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American International Group Inc Case Study Analysis

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American International Group Inc Case Study Analysis

Background and Facts

American International Group Inc a workplace supplies seller for tiny and average sized businesses has lately been associated with planning for a merger with its competitor Home Deport, which has actually impacted performance degrees in departmentswith the senior supervisor involved in legal complications put forth by the federal Profession Compensation. With the Advertising Head advancing the information of his departure from the business in one year, Jeannie Lewis, the current head of procedures has actually been asked to take the duty in the near future. With obstacles in the type of a potential cultural adjustment as well as reduced staff member spirits, the company wants a full reengineering initiative at the advertising division.

Trouble Statement
Porter's 5 Forces Analysis
The potential cultural change at the marketing department of American International Group Inc is boosting uncertainty in the workplace resulting in various challenges for the Jeannie Lewis who would be changing the head of the division in one year. nalysis

PEST analysis

Political Factors: Political factors play a major role in impacting strategic decisions considering that Stapes Inc. had to abandon its strategies of combining with Workplace Deport after the Federal Profession Compensation's intervention while doing so. Given the fact that the shop has a global presence with branches in UK, U.S.A., Canada and also Germany, political consider each of these countries may have the ability to impact efficiency or calculated objectives. Federal Trade Payment's antitrust match versus the merging used up valuable time of the company's elderly monitoring suggesting that 'political' factors can have significant effects for an international company.

Economic Factors: Financial factors such as the appearance of small businesses in the international circumstance recommend that American International Group Inc is thriving in a setting where there is possible development of companies. Reality that shop consumers are mostly looking for office supplies for residence workplaces recommends that the market has a climbing fad of entrepreneurs as well as home based services.

Social factors: Social trends in the economic climate show that customers are looking for benefit along with eye-catching prices. Market research demonstrates how the customer for American International Group Inc does not have understanding about discovering solutions which can offer a combination of comfort and also inexpensive.

Technical factors: Innovation plays an important duty in American International Group Inc's organisation strategy particularly as the organization is piloting Modern technology facilities which would provide innovation sales and also support in the kind of memory upgrades, peripheral setups. (Summary of PEST in appendix 2).

OB Issues and also Effects.

A number of underlying Business Habits concerns can be seen in American International Group Inc's case as highlighted in this area.

Worries about cultural adjustment: There is worry regarding a social adjustment that would certainly occur as soon as Todd Krasnow leaves from his setting as the Executive Vice Head Of State of Advertising with a lot of the personnel currently showing unhappiness over this prospective move. This predicted adjustment has actually created anxiety in the work environment which has been coupled with the previous tension of preparing the firm for a prospective merging with Home Deport.
Pest Analysis
Demanding Task Environment for Newcomers: There is scarcity of personnel that can match the stressful atmosphere of a fast-paced company. Not just does this lead to problem in discovering the appropriate individuals, it places tension on new hires as can not withstand the pace as well as pressure that the company expects them to birth.

Twin Coverage Lines: Newbies discover this organizational society troublesome and also difficult to manage particularly as populated line relationships are indicated to be weak as a whole as well as objective setup and also efficiency analysis is still done by the strong line supervisor. This indicates that newbies might lose clarity concerning their particular functions as well as goals specifically as populated line reporting does not keep them in straight interaction with the strong line managers.

Animosity From Cross Departmental Hiring: Krasnow's choice to make Lewis his follower instead of Bridget Coles despite the fact that it had actually been guessed that the latter would certainly take Krasnow's position came as an impact to her morale. Lewis may have been capable as well as ideal for the task but the truth that Kransnow's departure would make Coles a straight record to Lewis may have been the factor for Coles' resignation from services.

Fear & Task Instability: Fear and also insecurity can be identified as two major worries that Lewis would certainly be taking care of particularly as the merger has actually currently be cancelled as well as 2 senior execs of the marketing department would certainly be leaving. The entire responsibility of the department would be dropping on Lewis's shoulders who would not simply be in charge of brining regarding a social change yet would likewise have to confirm herself in her brand-new duty.

