Analysis of Dynacorp Case

Topics: Strategic management, Customer service, Management Pages: 6 (2108 words) Published: May 13, 2013
The strategic design lens assumes organizations are deliberate, goal-achieving entities (Ancona, Kochan, Scully, Van Maanen, & Westney, 2005: M-2, 10). In this view, managers can achieve organizational goals by understanding the fundamentals of design and fitting design to strategy, as well as to the larger organizational environment (Ancona et al., 2005: M-2, 12). In this paper, I discuss the five major elements of strategy – environmental fit, strategic intent, strategic grouping, strategic linking, and alignment – and identify two specific elements as causes of the problems Dynacorp is experiencing with its redesign. These elements are strategic linking and alignment. Fit with the Environment

In the 1980s, Dynacorp was an excellent fit with the environment; it produced high-quality, innovation products. As result, its customers were happy to wait months or even a year for the company to bring out a new product and to “do some of their own applications work and figure out how to integrate Dynacorp’s products with the rest of their operations” (Dynacorp Case, 2005: M-2, 97). In the 1990s, however, the company lost the technological advantage it had maintained over the competition. According to Carl Greystone, executive vice president of the U.S. Cus-tomer Operations Group, “Both foreign and domestic competitors have been cutting into our market share, and our gross margins are way down,” (Dynacorp Case, 2005: M-2, 97-8, 100). Indeed, Dynacorp was finding that many of its customers needed more than hardware, but want-ed ‘complete solutions’ to problems. Customers were “looking for systems solutions, more cus-tomized software, and more value-added services” (Dynacorp Case, 2005: M-2, 97-8, 100). Dynacorp’s senior managers recognized that the firm’s existing functional structure was seriously inhibiting the organization from creating effective cross-functional responses to its external environment. Strategic Intent

Dynacorp’s senior management thus moved to redefine the firm’s strategic intent, a no-tion that Ancona et al. define as “setting the strategy or mandate of the organization…” (2005: M-2, 12). Instead of continuing to think of itself as a company merely selling hardware, the firm reorganized with the intention of providing customers with the integrated solutions they were demanding, and, where necessary, to do all this on a global basis (Dynacorp Case, 2005: M-2, 97). Strategic Grouping

To implement its strategic intent, Dynacorp executives first had to make decisions about how to regroup tasks and functions. According to Ancona et al., strategic grouping is a process of deciding “how the necessary activities are to be allocated into jobs, department, divisions, and other units, and how people are assigned to each…” (2005: M-2, 12). The textbook describes five possible methods by which grouping of functions can be organized: activity; output; user, customer, or geography; matrix; and business process. At Dynacorp, the decision was made to move away from grouping by activity. Instead, the development, manufacturing, and marketing functions were grouped together into an output-oriented set of “‘end-to-end’ business units” in which all the functions would be ex-pected to contribute to the success of a product or a family of products or services. Within the sales area, executives decided to group by geography (U.S., Europe, Latin America/Asia, with each of these areas further subdivided into regions) rather than to create multiple sales forces for each business unit. “Since products overlapped,” the interviewer was told, “the purchasers of different products were frequently the same people, and the cost inherent in replicating the field structure several times was prohibitive,” (Dynacorp Case, 2005: M-2, 98). Within each sales region, management created account teams with each team focusing on customers within market segments and industries. Greystone asserts that such...

References: Ancona, D., Kochan, T., Scully, M., Van Maanen, J. & Westney, D.E. 2005. Managing for the future: Organizational behavior and processes (3rd ed.). Cincinnati: South-Western College Publishing.
Dynacorp Case. 2005. In D. Ancona et al. Managing for the future: M-2, 97-102. Cincinnati: South-Western College Publishing.
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