Menu

The Hestia Fund Case Study Help

CASE SOLUTION

Home >> Chicago Booth >> The Hestia Fund >>

The Hestia Fund Case Study Solution

Background and Facts

The Hestia Fund an office materials merchant for tiny as well as moderate sized services has recently been associated with preparing for a merging with its competitor Residence Deport, which has actually affected effectiveness levels in departmentswith the elderly manager associated with legal problems put forth by the federal Profession Compensation. With the Advertising Head putting forward the information of his departure from the company in one year, Jeannie Lewis, the present head of operations has actually been asked to take the role in the future. With challenges in the kind of a potential cultural change as well as low staff member morale, the company wants a complete reengineering effort at the advertising department.

Problem Declaration
Porter's 5 Forces Analysis
The possible social modification at the advertising division of The Hestia Fund is enhancing unpredictability in the working environment leading to different difficulties for the Jeannie Lewis who would certainly be changing the head of the division in one year. nalysis

PEST analysis

Political Factors: Political factors play a major duty in affecting tactical choices since Stapes Inc. had to abandon its strategies of merging with Office Deport after the Federal Profession Payment's treatment while doing so. Given the truth that the store has a worldwide existence with branches in UK, UNITED STATES, Canada as well as Germany, political factors in each of these countries may be able to impact efficiency or calculated goals. Federal Trade Payment's antitrust suit versus the merger used up valuable time of the organization's senior management suggesting that 'political' factors can have serious ramifications for a worldwide business.

Economic Factors: Economic factors such as the introduction of local business in the international situation suggest that The Hestia Fund is prospering in an atmosphere where there is prospective growth of companies. Reality that store customers are mostly looking for office materials for residence offices recommends that the market has a rising pattern of business owners as well as residence based organisations.

Social factors: Social fads in the economic climate reveal that clients are looking for comfort in addition to eye-catching rates. Marketing research demonstrates how the consumer for The Hestia Fund does not have understanding concerning locating options which can offer a combination of comfort and inexpensive.

Technical factors: Modern technology plays a vital function in The Hestia Fund's business approach especially as the company is piloting Modern technology facilities which would certainly use modern technology sales and also assistance in the form of memory upgrades, peripheral setups. (Summary of PARASITE in appendix 2).

OB Issues and Effects.

Numerous underlying Business Behavior issues can be seen in The Hestia Fund's case as highlighted in this section.

Concerns about social adjustment: There is uneasiness concerning a cultural change that would happen once Todd Krasnow leaves from his setting as the Executive Vice President of Marketing with the majority of the personnel already showing unhappiness over this possible action. This anticipated change has actually developed stress in the work environment which has been paired with the past tension of preparing the firm for a potential merging with Residence Deport.
Pest Analysis
Stressful Work Environment for Newcomers: There is lack of personnel that can match the difficult setting of a fast-paced company. Not just does this result in difficulty in discovering the right individuals, it places tension on new hires as can not withstand the rate and stress that the organization anticipates them to bear.

Double Reporting Lines: Beginners locate this organizational culture cumbersome and challenging to manage specifically as dotted line relationships are indicated to be weaker generally and unbiased setting as well as performance analysis is still done by the strong line supervisor. This means that beginners might shed clarity regarding their respective functions as well as objectives particularly as dotted line coverage does not keep them in direct communication with the strong line managers.

Animosity From Cross Departmental Hiring: Krasnow's choice to make Lewis his successor instead of Bridget Coles despite the fact that it had actually been guessed that the last would certainly take Krasnow's setting came as an impact to her morale. Lewis may have been qualified and also ideal for the work however the reality that Kransnow's departure would certainly make Coles a direct record to Lewis may have been the reason for Coles' resignation from solutions.

Worry & Job Insecurity: Fear and insecurity can be identified as two major worries that Lewis would certainly be managing specifically as the merger has now be cancelled and also two elderly executives of the marketing department would be leaving. The whole responsibility of the department would be falling on Lewis's shoulders who would not simply supervise of brining regarding a social adjustment yet would also have to confirm herself in her brand-new duty.

