerment, and responsibility? What do you think it would be like to work in a company with such a structure?
> Locals referred to it—affectionately or sarcastically—as the “Adding Museum.” Housed in the massive Romanesque-style former mansion of Horace and Margaret Addlington, the 100-year-old Addlington Gallery of Art had, by 2016, reached a tipping point of ins
> The manager of a consumer products firm said, “We use the brand manager position to train future executives.” Why do you think the brand manager position is considered a good training ground? Discuss.
> Why do you think the pressure of scarce resources across product lines causes managers to consider a matrix structure?
> As a manager, how would you create an organization with a high degree of relational coordination?
> When Burton Lee took over as plant manager for the Burlington division of a large manufacturing company, he saw the opportunity to transform the lowest performing unit as a pathway to his promotion into top management. Burton was aware of his reputation
> The Daily Tribune is the only daily newspaper serving a six-county region of eastern Tennessee. Even though its staff is small and it serves a region of mostly small towns and rural areas, the Tribune has won numerous awards for news coverage and photojo
> Hu-go. Hu-go. As Alissa Mason drove up the mountain through the rain, she turned up the volume on the radio to clear her mind. However, even the steady rhythm of the truck’s windshield wipers steered her mind back to the problem—Hu-go, Hu-go. Ten years e
> Harmon Davidson stared dejectedly at the departing figure of his management survey team leader. Their meeting had not gone well. Davidson had relayed to Al Pitcher complaints about his handling of the survey. Pitcher had responded with adamant denial and
> Jim Malesckowski remembered the call of two weeks ago as if he had just put down the telephone receiver: “I just read your analysis and I want you to get down to Mexico right away,” Jack Ripon, his boss and chief executive officer, had blurted in his ear
> Fabulous Footwear produces a line of women’s shoes that sell in the lower-price market for $27.99 to $29.99 per pair. Profits averaged 30 cents to 50 cents per pair 10 years ago, but according to the president and the controller, labor
> NASCAR fans expect their drivers to be smart, crafty, and calculating and, if need be, playing just this side of the rule book—in the garage and on the track. Loyal fans “know” their drivers and can easily picture themselves drinking a beer or spending a
> Larisa Harrison grimaced as she tossed her company’s latest quarterly earnings onto the desk. When sales at Virginia- based Millier Machine Parts & Services surged past the $10 million mark some time back, Larisa was certain the company was well position
> Curtis Simpson sat staring out the window of his office. What would he say to Tom Lawrence when they met this afternoon? Tom had clearly met the challenge Simpson set for him when he hired him as president of Midwest Controls, Inc. a little more than a y
> Bachmeyer Foods is a large distribution company with more than 5,000 employees and gross sales of more than $900 million (2017). The company purchases salty snack foods and liquor and distributes them to independent retail stores throughout the United St
> High-tech within the corporate world was developed, in part, on the notion of mobile strategy and convenience— the ability to communicate, work remotely and accomplish the same results; cutting the corporate and personal car- bon footprint by reducing co
> Hermitage Escalator Company is an independent division of a large international manufacturer that sells and provides maintenance of elevators and escalators. Hermitage was started by an entrepreneur living in Hermitage, Tennessee in 1954, just as the dem
> Fifty-year-old Paul Sandberg glanced up from his CNC (computer numerically controlled) turning machine to the computer control office above him on the 2nd floor of the workshop. A new program had been initiated that morn- ing and, despite earlier tests,
> The acetate department’s product consisted of about twenty different kinds of viscous liquid acetate used by another department to manufacture transparent film to be left clear or coated with photographic emulsion or iron oxide. Before
> Sitting in Maisson’s Restaurant, Janelle Mosley completely lost interest in her chef salad and now sat sipping her Pinot Grigio and watching with a combination of amusement and curiosity her rival, Jonathan Draper, “doing his own thing.” Seated across th
> Jenny Amaraneni is a social entrepreneur determined to build a social enterprise named SOLO Eyewear. Solo produces a line of hand-crafted sunglasses made from bamboo materials, with a portion of the funds from each pair sold donated to providing eye care
> Would you prefer to work in an organization with a tight or a loose culture (BookMark)? Explain why.
> What importance would you attribute to leadership statements and actions for influencing cultural values in an organization? Explain.
> Do you think strong subcultures would be a good thing for an organization? Why?
> How might the symbols apparent in a business college differ from symbols in a school of social work? If you have access to both types of schools, walk through them and record any differences you see.
> In which of the four cultures described in Exhibit 11.4 would you prefer to work? Why?
> Describe the four elements of the feedback control model. Which of these elements is more similar to behavior control? Outcome control?
> Many of the companies on Fortune magazine’s list of most admired companies are also on its list of most profitable ones. Some people say this proves that high social capital translates into profits. Other people suggest that high profitability is the pri
> How would you describe the major differences between a hierarchical philosophy of control and a decentralized philosophy of control? Which philosophy of control would be easier for a manager to implement? Discuss.
