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Class 2 Dynacorp I case.pdf

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Organization Studies
ORGS 2010
All Professors

STRATEGIC DESIGN AT DYNACORPWere too slow too unresponsive to the market and too undisciplined about costsAnd the main reason is how were organizedit just isnt working any moreWeve outgrown the old design in so many ways but were still trying to manage with the same structure we had when we started the company Dynacorp product managerTheres a lot of talk now about changing our organization designBut we should be careful that were not throwing the baby out with the bathwaterWere fixating on whats wrong with the organization instead of thinking about how to make it work better Dynacorp engineering managerThe Dyna Corporation known in the industry as Dynacorp is a major global information systems and communications companyOriginating in an office equipment company that moved into high technology applications in the 1960s and 1970s Dynacorp had by the 1980s established a position as an industry leader known for its technological innovationDynacorp was first to the market with innovative and highquality products that were significant advances on anything its competitors were offeringCustomers would gladly wait months and even a year or so to take delivery of products bearing the Dynacorp logoThe customers were typically sophisticated users who were willing to do some of their own applications work and to figure out how to integrate Dynacorps new products with the rest of their operationsDuring this period the company grew at a very fast rate and expanded its market to Europe Asia and Latin America The 1990s were a much more difficult period for the companyIt continued to grow but at a slower rate and experienced periods of significantly reduced earningsCritics both inside and outside the company attributed Dynacorps difficulties to a loss of leadership in getting new products to market costs that were too high and changes in the marketplace that Dynacorp was slow to recognizeCompetitors were closing the technology gap and were often faster getting products to marketIn a growing number of product areas Dynacorp had been surprised by competitors that although they had started working on a new product much later than Dynacorp were faster at getting the product to the customer at a very attractive priceIn addition a growing number of ITC consulting firms were capturing the relationship with the large customer by offering valueadded services and solutionsThe consulting firms acted as intermediaries supervising the purchase of ITC hardware and software providing integration services and capturing much of the highmargin business A growing number of executives in Dynacorp were coming to believe that the problems could not be addressed effectively with Dynacorps current organizational structureLike most companies Dynacorp had been established with a functional organizationBut the company had expanded its activities across five continents and greatly increased its product range and top management began to ask if Dynacorp needed a major redesign As a first step the CEO appointed a small internal task force to make preliminary recommendations on organization design to the top management teamThe CEO personally launched the task force with a companywide communication listing the challenges Dynacorp was facing high costs being too slow to get new products to the market and a need to increase the value created for customersThe CEO emphasized that the current task forces mandate was driven by Dynacorps commitment to maintaining its leadership position in its industry and asked all Dynacorp employees to cooperate fully and frankly with the task forces inquiries A number of the task force members traveled around the company conducting interviews with managers at multiple levels across the three major divisions of the company while others embarked on an external benchmarking exercise to look at how other companies in the industry were organizedAs they consolidated their findings they found themselves in agreement that Dynacorps current organization had serious shortcomings but they disagreed vehemently on what the best design solution might beThe CEO had made it clear however that he did not want a simple listing of alternatives he wanted the task force at the very least to provide a ranking of the alternative choicesDYNACORPS DESIGN THE FUNCTIONAL ORGANIZATION Since its earliest days of operation Dynacorp had been organized functionallyThe three line divisions each led by an Executive VicePresident were Engineering Manufacturing and MarketingThese were supported by a number of corporate staff divisions including Finance Human Resource Management and Corporate Affairs
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