Contemporary Organizational & HRM - Airstar Inc - Case Study Example

Heading: Contemporary Organizational & HRM Your name: Course name: Professors’ name: Date Table of Contents Executive summary The report seeks to explore the organizational design and strategy of the Airstar Inc., a firm that is currently facing several problems. It demonstrates ways in which the company fails to be an effective organization, as it does not comply with the principles of a successful organization. The report also intends to examine the current failures of the corporation, which include conflicts among the corporate officers regarding business decisions like acquisitions and mergers. Another issue that the report seeks to point out regards the stiff competition that the company presently experiences, as well as its low performance, as compared to the past. In the report, it is clear that the company has no written and clear responsibilities and duties for its superiors; hence, the regular conflicts among them. Moreover, the report indicates that the corporation has a misalignment between its business strategy and organizational design; hence, low performance. What is more, the report shows that the company lacks a proper evaluation and mapping framework of its main business models. Furthermore, the report also suggests some of the solutions to the aforementioned problems for the company to adopt in order to be effective. Introduction Purpose In order to thrive and survive in the contemporary competitive environment, a company should have an explicitly defined strategy, and link its processes and people to attain business goals. The overarching strategy is instrumental in the provision of a roadmap, while the organizational structure is a means through which the company achieves success. The best organization is the one that identifies and develops a suitable strategy, and designs the firm for maximum execution. Therefore, this report aims at analyzing the situation at Airstar Inc. in terms of the concerns affecting the company’s organizational design, strategy, and structure. It also attempts to define The Company’s present strategy and form main rationales for the strategy’s failure. In addition, the report intends to recommend certain solutions to the current problems with justifications of the proposed change. Background Airstar Inc. is a corporation that deals in manufacturing, repairing, and overhauling jet engines and pistons for smaller, usually formerly owned aircraft. For a long time, most managers were with the founder in a firm position. Upon the founder’s death, a new president, Roy Morgan took over the leadership. Currently, the company experiences stiff competitions from other firms like Pratt & Whitney and General Electric. This situation also made the company’s performance and efficiency to reduce drastically. Consequently, managers need to develop another organizational strategy, as the old one is not successful. In fact, some of the considerations made by the managers include acquisitions, exports, import, extra repair lines, and research. Apart from competition, the company experiences a challenge relating to conflicts between controller and marketing vice president over acquisition and merger opportunities. These managers are out to outdo each other in the corporate affairs. In an attempt to establish the cause of the issues in the organization, it was apparent that the company does not have well-defined job descriptions in written form for its employees. The management, thus, decided to introduce a new strategy organizational design that would help eliminate these problems, and propel the firm towards the achievement of its set business objectives. Problem statement The report seeks to explore some of the causes of conflicts among its corporate officers. From the case study, it is clear that the company lacks an appropriate organizational design, structure, and strategy. This implies that there are no well-defined and written job descriptions, roles, and responsibilities of the employees of the company. Scope This report intends to examine the company’s current problems, as well as the possible causes of these challenges. It also intends to address the modern organizational strategy and design, and justify its ineffectiveness in the achievement of the business goals. In addition, the report provides suitable solutions to the identified problems in the organization. Analysis/Discussion As per the case study, it is clear that Airstar Inc. is experiencing serious business issues due to the use of an unsuitable organizational structure, strategy, and design. These problems are the main cause of the current low performance of the company, as well as the stiff competition it is facing. The organization’s present situation indicates that the organization needs to adapt new organizational design and strategy that helps in meeting the business objectives effectively. Corporate strategy According to Bryan and Joyce (2007), this involves actions taken by an organization to attain competitive advantage. Organizational executives devote a lot of their energy in product designs and creation of lasting strategic plans, even though most of these initiatives get outdated as competitors and markets adjust, social regulations and norms evolve, and technologies progress. Many corporate leaders ignore a great chance to develop a lasting competitive and make high profits for less risk and money; hence, making their design central to their strategy. Contemporary corporations are complex, massive, and dynamic ecosystems. In most of them, organizational inactivity is substantial. However, organizational structure task is time consuming and hard, and entails difficult personality matters and business politics. That explains why most of the chief executive officers normally prefer the ad hoc