For this week I found and used another news story. This story is on the restructuring of
Volkswagen (VW) in the Wall Street
Journal (WSJ).
According to the WSJ story,
VW is the world’s second largest automobile manufacturer and by 2018 it wants
to be the largest. General Motors is currently the largest.
Christoph Rauwald wrote in the WSJ:
But Volkswagen's aggressive expansion along with its growing
industrial complexity sparked concerns that the company is becoming
increasingly difficult to control. In addition to ambitious plans in the
commercial vehicle sector, Volkswagen last month entered the motorbike segment
through the acquisition of Italy's Ducati Motor Holding SpA. ‘With this new
positioning we're giving the right answer to master increased requirements [as]
our company became much larger and more international in recent years,’ Mr.
Winterkorn [Chief Executive of VW] said.
Having
such a large organization with such diverse products (cars, SUVs, motorbikes)
under various names (VW, Audi, Ducati), and having various leaders overseeing
each line and organization, I want to assume that VW uses a Matrix and/or
Hybrid Structure (Daft, 2007, p. 104).
Although of course this is just speculation; the article doesn’t go as
in-depth about it as I’d like.
The
article did, however, remind of the Microsoft example that Daft used to
describe divisional structure. Like the
various Microsoft business units (Windows, Office Software, etc.) VW operates a
variety of business units as well as brands.
Operating
that many brands and units and wanting to grow to become the largest automobile
manufacturer in the world by growing in China though, I think a Hybrid
Structure (combining Functional and Divisional Structures) would work (Daft,
2007, p. 122). This Hybrid Structure would
group both by function and products and services.
The
reading used Ford Motor Company as an example, citing this structure in an
effort to become the “world’s leading automotive firm in the twenty-first
century” (Daft, 2007, p. 122) which is VW’s current goal. Knowing this is the structure I would pick
and knowing what Ford’s outcome in the last decade has been, I would definitely
want to consider all options though.
Maybe the Hybrid Structure isn’t the best and that is something that
those in charge of VW’s restructuring did consider.
References:
Daft,
R. (2007) "Fundamentals of Organizational Structure.” Organization
Theory and Design (9th ed.), pp. 88-125 (Chapter 3)
Rauwald,
C. (2012, June 3). Volkswagen shuffles management. The Wall Street Journal. Retrieved from http://www.online.wsj.com
Hey Justin, nice post. What are your thoughts on the Lee Iacocca example Daft uses when discussing Horizontal Linkage? Would you be able to relate this design element to VW?
ReplyDeleteJustin, after reading a bit about Volkswagen, I happened upon this 2007 NYT article discussing the organization's restructuring:
ReplyDeletehttp://www.nytimes.com/2007/01/10/business/worldbusiness/10iht-vw.4163537.html
Assuming it hasn't changed much in the last 5 years (at least I know the CEO hasn't changed), how would you characterize this structure after reading the article? Is this consistent with what you thought?
I don't know Phillip. I could see VW taking the horizontal approach sure, but it seems that the horizontal approach although open and integrated as well as promoting communication, is more rigid, while VW, from this article at least, seems compartmentalized yet fluid and unified. Again, I'd love to have more information.
ReplyDeleteThat's interesting Dr. Pade. I find the 2007 description much more rigid in structure and I went back to last week's readings. It seems to me that 2007 VW was based more on Henry Mintzberg's types of organizations that Gareth Morgan wrote about in "Images of Organization," and is more comparable to "the professional bureaucracy" (1998, p. 51).
Maybe becoming more flexible is what allowed VW to grow and succeed the way they have.
I also found it humorous that VW groups Audi with Lamborghini, Bentley and Bugatti. Audi seems a bit out of place in that group.