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Adapting to Organizational Change January 31, 2007

Posted by breichen in Merger, Organizational Culture, Organizational Design, Organizational Environment.
3 comments

http://money.cnn.com/2007/01/25/news/companies/time_bonnier/index.htm

Time Inc. is a division of Time Warner, and publishes about 150 different magazines worldwide. They are the leading magazine publisher in both the US and the UK. In recent days, Time Inc. has made a deal to sell 18 of its magazines to the Bonnier Magazine Group, a Swedish Firm. The New York Post has reported that the sale is worth about $200 million. The deal will also force Time Inc. to cut the jobs of 300 employees.

Obviously this deal will affect both organizations in a significant way. This is just one example of how an organization’s internal structure can change at any time. At Time Inc., management will have to adjust to a number of changes including the loss of revenue from the 18 magazines sold, smaller organizational size, etc. Bonnier Magazine Group, who acquired the magazines with its U.S. magazine partner, World Publications. With the addition of 18 new titles to its lineup the company will be publishing over 40 titles and will receive over $350 million in revenue, making it one of the bigger publishers of magazines in the US.

Obviously management must consider the effect a decision will have on the organization as a whole. Whenever a decision is made certain changes will occur and the organization and its culture have to adapt to these changes.In this case, Time Inc. must deal with downsizing, while World Publications and the Bonnier Magazine Group have nearly doubled the amount of publications they release and presumably increased the size and scope of the organizations a great deal. It goes without saying that things will have to change within the organization, and that management needs to shape the organization based on the results of their decisions.

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Merck – battling over withdrawn drug January 31, 2007

Posted by silviamocanu07 in Business-Society Issues, pharmaceutical.
1 comment so far

I found this interesting article in the Financial Times – here is the link – http://www.ft.com/cms/s/573c20ec-b06d-11db-8a62-0000779e2340.html – and the issue discussed is Merck’s intention to fight lawsuits over its withdrawn painkiller drug called Vioxx.

Merck has already invested a significant amount of money into fighting lawsuits and it continues to refuse to settle any of them, despite the fact that this issue has taken a toll on their profit growth.
I think that the R&D costs that they have already invested in the drug are significant, therefore, they do not want to simply give up on such a large scale project. What do you guys think?

Given the significant expense already incurred in order to fight lawsuits brought against this one product, I think that Merck shoudl rethink their strategy and maybe try and improve the drug. In addition, this has already affected their income, particularly for the last quarter, therefore I believe that they should rethink the possibility of settling lawsuits, rather than pumping more money into them?Do you think that this the withdrawal of the drug could impact the company image as a whole or that it could take a long-term toll on their net income?

In Fashion, the Only Constant is Change January 31, 2007

Posted by Elaine in outsourcing, Retail, Technology.
2 comments

QuickStep Fashion, a specific application from Lawson Software, has recently been released for the apparel, footwear, textile, and accessories industries. Lawson Software provides software and service solutions to 4,000 customers in manufacturing, distribution, maintenance and service sector industries across 40 countries. The fashion industry’s supply chain consists of an extensive web of suppliers, manufacturers, distributors and of course, the valued customer. When a company has to outsource, they lose a considerable amount of time within the production and distribution area. They cannot directly control what they are producing and miscommunication does happen due to geographical distances .

The fashion business is a quick paced industry where companies have to be able to respond quickly to changes in their market demand. Lawson is making it possible for companies to see its entire supply chain, giving it direct assess to each step. It aids businesses with the changing styles and designs. This organizational structure also manufactures an extraordinary amount of products in a short life-cycle, even for large volume orders and business transactions. Since this software is able to receive information directly from the customer, delivery times are shortened as well. Data entry is accurate in terms of company inventory and other financial statements.

Keen Footwear is a company that has been introduced to this program recently and their director of operations, Joe Zitomer stated, “As we’ve grown and matured, we needed a faster, more reliable database, more sophisticated functionality, and dependable scalability, Lawsons applications met all of those needs.”

Timeliness is key to success in the fashion world. The overall goal of this new implemented program, is to operate as efficiently as possible and hopefully grow to such status that other companies will want to use this system. This collaborative enterprise is the new way to do business in an industry where taste (in fashion) comes as quick as it goes.