> How much do you think it is possible for an outsider to discern about the underlying cultural values of an organization by analyzing symbols, ceremonies, dress, or other observable aspects of culture, compared to an insider with several years of work exp
> Numerous large financial institutions, including Lehman Brothers and Merrill Lynch, experienced significant decline or dissolution in recent years. Which of the three causes of organizational decline described in the chapter seems to apply most clearly t
> At the age of 39, after working for nearly 15 years at a leading software company on the West Coast, Alex Schaaf and his soon-to-be-wife, Emily Rockwood, had cashed in their stock options, withdrawn all their savings, maxed out their credit cards, and st
> To better understand the importance of organization structure in your life, do the following assignment. Work with a partner or a small team to select one of the following situations to organize and to complete this exercise: • A copy and print shop • A
> Assume that you could design the perfect organization that reflected your values. What goals would receive priority in that organization? Rank order the list of goals below from 1 to 10 to reflect the goals you consider most important to least important
> Individually or in a small group of two, interview two employees who are in different organizations or who are in the same organization but in different parts and doing different jobs. Ask each person to answer the following questions on a four-point sca
> Think about how you typically handle a dispute with a team member, friend, or co-worker and then answer the following statements based on whether they are True or False for you. There are no right or wrong answers, so answer honestly. Scoring and Interpr
> Respond to each of the following statements based on how you have actually approached a difficult problem at school or work. Indicate whether each statement is True, Somewhat True, or False for you. Scoring and Interpretation: Sum questions 1-9 by giving
> In order to examine differences in the level of innovation encouragement in organizations, you will be asked to rate two organizations. The first should be an organization in which you have work experience, or your university. The second should be someon
> Individually read the measures and objectives below for a business firm. Make a check for each objective/measure item in the correct balanced score- card column. If you think an objective/measure fits into two balanced scorecard categories, write the num
> Think back to one of your most favorite and least favorite courses in school. How did the instructor assert control over you, other students, and the classroom in those courses? Write down your answers for the comparisons below. How were rules, standards
> The era of big data has arrived. Discussions of terabytes and petabytes that were reserved for supercomputing facilities just a few years ago are common today. Companies are recognizing the tremendous value in the data they create, and they want to capit
> You will be analyzing the work technology used in two different small businesses—a local cleaners and a local family restaurant. Your instructor will tell you whether to do this assignment as individuals or in a group. You must visit bo
> This exercise will help you better understand the concept of ethics and what it means to you. It probably will not happen right away, but soon enough in your duties as an organization manager, you will be confronted with a situation that will test the st
> ABC World News ran a special series called “Made in America.” In the opening program, correspondents David Muir and Sharyn Alfonsi removed all foreign-made products from a family’s Dallas, Texas, home
> 1. Divide into groups of three. Half the groups, on one side of the room, are “1s” and the other half are “2s.” 2. The 1s are Pharmacology; the 2s are Radiology. Read only your own role, not the other one. 3. Any students not in a negotiating group can b
> Below, list four organizations you somehow rely on in your daily life for some resource. Examples might be a restaurant, a clothing store, a university, your family, the post office, your wireless provider, an airline, a pizzeria that delivers, and your
> Can an organization be efficient without being effective? Can an inefficient organization still be an effective one? Explain your answers.
> A handful of companies on the Fortune 500 list are more than 100 years old, which is rare. What organizational characteristics do you think might explain 100-year longevity?
> Describe some ways in which the digitalization of business has influenced or affected an organization with which you are familiar, such as your college or university, a local retailer or restaurant, a volunteer organization, a club to which you belong, o
> What is one contingency factor that might help explain the poor performance of GE when Jeffrey Immelt was CEO? Explain.
> What is the difference between a task force and a team? Between liaison role and integrating role? Which of these provides the greatest amount of horizontal coordination?
> What are the primary differences in structure between a traditional, mechanistic organization designed for efficiency and a more flexible organic organization designed for learning?
> Large corporations tend to use different structures in different parts of the organization. Why would that be so?
> When is a functional structure preferable to a divisional structure?
> Describe the virtual network structure. What are the advantages and disadvantages of using this structure compared to performing all activities in-house within an organization?
> To what extent does the true structure of an organization appear on the organization chart? Explain.
> What are the similarities and differences between assessing effectiveness on the basis of competing values versus the strategic constituents approach? Explain.
> What are the advantages and disadvantages of the resource-based approach versus the goal approach for measuring organizational effectiveness?
> Suppose you have been asked to evaluate the effectiveness of the police department in a medium-sized community. Where would you begin, and how would you proceed? What effectiveness approach would you prefer?
> Do you believe mission statements and official goal statements provide an organization with genuine legitimacy in the external environment? When a company such as CVS (discussed in the chapter) makes a decision to stop selling cigarettes because that act
> Discuss the similarities and differences in the strategies described in Porter’s competitive strategies and Miles and Snow’s typology.
> What is the difference between a goal and a strategy as defined in the text? Identify both a goal and a strategy for a campus or community organization with which you are involved.
> What is a goal for the class for which you are reading this text? Who established this goal? Discuss how the goal affects your direction and motivation.
> How might a company’s goals for employee development be related to its goals for innovation and change? To goals for productivity? Can you discuss how these types of goals might conflict in an organization?
> A noted organization theorist once said, “Organizational effectiveness can be whatever top management defines it to be.” Discuss.
> How might the top management of an organization use SWOT analysis or scenario planning to set goals and strategy? Explain.
> Early management theorists believed that organizations should strive to be logical and rational, with a place for everything and everything in its place. Discuss the pros and cons of this approach for organizations today.
> What are some differences one might expect for measuring effectiveness expectations for a nonprofit organization versus a for-profit business? Do you think nonprofit managers have to pay more attention to stakeholders than do business managers? Discuss.
> What does it mean to say an organization is an open system? How is the stakeholder approach related to the concept of open systems?
> What are the primary differences between an organic and a mechanistic organization design? Which type of organization do you think would be easier to manage? Discuss.
> What does contingency mean? What are the implications of contingency theory for managers?
> What is the difference between formalization and specialization? Do you think an organization high on one dimension would also be high on the other? Discuss.