Inappropriate Administration Design of Leader: Lewis's administration style as well as its incompatibility with the advertising department's duty can additionally be seen as an OB obstacle particularly as she has been made use of to managing issues in the operations division where employees are educated to concentrate on processes as well as obtain them right. The advertising division on the various other hand can be viewed as a team of individuals who are utilized to being nurtured by Krasnow who concentrated extra on result than procedures.

Interdepartmental Differences: Interdepartmental disputes in between three departments, advertising, merchandizing and operations specifically over the allocation of the marketing mix can be identified as one more OB worry. The advertising and marketing division does not share the very same vision as the other two departments pertaining to the aloocation of the advertising mix twoards promotions as well as advertsing, the merchandizing and also operations divisions do not agree over the advertising and marketing mix allocation among one another either.

Disintegration in Marketing Division: Disintegration in between the marketing and advertising divisions can be determined as another OB issue which might need additional focus. The reality that the marketing and advertising areas in the marketing division are disconnected is avoiding both divisions from gaining from each various other's experience and also expertise. Assimilation of marketing with merchandising as well as operations would certainly end up being more difficult if the advertising and marketing division itself is degenerated which can be an additional potential OB worry.

The Hestia Fund Analysis

Various concepts have been utilized to clarify the circumstances to get more quality about the circumstance handy.
Swot Analysis
McGregor's Theory X & Y: According to Douglas McGregor's Concept X, most supervisors think that juniors are easy and also careless, have little aspiration and resist change. The circumstance at The Hestia Fund is not totally complying with Concept X, it can be seen that brand-new hires are locating this environment rather difficult which might ultimately lead to a higher disposition of the administration in the direction of Theory X. Also while evaluating Lewis's administration design, theory X might have been ideal in the procedures department to some degree yet the Advertising and marketing department would call for reliance on Concept Y in order to get the creativity as well as originality from the teams.

Tuckman's Team effort Concept: As for Lewis's problem about bringing harmony between the marketing and advertising division is worried, this would initially bring about conflict as talked about by Bruce Tuckman in his 'Teamwork Concept'. (Tuckman, 1965). As per Tuckman's concept shown in appendix 3, throughout the first stage of group advancement, people may not bond, as they are hectic discovering their area in the team. By integrating the advertising and marketing division's work, there might be the same preliminary separate which can bring about the second phase of 'storming' where the teams test each other. Nonetheless, it is only throughout the third phase or 'norming' when they would certainly come together to share suggestions before the team can bring about synergy in the fourth stage 'performing'.

Bridges' Change Model: As per William Bridge's concept (appendix 4), people are fairly awkward with change, which is apparent by the circumstance at The Hestia Fund The scenario can be viewed as a typical course of life if is researched according to Bridge's theory where he describes that people undergo three stages of shift when they experience change. 'Ending, shedding and also Letting go', The Neutral Zone as well as 'The New Beginning' (Bridges, 2004). When individuals exist with change, they get in phase one and so there may be emotions like sadness, uncertainty, disappointment, rage, concern, rejection and disorientation.The situation at the advertising and marketing department of The Hestia Fund is similar so Lewis can get comfortable with the idea that it is not phenomenal behavior. In the second stage, there may be a demand to connect the void in between the brand-new and also old society so Lewis may need to face this challenge when Krasnow leaves. There might be low spirits as well as reduced performance at this stage which must not be taken as an obstacle. It is throughout this stage that Lewis will certainly need to provide support to the division to make sure that they can discover an orientation. It can be seen exactly how Krasnow has already made this change much easier by making Lewis obtain involved in the division a year prior to his actual departure. According to Bridges' Model, stage 3 will certainly bring about openness to learning, High power and commitment as people will certainly accept the modification (Bridges, 2004).
Vrio Analysis
Abraham Maslow in his Theory of 'Demands Power structure' (appendix 5) has talks about the importance of 'security needs as being a lower degree need of a human for triggering motivation. As seen in the pyramid shared in appendix 3, we can see exactly how 'the requirement to really feel safe and also out of risk' is at the 2nd degree of requirements. Before a worker can be made to establish emotionally, he needs to have his 'Physiological 'as well as 'Security' requires fulfilled.