This is an expensive operation. If a business controlled all aspects of the supply chain, would quality be degraded? Would a company be overwhelmed with its responsibilities and tasks? Perhaps the fashion industry is the only industry that should use such a system due to their extreme versatility and be still be able to enhance profits.

A Survey about Firm’s Reputation January 31, 2007

Posted by Brian Mulligan in Consumers.
1 comment so far

As I was browsing the Wall Street Journal tonight, I came across an article that pertains how a consumers view companies. A research company named Harris Interactive performed this survey as part of year long research project to find out how people rank large fortune 500 companies. They based their rankings on emotional appeal, social responsibility, vision & leadership, financial performance, products & services and work place environment. This article has a direct connection with our reading for tomorrow’s class in the respect that companies have to build relationships and respect with certain companies. For example, in our text, Ecko Goup is a great example of producing a business-to-business relationship based on professionalism and trust with vital business partners and the beneficial results.

Here is the connection for the article in the journal:

<http://online.wsj.com/article/SB117019715069692873.html?mod=home_whats_news_us&gt;

Microsoft topped the list because of the great philanthropy work that Bill Gates has done over the past year. Survey respondent and homemaker said,

“He showed he cared more for people than all the money he made building Microsoft from the ground up. I wish all the other big shots could do something like this.”

Second on the list was J&J because they convey an image of creating baby products and appeal to more soft side of marketing than the usual hard side pharma has.

Those who dropped on the list from the previous year were usually companies that have experienced loss in sales or those involved in corporate scandals. For example, the scandal surrounding top executives at HP hurt their image and caused them to drop on the list.

I feel that this list is a great example of how a consumer perceives a company and shows that the way a company functions has a great impact on how the consumer views a company. In a more complex society, it’s essential to gain control and trust from your inputs such as resources and consumers.  When these become scarce, you need to formulate ways to reduce that complexity and this evident in very complex industries such as computes and pharma. Therefore, establishing a strong reputation with an input will become more necessary.  Additionally, the many corporate scandals that have been popping up in the recent years have tarnished the overall view of corporate America, so the companies that have a clean slate will shine even more. For example, Whole Foods Inc. moved onto the list because they provide healthy, organic foods to an ever growing health crazed consumer.

Being a responsible organization… January 31, 2007

Posted by Abby in Organizations and Mother Earth.
3 comments

So, this isn’t exactly about organization theory, but about an organization’s responsibility. The Bill Nye lecture got me thinking about it, and I found this site all about consumption: http://earthtrends.wri.org/features/view_feature.php?fid=7&theme=6

This responsibility to the Earth can now be seen as an issue of ethics. As a society, we have an interest in preventing the Earth from collapsing. We have a responsibility to ourselves, and future generations (forgive me for sounding cheesy). At the rate we’re all going, the best investment anyone can make right now is on a beach house in the middle of Siberia. It sounds extreme, but its pretty close to the truth.

Just a few ideas for an organization:
– Running a carpool for employees who work in the same area.
– Reduce, Reuse and Recycle (more)
– Switch to more efficient lighting options (LED instead of lightbulbs)

Organizations should be more aware of ‘green marketing’ and make sure their production, habits, etc are occuring with minimal detrimental impact on their natural environment. This harm is one thing a company cannot fix after it’s done. In the long run, maintaining and/or improving the environment will have a positive impact on all stakeholders.

Smart Solutions for Global Warming January 31, 2007

Posted by Kira in Organizations and Mother Earth.
2 comments

Although everyone is enjoying the warmer weather and more mild winters, the rising temperatures of our Earth may be detrimental. More recently, there has been a lot of concern over the issue of global warming. With all the expressed concern for the environment and the high price of oil, any company or organization would be wise to tap into the environmentally conscious consumer market. This is a great time for companies, such as Ormat Industries located in Israel, to enter into the renewable energy market.

“A Mideast nation with no oil of its own, Israel is increasingly tapping into a different kind of resource- the inventiveness and persistence of its scientists and entrepreneurs. From shale oil to solar power, Israeli companies are becoming world leaders in alternative energy, exporting their technology to customers worldwide while at the same time reducing Israel’s dependence on costly oil imports.”

Ormat Industries has become a global leader in geothermal energy and is one of the hottest renewable energy companies traded on Wall Street. Much of the company’s success is due to a turbine design that allows renewable energy sources to be converted into electricity more efficiently. The company operates 11 plants in five countries that use its turbine technology.

