Malik Arnold
BUSI 690-D06
Rothaermel Exercise 3
Professor Wilson
Chapter 11
11.1 Why is it important for an organization to have alignment between its strategy
and organizational structure?
It is important to have alignment between strategy and organizational structure because
both sectors play a role in the overall development of the company. An organization’s
strategy is the company’s plan for the entire business that sets forth how the organization
will use its resources to achieving specific goals (Rothaermel, 2013). An organization’s
structure is the internal format as to how the areas will function. It is important to keep
both sectors collaborating smoothly to avoid task overlap and workforce confusion,
specifically pertaining to long-term productivity. Task overlap, a situation in which two
or more employees perform the same task in different departments (Rothaermel, 2013),
results in loss of profits for the company. This in turn creates further confusion into who
is accountability and who is willing to take responsibility. Another way these two sectors
are related is because organizational strategy helps a company build its organizational
structure and design, shaping all functioning patterns of operations such as business
analyst and human resources departments. A company's organizational structure is based
on the result of the analysis of organizational strategy (Rothaermel, 2013). These results
are used to determine the main area of concentration and how the company has been
shaped.
11.3a What commonalities across the products would likely be enhanced by flexible
cross functional teams?
One commonality between these products that would be cross functional is the material
and its relation to the outdoors. All these products can be established in an outdoor
setting, allowing teams to build accommodations suitable to both climates. Gore’s
products deal greatly with materials, making their products a necessity to a variety of
different building renovation products and services. All the products share a relationship
with the consumer through all types of outwear capabilities. Flexible cross-functional
teams would thrive from this company because of the variety of area they can focus on
when solicitation the product. Since outdoor apparel and equipment is important to the
consumer, Gore’s product gains more attention, as well as sales profit and revenue.
11.3b What would be your expectations of the type of norms found at W.L. Gore?
My expectations of the type of norms that would exist at W.L. Gore would be ones that
are not similar to those at regular public corporations or organizations. Their norms
would be informal with no titles, no bosses, and no formal hierarchy. The environment is
geared more towards a network setting, where associates would be able to go directly to
any individual working within the organization for information or direction. These norms
would halt the usage of any titles in specific individuals, as no official manager or
supervisor exists, allowing everyone to possess equal knowledge in the job.
Chapter 12
12.1 How can a firm lower the chances that key managers will pursue their own self-
interest at the expense of the stockholders? At the expense of the employees?
A firm can lower its chances of conflict between their managers and stockholders by
implementing an effective strategic control system. Strategic control systems are the
primary governance mechanisms established within a company to reduce the scope of the
agency problem between levels of management (Rothaermel, 2013). These systems
effectively establish standards and targets against which companies can measure their
performance. They also evaluate the final results and take any corrective action against
management that may be necessary. In terms of the employees, incentive programs have
been proven to be effective controlling the relationship between the stakeholder and the
worker. To help make this relationship the most positive possible, incentive systems are
often put in place to motivate employees to work towards goals that are central to
maximizing long-term profitability (Rothaermel, 2013). Stock option grants have also
been proven to be in favor of the employee as the logic behind these types of system are
straight forward: stock price is dependent upon the profitability of the company,
employees will the work towards maximizing profitability.
12.2 The chapter notes that in 2010, in roughly two-thirds of U.S. firms, the CEO is
also the chair board of directors. More broadly this can be viewed as an
intermingling of management and ownership. Why are these two roles typically
separated? Is it a positive development for so many firms to have combined CEO
and board chair?
The issue of separating the chair/CEOs roles often arises after a recent financial crisis or
when public corporations come under attack from shareholders or regulators. This is
known sometimes as a “one size fits all” approach. Based on agency theory, the most
common argument regarding this separation tactic is that the separation of the chair and
CEO roles increases the board’s independence from management and thus leads to better
monitoring and oversight (Rothaermel, 2013). This is mainly due to the fact that the CEO
manages the company and the chair leads the board in overseeing the operations and
functions of the company. The idea that one person has the power capable enough to
manage all executive tasks of the company is irregular, however, one individual does
have the power to oversee the operations. This is a positive development for firms to
possess this structure because it keeps the company going in one solid direction, without
any side tasks or explorations that haven’t been approved by all those in executive favor.
References
Rothaermel, F. T. (2013). Strategic management concepts and cases. New York, NY:
McGraw-Hill. ISBN: 9780073535166.
