GM543 Unit 2 Star Model Organization Profile Example

A Strategy the Structure Was Not Built For: A Unit 2 Star Model Profile of a Furniture Maker

[Student Name]

Purdue University Global

GM543: Strategic Organizational Design and Architecture

Unit 2 Organization Profile

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[Date]

Harrow Contract Furniture and every figure are composite and illustrative; the frameworks and studies cited are real.

Company Snapshot

Harrow Contract Furniture employs about 502 people and sells office and institutional seating and tables. It has two plants, one for seating and one for tables, and sells mostly through about 140 independent dealers, with a national accounts team of six that handles large corporate and university customers directly. Annual revenue is roughly $118 million, and about 70 percent of it still comes from catalog orders placed by dealers.

Strategy

Two years ago the board adopted a strategy with two aims: grow large workplace projects, defined as orders above $250,000 that need custom finishes and coordinated installation, from 12 to 25 percent of revenue, and launch a healthcare seating line for hospitals and clinics. The strategy document says the company will "win on reliability of delivery for complex projects."

That decision demands capabilities the catalog business never needed. Large projects need one point of accountability from quote to installation, fast engineering answers on custom requests and reliable ship dates. Healthcare needs knowledge of infection control, cleanable fabrics and weight-rated products, plus a sales team that can work with group purchasing contracts. Galbraith argues that strategy should be the first point of the star because it sets the criteria for choosing among design options (Galbraith, 2014). Here, the criteria are project accountability, engineering speed and healthcare expertise.

Structure

Harrow's CEO oversees seven functions, from sales and engineering through finance and human resources to customer operations. Operations is grouped by product, with a seating plant and a tables plant. Sales is grouped by region, with four regional directors and 22 territory managers. Customer operations holds 19 project coordinators under one supervisor. Engineering has three groups: seating, tables and special products, which reviews any custom request.

Each grouping choice buys something and costs something. The five choices below record both sides, with each cost stated in days, people or rework where the records allow.

Plants grouped by product. The seating plant and the tables plant each run long batches on one frame standard, which keeps unit cost low and quality steady. The price falls on mixed orders. A project with both chairs and tables is split across two schedules that nobody reconciles, and in the last year such orders took about six days longer than single-plant orders of the same size.

Sales grouped by region. Territory managers know their dealers well and territories are simple to manage. The price is that no one in sales specializes in healthcare, and a hospital system with buildings in three regions meets three territory managers who quote it three different ways.

One special products group. Every custom fabric, finish or dimension goes through the same review, which keeps standards consistent. The price is a queue that averaged about nine working days last year, and a large project usually needs four or five approvals.

Coordinators pooled in customer operations. Nineteen coordinators share one set of procedures and can cover for each other. The price is one supervisor for nineteen people and a role that can ask a plant for a date but cannot change one.

Engineering grouped by product line. Seating and tables engineers know their products deeply. The price is that healthcare work has no home; seating engineers fit it between catalog updates, and the healthcare line's first recliner slipped two quarters.

The pattern across these five choices is that each function is well designed for its own work. The plants are efficient, the regions know their dealers and engineering keeps standards high. What the structure does not provide is a place where a whole project or a whole market belongs. Alfred Chandler's old finding, that a new strategy eventually forces a new structure because the old one cannot carry it, describes Harrow two years into its strategy (Chandler, 1962).

Every function at Harrow is well designed for its own work; the structure simply has no place where a whole project or a whole market belongs.

Processes

Harrow's core processes run in sequence across functions. A large project moves from quote to engineering review to scheduling to purchasing to installation, and each handoff is managed by email and a shared special-orders spreadsheet. The Tuesday order review began with six attendees and now draws seventeen. Galbraith describes lateral processes as the means a design uses to coordinate across its groupings, and he notes that the more interdependent the work, the stronger these processes need to be (Galbraith, 2014). Harrow's lateral processes were built for catalog orders, which move through the plants with few questions. Large projects raise a question at almost every handoff, and the processes have grown by adding people to a meeting.

Rewards

Plant managers are paid bonuses on cost per unit and on-time completion of scheduled runs. Territory managers earn commission on booked revenue. Engineers are reviewed on catalog updates finished on schedule. Coordinators are measured on the number of orders processed. No one at Harrow is rewarded for a large project shipping complete and on time, and no one is rewarded for healthcare revenue. The library chair order from last spring, which shipped eleven days late, hurt no one's bonus. A plant manager who breaks a long run to fit a custom project loses on cost per unit, so the reward system actively favors the dealer catalog over the strategy.

People

Harrow's people practices hire for depth in one function. Coordinators are hired from customer service roles and trained on order entry, not project management. No one on staff has worked in healthcare sales. Careers move up inside a function, so there are few managers who have worked in more than one, and almost no one who has run a whole business line. Kates and Galbraith suggest that people practices should develop the general management skill a design will need (Kates & Galbraith, 2007). Harrow's practices develop excellent specialists and almost no one who could lead a market unit.

The Point Furthest From the Strategy

All five points fall short of the strategy, but the reward system is furthest from it. Structure can be redrawn and processes added, yet as long as plant managers lose money for serving projects and no one earns anything for healthcare growth, any new design will be pushed back toward the catalog. The next units should test structural options, and each should come with a reward change that makes the new design worth supporting.

References

Chandler, A. D. (1962). Strategy and structure: Chapters in the history of the industrial enterprise. MIT Press.

Galbraith, J. R. (2014). Designing organizations: Strategy, structure, and process at the business unit and enterprise levels (3rd ed.). Jossey-Bass.

Kates, A., & Galbraith, J. R. (2007). Designing your organization: Using the star model to solve 5 critical design challenges. Jossey-Bass.