This article touches on a few of the issues discussed at the beginning of Chapter 3. Ormat has dealt nicely with managing both their specific and general environment. By breaking into the renewable energy market, they have surpassed their oil competitors and have also satisfied consumer/stakeholders’ changing wants and needs for a safer environment. The company has also satisfied other outside stakeholders including the government and consumer interest groups, such as the EPA, that strongly advocate for alternatives to oil. Managing these forces from outside stakeholder groups helps the company’s ability to secure resources. Ormat has also managed their general environment well- more specifically economic, technological, and environmental forces. With their new turbine technology, the company eliminated its need for costly inputs- such as oil. This new technological development has important implications for an organization’s competitive advantage. Also, their environmentally friendly energy source strengthens the organization’s relationships with competitors, consumers, and government agencies.

This article is also relevant to the resource dependency theory. Organizations are dependent on their environment for the resources they need to survive and grow. With no oil in Israel, Ormat would not be able to survive. The absence of oil in Israel left this scarce resource to be completely controlled by other organizations. The goal of this theory is to minimize dependence on other organizations. Ormat was able to minimize its dependence on other organizations since oil is not necessary for renewable energy. This added strength to the company and has made them less vulnerable to other organizations. With the exportation of their technology worldwide and 11 plants in five countries, Ormat is increasing their influence over the global environment.

I hope that Ormat Industries sets an example that other companies will follow. The future and safety of our environment is crucial- which many people do not seem to understand. Hopefully we will see an influx of companies following suit and breaking into the renewable energy market. I look forward to hearing more about the company’s future projects that were also discussed in the article.

 http://www.businessweek.com/globalbiz/content/nov2006/gb20061101_030101_page_2.htm

Organizational Culture: Google January 31, 2007

Posted by Stacey Swift in Organizational Culture.
26 comments

I also came across the same article on Google as Jenine, however I wanted to pose a different question in another blog. Google was recently named the #1 company to work for by Fortune magazine. I came across a very interesting quote that I believe can provide an interesting discussion on organizational theory.

“Is Google’s culture the cause of its success or merely a result? Put another way: Is Google a great place to work because its stock is at $483, or is its stock at $483 because it’s a great place to work?”

http://money.cnn.com/galleries/2007/fortune/0701/gallery.Google_life/2.html
It is clearly easy for Google to provide their employees with 11 eateries free to employees when they are doing so well financially. Is it possible for a company to become financially successful because of their culture?

Or do they need to be financially successful first in order to create a culture enjoyable for?

I think it is possible for a company to become successful because of their organizational culture. We saw in Chapter 1 p.10 in the comparison of Dell and Apple, Dell, “Fostered a spirit of comradeship and cooperation among team members to encourage top performance.” They were thus very successful. If the company culture encourages their employees to think freely and be creative, financial success will follow. I believe it may go both ways.

Newspapers vs. Online news January 31, 2007

Posted by Stephanie in allances, Internet, media.
1 comment so far

In the January 29, 2007 edition of Business Week, an article titled Yahoo’s Unlikely Amigos reported that many newspapers are considering joining the online world through an association with Yahoo. As “the world’s most visited home page,” Yahoo clearly has a lot to offer other companies who desire and more or less need the public’s attention on a daily basis. The nine companies involved represent 215 U.S. daily papers that hope to increase stock prices which have been sharply declining as more readers use online sources for news.

 

This raised my interest in the change of how people receive daily news. Just as the television revolutionized the 1960’s, online news seems to be taking great strides on traditional printed papers. Although “local TV news remains the most accessed source of news” according to a study reported by Rupert Murdoch , younger consumers prefer and are using the internet far more often. Of the study,

“44 percent of the study’s respondents said they use a portal at least once a day for news, as compared to just 19 percent who use a printed newspaper on a daily basis.”

 

Still some people are not as concerned with the possibility of the demise of printed newspapers. Just as the threat of television news occurred, some say that newspapers will remain in circulation. http://news.bbc.co.uk/2/hi/programmes/click_online/6220424.stm

 

Do you prefer reading news online or have a physical paper in front of you? Would you pay to view news online?

 

The original article about Yahoo refers to the association between the companies and Yahoo as a consortium. This interested me as the textbook in Chapter 3 talked about alliances, mergers and takeovers. The article interchanged “consortium” and “partnership.” I was not sure the exact differences and how to categorize the situation of Yahoo and the newspaper companies.