structural alteration, large acquisitions, or emphasis on how and where to compete, instead of tackling internal company concerns to improve company performance. Therefore, it is imperative for executives to identify the strategic desire of developing organizational abilities that assist firms to survive regardless of the conditions they face (Bryan & Joyce 2007). Contingency theory of organizational design The theory is a major mechanism of studying organizational design. It states that the most efficient organizational designs lie where the design is suitable for the contingencies. Nonetheless, the theory has numerous challenges, which include the fact that it fails to address organizational adaptation and changes because of its static nature. It is appropriate to argue that the center of the theory of structural contingency is statics, as it addresses with the way a static state of suitability between contingency and structure leads to high performance (Burton, Eriksen, Håkonsson, & Knudsen 2008). Nevertheless, theory of structural contingency writings is in a functionalist custom of social science, which sees firms as adjusting to their changing environments. Thus, firms change from one structure to another with time. Specifically, Structural Adaptation to Regain Fit (SARFIT) theoretical model articulates a certain process. Here, a firm in fit experience greater performance that yields surplus resources and facilitates expansion, for instance, growth in geographic extension, size, diversification, and innovation. This enhances the degree contingency factors like size, causing a misfit with the already existing design. Notably, the misfit is responsible for lowering performance, and ultimately causing adaptive structural change and performance crisis into fit. A new variant of the contingency theory regards the configuration theory that asserts that the fit between structural and contingency factors only lies on a few gestalts and configurations; fits (Donaldson 2001). Organizational structure is beneficial to managers, as it enhances the attainment of higher performances for their firms by assuming a more efficient structure. The contingency framework enables managers to recognize misfits between their contingencies and structures like diversification and size, which consequently are parts of the organizational strategy. Because there are many aspects of design and that each of them can have many contingencies that it misfits and fits, there are several possibilities misfits that can happen in a firm, each one of them drags down the firm’s performance (Kirschkamp 2007). Effective organization Jermias & Gani (2004) says that an effective organization is the one that has its organizational structure aligned to its business strategy. Moreover, a successful company also measures also organizational abilities that enable appropriate decision-making, as well as market responsiveness. In addition, effective organization ensures that it assesses and maps its main business processes to its model. Clear definition of responsibilities and roles is another determining factor of an effective firm. Furthermore, a successful organization should also create suitable performance metrics for its business (Lin 2002). Nevertheless, the appropriate strategy is insufficient for a firm’s success. This is because even if the firm has the most appropriate strategies, it can fail if it lacks an efficient structure to support the strategies’ implementation. Certain signs show that a firm has a misalignment between the organizational design and strategy. To start with, a firm with ineffective main business processes and an unclear flow through the firm’s structure has a poor link between design and strategy. This also evident in the fact that the firm’s size is hampering its capacity to adjust and react to market changes. Misalignment between organizational design and strategy is evident in the way a firm believes that extra resources are the lasting solution to departmental underperformance and obstacles (Zheng, Yang, & McLean, 2010). Moreover, a firm whose employees play out of their positions in numerous roles; hence causing poor worker performance and redundancies indicates a misalignment between its design and strategy. It is also clear a firm has no strong link between its design and strategy is evident when red tape and bureaucracy prevents its employee and production achievement. Here, workers depend on tribal relationships and knowledge to make things happen. Importance of aligning business strategy and organization structure Linking the firm’s design to its business strategy enables cost efficiency, execution, and attainment of business goals. Moreover, an appropriately designed firm adds value to the people, business, and customers. An efficient design is instrumental in increasing operational effectiveness, and productivity. Additionally, a proper organizational design creates explicit interdependencies, accountabilities, as well as processes, which have a direct impact on the strategy. It is also crucial to adapt an effective organizational design, because it helps in removing operational impediments, as well as refocusing the firm on the accurate things that facilitate strategy (Ludema & Olofsgard 2006). Furthermore, Adler (2011) asserts that successful organizational design is the one that identifies performance metrics, which stimulate and reward favorable worker skillsets and behaviors. What is more, a proper organizational design is critical, for it develops a scalable firm model that contains and enables growth. The best organizations select valuable designs based on work performance, instead of relying on standard templates. These firms also enforce the design by engaging main leaders and efficient communication of changes to managers. Additionally, these firms constantly assess