SWOT Analysis for The Hestia Fund Case Study



Effects of Analysis.

The OB analysis has checked out different concepts to understand how to cope with the existing situation at hand. The following three options have actually been proposed to aid Lewis deal with the organizational difficulties in the advertising division. Each of these choices has been suggested for reducing the shift needed to bring the advertising department according to the needs of the marketplace as well as for making the cultural change that would certainly follow as soon as the existing leader leaves.

Integration of advertising and marketing features. Separating Adverting and also Production functions. Assimilation of Marketing with Procedures.

Evaluation of Alternatives.

Integration of Advertising And Marketing & Advertising Functions: The in-house advertising and marketing company of The Hestia Fund is currently strength for the company in terms of saving up on expenses related to marketing and promotion. Considering that no new employment has actually been done after Bridget Cole's departure with the reporting line being straight designated to Krasnow for the advertising feature, this is a favorable opportunity for incorporating the advertising and marketing features. Judith Shapiro who has earlier been spoken with by Lewis during the earlier merging days has expertise in business-to-business marketing along with company and also retail advertising experience. As soon as Krasnow leaves, Lewis can work with Shapiro as an EVP for marketing to manage both advertising and marketing functions.

The advantage of this technique is that it will certainly integrate the two features while lowering the demand for employing an added resource for advertising. Lewis would certainly be heading the advertising and marketing division as well as in any kind of case her substitute would be needed for the present duty that she is carrying out. The downside of this choice is that exterior hiring might bring about bitterness from inner personnel who might be considering the position of EVP after Lewis takes over Krasnow's position.

Dividing Adverting and also Manufacturing: Offered the competitive pressures and also premium quality work needed from the ad agency, it is suggested that Lewis needs to allow the manufacturing unit to be a different function from the advertising and marketing system. Considering that most advertising agencies had these 2 functions as separate systems, it makes even more feeling to adhere to the norm. Along with this, both functions might have the ability to concentrate on their core turns on much more effectively. The negative aspect of this strategy would certainly be that extra costs would certainly have to be birthed for establishing up different manufacturing functions. In addition to this, a manufacturing head might need to be employed which could boost overheads for the organization.

Integration of Advertising And Marketing with Procedures: Considering that Lewis is currently taking treatment of the advertising as well as operations departments at the same time; it makes sense to integrate the two features given that she has been efficiently taking treatment of both ends. The truth that Lewis has to adjust her administration design for the advertising division suggests that these two departments would certainly be culturally varied.

Recommendation.



An examination of the three alternatives indicates that assimilation of advertising and marketing and procedures would not be a practical step because of the substantial distinctions in between both divisions despite the fact that presently Lewis is dealing with both. While separation of the production feature may have been a beneficial action for the advertising department, the fact that it would certainly suggest placing a 3rd feature under Lewis's wing suggests this should be prevented. The assimilation of the advertising division is the best option in regards to obtaining the optimal arise from the division. An activity plan for this alternative is discussed listed below.

Action Strategy.
Recommendation
Lewis will take over the role of EVP Advertising after Krasnow leaves.

Marketing and advertising functions would certainly be merged.

Judith Shapiro will certainly be employed to take Lewis's area as SVP of marketing and advertising.

Manufacturing function will certainly remain component of advertising and marketing under advertising and marketing function.

Lewis will certainly separate herself from procedures.

A democratic management design with employee empowerment will certainly be used in advertising division.

Open up door policy and emphasis on cross departmental communication will certainly be targeted at removing dissonance.

Backup plan.

If the assimilation does not exercise as prepared, a contingency plan would follow which would divide the manufacturing feature from the advertising and marketing feature to reduce the lots on the SVP of marketing and advertising. In case Judith Shapiro does not get worked with, Lewis will certainly be heading the advertising department without an SVP. In that case the manufacturing feature will certainly be divided by positioning it under an SVP production.