According to Wikipedia, “a consortium is an association of two or more individuals, companies, organizations or governments (or any combination of these entities) with the objective of participating in a common activity or pooling their resources for achieving a common goal. Each participant retains its separate legal status and the consortium’s control over each participant is generally limited to activities involving the joint endeavor, particularly the division of profits. A consortium is formed by contract, which delineates the rights and obligations of each member.” http://en.wikipedia.org/wiki/Consortium

With that in mind, I believe that the agreement would be considered a strategic alliance as they are still mutually benefiting from the relationship to achieve a common goal while still remaining independent. What do you think? Should they merge instead? Do you think Yahoo will eventually takeover newspapers companies?

Tylenol January 31, 2007

Posted by collage9 in pharmaceutical.
3 comments

I think an interesting case that deals with business ethics, and one that we recently discussed in my MGMT 312 class, is the Tylenol scare in 1982.  It is interesting to see how major companies, in this case Johnson & Johnson, handle crisises such as this one.  After learning that several deaths had occurred as a result of taking their Extra Strength Tylenol capsules, with five occurring in Chicago and one in Texas and California each, Johnson & Johnson made the decision to pull all Tylenol capsules off the shelves.  They recalled 32 million bottles of Tylenol that were worth over $100 million in sales.  This is obviously not an easy thing for a company to do, especially given the amount of sales that this product generated for the company.  But, for Johnson & Johnson, there really was no other choice.  They are a company that has always taken pride in the fact they put their customers above all else, and in this case the possibilty of more deaths resulting from taking Tylenol greatly outweighed the fact that they could lose so much profit.

I think that Johnson & Johnson without a doubt did the right thing in taking all Tylenol capsules off the shelf.  Even though it could have ended up as a public relations disaster and a large decrease in sales overall, they still had the courage to make the right decision, something that i think a lot of other companies might not have been able to do.  I think its good to see that the decision paid off for the company in the end and was rewarded for doing the right thing.  Some might say that the decision probably was made because they didn’t want to lose sales as a result of not taking the Tylenol off the shelves, but I really think that Johnson & Johnson had their customers best interests in mind.

Ethics in Business January 31, 2007

Posted by wilson7 in Auto's, Consumers, transportation.
1 comment so far

In chapter two of our book it deals a lot with Ethics, this topic related to the Ford Pinto case that I read in Business Government & Society. In 1970, the Ford officials had to confront a difficult decision either delay production of the new Ford Pinto or continue as scheduled. The problem with the Pinto was the design of the gas tank, which failed 8 out of 11test trails (the 3 that passed the test all had modifications to the gas tank). The company decided to do a cost-benefit analysis to determine if it was worth the wait. This analysis determined that a person killed in a gas tank accident was worth $200,000, a person injured was worth $67,000, and vehicles burned $700. How is a company able to put a price on a human life? Is this fair to the families of these people? Anyway, Officials estimated that there would be 180 burned deaths, 180 burned injuries, and 2,100 burned vehicles thus totaling $49.5 million. On the other hand to fix the gas tank it would cost $11 per car and truck, there were 11 million cars and 1.5 million trucks totaling 137.5 million. The Ford officials decided to continue as schedule in the belief that the delay of the new automobile would cost the company more money than the lives that they put in danger. How do you think this situation worked out? 

Aristotle said that deciding what is the best ethical course is not easy. Reasonable people will disagree on what is right. The ultimate, overreaching questions are: What is an ethical company and to what extent should law require ethics? 

Did the Officials for Ford make the right ethical decision? I do not believe so; they put a car with defects on the road knowing that people would be seriously injured maybe even killed. They decided that making money was more important than human life. How many companies do you think are like this around the world? Is there 1, 100’s, 1000’s? A consumer would never know, only the members of that organization. Should there be laws that prevent this type of unethical behavior? I do not think this can be regulated by the government but only in the minds and hearts of the producer. Officials have to determine what is more important a quick buck or the death of several innocent people. Between 1971 and 1978 there were 700-2,500 deaths with fires involving the Ford Pinto and 100’s of millions of dollars in lawsuits. So was it worth it?

http://www.answers.com/topic/ethics-in-law-for-business