Incompatible Administration Style of Leader: Lewis's administration design and its conflict with the marketing division's function can likewise be seen as an OB challenge especially as she has actually been used to taking care of problems in the operations department where workers are educated to concentrate on processes and also obtain them right. The marketing division on the other hand can be viewed as a team of individuals who are made use of to being nurtured by Krasnow who focused more on result than processes.

Interdepartmental Differences: Interdepartmental disputes in between three divisions, advertising, merchandizing as well as procedures respectively over the appropriation of the marketing mix can be identified as an additional OB concern. The advertising and marketing department does not share the exact same vision as the various other two departments pertaining to the aloocation of the advertising and marketing mix twoards promos as well as advertsing, the merchandizing as well as operations divisions do not concur over the advertising mix allotment among one an additional either.

Fragmentation in Advertising Division: Disintegration between the marketing and advertising departments can be determined as an additional OB issue which could need more focus. The truth that the marketing and advertising sections in the advertising division are detached is stopping both divisions from getting from each various other's experience and also experience. Assimilation of advertising and marketing with retailing and also operations would certainly become harder if the marketing department itself is broken down which can be another possible OB issue.

American International Group Inc Analysis

Different concepts have actually been made use of to clarify the situations to obtain additional clarity concerning the scenario available.
Swot Analysis
McGregor's Theory X & Y: According to Douglas McGregor's Theory X, many managers believe that subordinates are easy as well as careless, have little passion and also stand up to adjustment. The hard version of this theory stressed browbeating, tight controls, threats and also punishments. With time it creates reduced productivity, subtle sabotage and rivalry (Offer, 2003). The circumstance at American International Group Inc is not completely adhering to Theory X, it can be seen that brand-new hires are discovering this environment rather difficult which might ultimately lead to a better disposition of the monitoring in the direction of Theory X. Based on McGregor's supported sight, which he called Theory Y, the important job of the administration is to prepare business conditions to ensure that individuals can accomplish their own goals best by routing their efforts in the direction of organizational benefits. If individuals find no fulfillment in their work, the management would have little selection yet to rely on concept X as well as exterior control (Offer, 2003). Even while examining Lewis's monitoring style, concept X may have been suitable in the operations division somewhat but the Advertising department would require reliance on Concept Y in order to get the creativity as well as creativity from the groups.

Tuckman's Teamwork Theory: As far as Lewis's concern regarding bringing harmony between the marketing and also advertising and marketing department is worried, this would initially lead to conflict as gone over by Bruce Tuckman in his 'Team effort Theory'. By combining the marketing and also advertising and marketing division's work, there might be the same preliminary disconnect which might lead to the 2nd phase of 'storming' where the groups challenge one another.

Bridges' Transition Design: According To William Bridge's theory (appendix 4), people are quite unpleasant with adjustment, which is noticeable by the circumstance at American International Group Inc The situation can be seen as a typical course of life if is examined as per Bridge's concept where he clarifies that people experience 3 stages of shift when they experience change. 'End, losing and also Letting go', The Neutral Area and 'The New Starting' (Bridges, 2004). When people exist with modification, they enter stage one and so there might be emotions like despair, uncertainty, aggravation, anger, fear, rejection and disorientation.The situation at the advertising division of American International Group Inc is comparable so Lewis can get comfortable with the suggestion that it is not extraordinary habits. In the 2nd phase, there may be a need to connect the void in between the new and also old culture so Lewis might need to face this ordeal as soon as Krasnow leaves. There might be low spirits and reduced productivity at this phase which must not be taken as an obstacle. It is during this phase that Lewis will have to offer advice to the division to make sure that they can find a sense of direction. It can be seen exactly how Krasnow has already made this shift easier by making Lewis get associated with the division a year prior to his real separation. As per Bridges' Model, stage 3 will certainly bring about openness to discovering, High energy and also dedication as individuals will accept the change (Bridges, 2004).
Vrio Analysis
Abraham Maslow in his Concept of 'Requirements Hierarchy' (appendix 5) has talks about the significance of 'safety requires as being a lower degree requirement of a human for causing motivation. As seen in the pyramid shared in appendix 3, we can see how 'the requirement to really feel secure and also out of threat' is at the 2nd degree of demands. Prior to a worker can be made to develop mentally, he needs to have his 'Physical 'and also 'Safety and security' requires fulfilled.