their structure to make sure that it relates to their strategies, as well as to aid worker performance. Current problems at Airstar Inc. With respect to Airstar Inc., the aforementioned features of an effective business are lacking. To start with, the business lacks clear job descriptions for its employees, and thus, the main reason why there are conflicts among corporate officers. For instance, the controller and the marketing vice president have disputes regarding who should be in charge of certain acquisitions and mergers in the company. This is an obvious indication that there is no written demarcation of responsibilities and duties for the organization’s members of staff (Deitzer & Shilliff 1997). Secondly, Airstar Inc. does not meet the standards of an effective organization, since there is no explicit link between the organizational structure and the business strategy. This is evident in the manner in which the company conducts its business affairs. The president complains that the firm makes many mistakes regularly, as the management makes changes and decisions based on convenience. The firm also lacks efficient principles to guide its officers’ functions; hence, poor performance. In addition, the organization has no specific business directions, as it is undecided on whether to engage in mergers or in acquisitions (Deitzer & Shilliff 1997). Thirdly, Deitzer and Shilliff (1997) shows that Airstar Inc. experiences another problem in relation to the measurement of organizational abilities in order to facilitate market responsiveness and proper decision-making. This implies that the firm’s potentialities do not reflect its market responsiveness and proper decisions made by the management. Presently, the decisions made by the company are ineffective, as they have negative impact on its performance. It is explicit that the company’s orders are very low due to stiff competition posed by other organizations. The fourth issue with the firm involves lack of proper evaluation and mapping of the main business processes to the firm model. This is evident in the way the firm’s president declares his basis for appraisal and evaluation of staff obsolete. This implies that there is no significant basis for conducting an appraisal and evaluation of the executive’s goal attainment and performance. Based on the contingency theory of organizational design, it is clear that Airstar Inc. has numerous misfits that are responsible for the present problems (Deitzer & Shilliff 1997). What is more, it is apparent that the corporation does not comply with the principles of an effective organization, as per the manufacturing vice president, Jim Robinson. To start with, the organization does not establish the goals, programs, policies, plans, and strategies that will help in the achievement of the company’s desired results. Secondly, the corporation has no well-established business activities for its employees to do. Thirdly, the organization does not have divisions of businesses activities, as it has an organizational design that is hard illogical and hard to understand. Fourthly, the vice president says that the company lacks well-defined authority and responsibility of each superior plainly in writing. Fifthly, it lacks appropriate personnel to occupy position in the organizational design. Sixthly, the company does not keep the kinds and number of authority levels at minimum (Deitzer & Shilliff 1997). What is more, the case study demonstrates that the corporation’s superiors do not study the organizational chart to understand the organizational design, and act as per the design. The failure of the corporation to comply with the principles of an effective organization is the main cause of the problems that it is facing today. This implies that the company’ strategy and design are ineffective as there is an obvious misalignment between them (Sadeghi 2007). Conclusion As per the case study of Airstar Inc., organizational strategy and design are highly indispensable for a company’s success. The company has a misalignment of its business strategy and the organizational design. This explains its low performance, stiff competition, and conflicts among the corporate officers. Some of the failures of the company include unwritten responsibilities and duties of each superior, the measurement of organizational abilities to facilitate market responsiveness and proper decision-making, improper evaluation and mapping of business model, and generally fails to comply with principles of a successful organization. The contingency theory of organizational design advocates for alignment of business strategy and organizational design by companies in order to succeed in their operations. Recommendations It is imperative for the Airstar Inc. to link its business strategy to its organizational design in order to achieve success. Airstar Inc. should also develop clear, written job descriptions, duties, and responsibilities of all its corporate officers to enhance organization and reduce conflicts and duplication of duties among the officers The corporation should also ensure that there is proper means of evaluation and mapping of the main business processes to the firm model. Airstar Inc. ought to conduct appropriate the measurement of organizational abilities in order to facilitate market responsiveness and proper decision-making. It is also crucial for the company to ensure that it keeps the kinds and number of authority levels at minimum to facilitate success. The company should also ensure that it has suitable personnel to occupy each of the main positions in the organizational design. It is significant for the corporation to establish policies, goals, plans, strategies, and program that will facilitate the achievement of the desired results for the firm. 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