Business

Case Questions

1. Recall our definition of strategy in Chapter 7 as “a comprehensive plan for accomplishing an organization's goals.” Explain why NOV's approach to acquisitions qualifies as corporate-level strategy. Be specific by discussing the company's moves, the nature and state of the industry that it's in (drilling equipment and services), the nature and state of the industry to which it's closely related (oil and gas drilling), and, most importantly, its goals. What are NOV's goals?

2. How does each of the following situational influences on organizational design affect organizational design (and strategy) at NOV—core technology, environment, and organizational size? How about organizational life cycle? At what stage in that cycle would you put NOV? Which of NOV's actions give an indication of the company's life-cycle stage as management sees it? (Note: NOV intends to spend $100 billion in the next 10 years.)

3. Wall Street has a surprisingly uneasy relationship with NOV. Stock price, for example, hasn't nearly kept pace with increase in earnings over the past decade. For one thing, some sectors of the company's business make its overall performance somewhat volatile, and analysts at Motley Fool observe that “NOV's volatility isn't its best feature.” Asked about the spinoff of DistributionNOW and the subsequent reorganization, Pete Miller replied: “We think it's going to give the analysts a better opportunity to be able to look at the company and say, ‘OK, I understand this part of it, and I understand this part of it,’ and probably get a better valuation.”

Strategically speaking, how would you characterize the message that the combination spinoff and organizational redesign are supposed to send to investors and analysts? Why do you suppose NOV management felt the need to send it? Why do you suppose it was sent when it was sent?

4. An investment analyst asked Pete Miller how his acquisitions strategy affects the company “from the top down in your company culture.” How does the company culture “allow your employees to buy into these new companies coming into the fold?” Miller replied, “I don't think a company like ours can have a culture. We're too spread out. In 63 countries, you've got all different cultures.” But he also added that employees understand how a strategy of acquisition provides opportunity. “I tell everybody in this company, I'm not sure what a CEO is supposed to do, but one of the things that I do try to do is provide opportunity to our employees. You provide that opportunity by growing. As you continue to grow, and people actually see the opportunity, then they see what it affords to employees as well as customers.”

What about you? Would this theory of company culture, along with its theory about employee appreciation of opportunity, appeal to you? Would it be relevant to you in deciding whether to take a job at NOV? Would you want to work for a company with 64,000 employees in 63 countries?