New Organizational Structure Maximizes Calvin Klein Business
The assigned reading for this week, I admit, is my first real exposure to
organization design. The more I delved into the reading the more complicated
it seemed. What simplified it for me was going back to and understanding
Galbraiths (2011) Star Model represented as the “foundation on which a
company bases its design choices.” (pg. 1). I then raised the question to
myself, “Would you be able to identify in the real world the design policies
used by a company?” I recognizably found an article in the Wall Street Journal
titled “Warnaco Announces New Organizational Structure and Key Executive
Appointments at Its Calvin Klein Business to Support Its Global Growth
Strategies,” (March, 2012) that talked about a new organizational structure
for Warnaco’s Calvin Klein business. The highlights of the article subliminally
indicated that the design policies of “The Star Model” (Galbraiths, 2011) were
used in the design process. The article identified the long-range strategy of the
company, the new structure of segmenting the Calvin Klein business into two
components, the people, new and promoted personnel, to lead the management
charge of the two components and the processes of which they will meet their
objectives.
As the article talked about the two new business components, I believe it clearly
showed how they can support the identification as a new business as Lorsch
identified in his 1975 Notes on Organization Design. The article also gave
the perception that Warnaco is confident of their decision to move into new
markets, grow their direct to consumer channels and increase market share by
establishing the two centers of excellence. Also by establishing the two centers
they are a true example of one of today’s built-to-change organizations. (Worley
& Lawler, 2006). The article insinuates they are in touch with their markets, they
know where their new markets are and they will capitalize on every opportunity
as it arises.
Lastly, in Warnaco’s drive to accelerate growth and ultimately gain more market
share, I believe they recognized the need to do something different to get ahead
of the competition and that was the development of the centers of excellence that
will explore every way to maximize their potential. According to the article it looks
like they have some growth potential in the direct-to-consumer market. I believe
this strategy was shaped by the response of the consumer therefore confirming
one of Galbraith’s six organization shapers, “Buy Power”. (2002).
References
Business Wire (March, 2012). Warnaco Announces New Organizational
Structure and Key Executive Appointments at Its Calvin Klein Business
to Support Its Global Growth Strategies.Wall Street Journal. Retrieved on
May 26, 2012 from
http://online.wsj.com/article/PR-CO-20120322-904924.html
Galbraith, J. (2002). An Executive Guide to Strategy, Structure, and Process.
Designing Organizations, 3.
Galbraith, J. (2011). The Star Model.
Lorsch, W. (1975). Note on Organizational Design. Harvard Educational Review,
14.
Worley, C. & Lawler, E. (2006). Designing Organizations that are Built for
Change. MIT Sloan Management Review. 48(1), 21.
Hi Audrey,
ReplyDeleteFirst, it was my first real exposure to organizational design too. Well, my last company did I think, but they didn't follow the Star Model or any model I would guess.
But I found your posting of the WSJ article interesting. At the end of my post this week I questioned the practicality of some of the models due primarily to the fact that this is my first real exposure to them. To see a brand like Calvin Klein use what we learn, that seems fairly obvious when you read it, helps to make what we read concrete -- for me at least.
It also makes me wonder why so many other businesses don't appear to use these theories? Or maybe they do and we'll keep finding out throughout the semester.
Justin
Now that we have been exposed to these theories I believe we will start recognizing them in the context of organizational design. If I saw this article one month ago I would have assumed Calvin Klein was going through a reorganization. The theories we learned about this week puts their direction in a new light.
DeleteThe material this week is not easy and I agree that sometimes it is hard to bridge the gap between theory and practice. I am glad this article allowed you to make that jump. You say that Warnaco is in touch with its markets, and a key point of the reading was to have a large amount of "surface area" or interaction with the environment. What do you think this company is doing or can do to interact with its environment on a daily basis? How should they monitor their market?
ReplyDeleteI believe Warnaco is or should connect as many employees as possible with the external environment on a daily basis. By doing this Warnaco can monitor their market by connecting with various groups from the community to suppliers and to customers.
DeleteI thought you did a wonderful job with this blog post this week. It was really fascinating to learn about marketing strategies and how they are formulated to connect with a community and the consumers in it. Nice Job.
ReplyDeleteI found the Star Model a little hard to grasp from the reading. The info was there, but it wasn't clicking. Real-world examples like this are wonderful illustrations of reconfigurability in action. Interesting to see how a large organization can be so light on their toes, deploying their talent in the proper direction to achieve new business goals. Will be interesting to see how this registers in terms of profit/loss down the road.
ReplyDeleteI appreciated how you highlighted Calvin Klien's move to "increase market share by establishing the two centers of excellence." I wonder how much that move could be amplified by adding more than two centers. There must be a point of diminishing returns when it comes to spreading their resources too thin. But that direction of having a better pulse on individual markets by physically being there is undoubtedly a good one.
ReplyDelete