Answer 1: In the 1990s, Nordstrom had six co-presidents who were six cousins belonging to the family’s fourth generation. All six cousins took decisions jointly on major issues concerning the business. Thus, it was necessary that all six co-presidents agree on a decision or a plan for it to be acted upon. This was quite a difficult task as all of them often had differing opinions. Due to this many decisions were delayed or met with resistance by one or the other member.
These six co-presidents were compared to a multi-headed hydra. Dismantling the hydra would prevent conflicts on future decisions and would also enable decisions to be taken quickly. It will also vest the ownership for the decisions onto one person. It will also enable a family member to be groomed for possibly leading the company one day. The possible disadvantages of dismantling the hydra is that the six co-presidents could have all contributed their knowledge and experience and have arrived at a better more informed decision. If equal power is vested in six people at the top, it enables them to share the workload.’
Answer 2: Creating departments around products will create independent profit and loss units for each product. The members of each department will have expertise on their products. They will know how to procure those products and effective sales and marketing techniques to sell those products better. This will narrow down their focus and they will concentrate only on the product that they are selling and will gain expertise on how to sell it best. The possible disadvantages of creating departments around products are that the employees will not have a complete picture of the entire business and where they stand. If in future, they are moved to another department, they will have to gain information about that product from scratch.
Answer 3: The following changes prompted the move from mechanistic to organic organization. In the 1990s, the company met with stiff competition from its competitors. Its sales began to plateau. Its net income fell 2% and sales edged up only 1.9%. In the stores that had been open for a year, its sales dipped 1.1% after a 2.6% drop the prior year. Nordstrom’s shares fell from a 1999 high of 44 3/16 to under 20 in February. The customers and outsiders complained that top executives spent more time in seeking consensus of all co-presidents on issues and this was a reason for Nordstrom being slow in presenting new fashions for sales.
Answer 4: In designing an organization to manage change, an additional structural change that Mr. Whitacre should consider is to start a competition among the departments. In this quarterly competition, the department that has the best sales and profits should be the winner and its members should be given some incentives. They should be asked to share the best practices with the other departments in order to help them manage change better. Employees should be rotated regularly from one department to another.
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