February 3, 2012
Dynacorp: Case Analysis
Dynacorp, officially The Dyna Corporation, is a major global information systems and communications company. It was originated as an office equipment company and moved in the 1960s and 1970s into high-technology applications. In the 1980s the company became an industry leader by being the first to provide innovative and high quality products. The demand for products was so high that customers were willing to wait for months just to have them delivered.
Growth and earnings slowed in the 1990s as the company’s costs increased, value-added services and solutions were not offered, new products were slow to market, and the products were not meeting marketplace demands. Solutions packages that were offered by information technology and communications (ITC) consulting firms were winning high-margin client business from Dynacorp who did not have a competitive concept. The gap that Dynacorp had created in the technical product market was shrinking due to gains by technology manufacturers. Dynacorp was not changing fast enough to keep pace with competitors. Problem
The goal to remain an industry leader in technological innovation and comprehensive packaged solutions is being pursued by Dynacorp through the following objectives * Produce and offer new technologies within project plan timelines to obtain the technical leadership advantage in the market * Within two years:
* Drive product offerings by identifying changes in the marketplace * Reduce product costs to remain competitive
* Rebuild market share by increasing relevance and profitability The Chief Executive Officer (CEO) charged an internal task for with the duty of exploring the major challenges that Dynacorp was facing. These included the high costs, slow pace of providing the market with new products, and the need to increase value for customers. A consulting firm that was experienced in the ITC industry was brought in to work with the task force. The end result was that a recommendation was posed to restructure Dynacorp into a Front/Back organization. This was accepted and mandated by the CEO. The new structure was designed to maintain the company’s founding tenets of strong customer relationships and deep knowledge of market characteristics while simultaneously improving upon to the integration of technology development and production. Two years after the restructure the company is still facing low gross margins and struggles to meet both revenue and profit targets. Foreign and domestic competition continues to erode Dynacorp’s market share. This erosion is hastened by the company’s inability to effectively lower product cost and get new products to market in a timely fashion. Packaged solutions are still not available through Dynacorp. The impact of this continued decline is poor investor relations and lost market value. There is also a lack of organizational congruence and misalignment of supporting systems and processes which have been created during the new reorganization period. Many skills and attitudes at all levels of management have been mismatched and do not integrate with the current needs. There are no clearly defined job descriptions or standard operating procedures in place to guide employees. Managers of branches and product lines are compensated on performance against revenue and margin goals rather than addressing customer needs. These issues persist within the new organizational structure and continue to have a negative effect on the company’s overall daily operation. The engineering group appears to being using its considerable political power in such a manner as to hinder the accomplishment of the strategic plan, and this carries the problems of the old culture through to the new. Continued misalignment of personnel and operational inefficiency diminish the company’s ability to compete in the market. The lack of efficiency...