SWOT Analysis for American International Group Inc Case Study



Implication of Analysis.

The OB analysis has looked at various theories to recognize exactly how to manage the current circumstance handy. The complying with 3 alternatives have actually been suggested to help Lewis manage the business obstacles in the advertising and marketing division. Each of these options has been suggested for reducing the change needed to bring the advertising division in accordance with the needs of the market and for making the cultural modification that would certainly follow as soon as the existing leader leaves.

Assimilation of marketing and advertising features. Separating Adverting and Manufacturing features. Assimilation of Marketing with Procedures.

Examination of Alternatives.

Combination of Advertising & Marketing Functions: The in-house marketing agency of American International Group Inc is already toughness for the company in regards to conserving up on overheads connected to marketing and promo. Since no brand-new employment has been done after Bridget Cole's separation with the coverage line being straight assigned to Krasnow for the marketing feature, this is a positive possibility for integrating the advertising and marketing features. Judith Shapiro who has actually earlier been spoken with by Lewis during the earlier merger days has expertise in business-to-business marketing in addition to company and retail advertising experience. When Krasnow leaves, Lewis can employ Shapiro as an EVP for advertising to manage both marketing and advertising features.

The advantage of this technique is that it will integrate the two functions while decreasing the need for working with an additional resource for marketing. Along with this, Lewis would certainly be heading the advertising and marketing department as well as in any case her substitute would be required for the current role that she is executing. The downside of this option is that outside hiring might cause bitterness from inner personnel who might be considering the placement of EVP after Lewis takes over Krasnow's position.

Separating Adverting and Production: Offered the competitive stress and also premium quality job required from the ad agency, it is advised that Lewis ought to enable the manufacturing unit to be a separate feature from the advertising and marketing device. Since most advertising agencies had these two features as separate systems, it makes even more feeling to comply with the standard. Along with this, both features may have the ability to concentrate on their core triggers more successfully. The drawback of this approach would be that extra prices would have to be birthed for setting up different production features. A manufacturing head may have to be worked with which might enhance expenses for the organization.

Assimilation of Advertising with Procedures: Given that Lewis is currently caring for the advertising and also procedures divisions simultaneously; it makes sense to integrate both functions because she has actually been effectively dealing with both ends. The reality that both departments already have major distinctions over allocation of resources suggests that this assimilation might have the ability to produce consistency specifically as Lewis would be heading both ends.However there are various negative aspects of this move particularly as it would place way too much worry over Lewis's shoulders. The reality that Lewis needs to adjust her management style for the advertising and marketing division recommends that these 2 divisions would be culturally diverse. Lewis might not be able to use one type of leadership style to both departments which might result in inefficiency in either one of the 2 features.

Recommendation.



An assessment of the 3 alternatives suggests that integration of advertising and procedures would certainly not be a viable action due to the huge differences between the two divisions although that currently Lewis is managing both. While splitting up of the production feature may have been a beneficial action for the advertising department, the reality that it would indicate putting a third function under Lewis's wing indicates this need to be avoided. The integration of the marketing division is the best choice in regards to getting the optimal results from the division. An action plan for this option is talked about below.

Activity Strategy.
Recommendation
Lewis will take over the function of EVP Advertising and marketing after Krasnow leaves.

Marketing and advertising functions would be merged.

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

Manufacturing function will stay component of advertising under advertising feature.

Lewis will certainly separate herself from operations.

An autonomous management design with worker empowerment will be utilized in advertising division.

Open up door plan as well as emphasis on cross departmental interaction will certainly be focused on getting rid of disharmony.

Contingency strategy.

If the integration does not work out as prepared, a backup plan would adhere to which would divide the production feature from the advertising and marketing feature to lower the load on the SVP of marketing and advertising. In case Judith Shapiro does not obtain worked with, Lewis will be heading the marketing department without an SVP. In that case the manufacturing feature will absolutely be divided by putting it under an SVP manufacturing.