Reference no: EM131173388

Macy's and IBM are companies that sell two different products, both dealt with similar difficulties of organizational problems and change. IBM focused on coordinating activities to create the most value for each customer which would produce a supply chain of global operations, independent operations that each member focused and grow business based on local response. The mindset of the IBM managers, were that the IBM store each operated, were not IBM but of each country the stores were operating in, this produced little connection with the country and corporate operations.

Macy's business was divided into geographic districts and focused on regional market, this gave the managers autonomy but they wouldn't develop the market place response. Whereas IBM focused open decentralization (Spector, 2013).

Regional differentiation called for Macy's new strategy, while its formal structure made such differentiation difficult, if not impossible. So, in order to achieve that strategy, Macy's changed its structure. After running six pilots, the company moved to a focus on regional markets (Spector, 2013). In all organizations, the activities of employees need to be focused on two separate issues (Spector, 2013):

1. The functional or technical activities required to achieve the desired out- comes of the organization. 2. Responsiveness to the external marketplace (customers, suppliers, competitors, regulators, and so on) in which the organization has elected to compete.

It is therefore important that leaders understand the impact that various structural choices will have on the focus of employees and, consequently, on their behavior. Organization structure is a mechanism for helping to achieve the desired focus. Therefore, when a new strategy calls for a new focus, it is likely that the structure of the organization will need to change. By letting the managers make the decisions within their store was a great idea in order to make this change effective.

IBM's decentralized structure worked wonders for the company. Country managers could focus on their own regions and grow the business based on local responsiveness. But if local responsiveness was the benefit of decentralized structures, the cost was low collaboration. In IBM's case, they didn't have the manager's support when trying to implement change.

Gerstner announced a new structure. Twelve customer groups (such as banking, government, and insurance) and one small and medium-sized company group would take over all IBM accounts, including responsibility for budgets and personnel. The restructuring reassigned most employees in non-U.S. operations to a specific group; they would now report to the global leaders of their industry group rather than to their country general managers. "The response from country general managers was overwhelmingly negative. It will never work and you will destroy the company were statements that expressed their resistance. Some country general managers responded by simply ignoring the new structure (Spector, 2013)." One regional executive unilaterally decided to block all communications between Gerstner and the field.

Reference

Spector, Bert. (2013). Implementing Organizational Change, 3rd Edition. Vital Source Bookshelf Online. Retrieved July 19, 2016, fromhttps://bookshelf.vitalsource.com/#/books/9781256713