American International Group Inc Case Study Analysis


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Background and Facts

American International Group Inc a workplace materials merchant for little and also average sized businesses has actually just recently been associated with planning for a merging with its rival House Deport, which has affected performance degrees in departmentswith the elderly supervisor associated with legal issues put forth by the government Trade Commission. With the Advertising and marketing Head putting forward the news of his separation from the business in one year, Jeannie Lewis, the present head of operations has actually been asked to take the role in the near future. With challenges in the kind of a potential cultural change and low employee morale, the company is in need of a complete reengineering effort at the advertising and marketing division.

Problem Declaration
Porter's 5 Forces Analysis
The prospective cultural modification at the advertising and marketing division of American International Group Inc is increasing unpredictability in the working environment resulting in different challenges for the Jeannie Lewis that would certainly be changing the head of the department in one year. nalysis

PEST analysis

Political Factors: Political factors play a major duty in influencing critical decisions given that Stapes Inc. had to abandon its plans of combining with Workplace Deport after the Federal Profession Commission's intervention at the same time. Offered the reality that the shop has an international presence with branches in UK, U.S.A., Canada and Germany, political factors in each of these nations might be able to affect performance or calculated goals. Federal Profession Compensation's antitrust match versus the merging occupied useful time of the company's senior management suggesting that 'political' factors can have serious implications for a worldwide service.

Economic Factors: Financial factors such as the emergence of small businesses in the international scenario recommend that American International Group Inc is growing in an atmosphere where there is prospective development of organisations. Reality that shop customers are mostly looking for workplace materials for residence offices suggests that the market has a climbing fad of business owners and house based organisations.

Social factors: Social patterns in the economic situation show that consumers are looking for ease as well as attractive costs. Marketing research demonstrates how the consumer for American International Group Inc does not have awareness concerning discovering services which can offer a mix of benefit and inexpensive.

Technical factors: Innovation plays a crucial function in American International Group Inc's business strategy particularly as the organization is piloting Technology centers which would certainly provide technology sales as well as assistance in the kind of memory upgrades, outer installations. (Recap of BUG in appendix 2).

OB Issues and also Effects.

A number of underlying Organizational Actions problems can be seen in American International Group Inc's case as highlighted in this area.

Worries regarding cultural change: There is apprehension regarding a cultural change that would occur as soon as Todd Krasnow leaves from his setting as the Exec Vice President of Advertising with the majority of the team member currently showing discontent over this potential move. This predicted modification has actually created stress and anxiety in the work environment which has been combined with the past anxiety of preparing the company for a prospective merging with House Deport.
Pest Analysis
Demanding Job Environment for Newcomers: There is shortage of personnel that can match the demanding environment of a hectic organization. Not only does this cause trouble in locating the right individuals, it puts stress on brand-new hires as can not withstand the speed and stress that the company anticipates them to bear.

Twin Coverage Lines: Beginners find this business society cumbersome and also tough to deal with specifically as populated line relationships are suggested to be weaker generally and also objective setting as well as efficiency examination is still done by the solid line manager. This indicates that newbies could lose clearness about their particular duties as well as goals especially as dotted line reporting does not keep them in direct interaction with the solid line supervisors.

Animosity From Cross Departmental Hiring: Krasnow's decision to make Lewis his follower instead of Bridget Coles despite the fact that it had actually been speculated that the last would certainly take Krasnow's placement came as a blow to her spirits. Lewis might have been qualified and also proper for the work but the reality that Kransnow's separation would make Coles a direct report to Lewis may have been the factor for Coles' resignation from services.

Anxiety & Work Insecurity: Fear and also instability can be identified as 2 major concerns that Lewis would be dealing with specifically as the merger has currently be terminated and also two elderly execs of the marketing department would certainly be leaving. The whole responsibility of the division would be falling on Lewis's shoulders who would not just supervise of brining concerning a cultural change yet would certainly likewise need to prove herself in her brand-new duty.

Inappropriate Monitoring Design of Leader: Lewis's management style and its incompatibility with the marketing department's function can likewise be seen as an OB difficulty specifically as she has been made use of to dealing with issues in the procedures division where employees are shown to concentrate on processes and also get them. The advertising and marketing division on the various other hand can be seen as a group of individuals that are used to being supported by Krasnow that focused extra on result than processes.

Interdepartmental Disagreements: Interdepartmental disputes between 3 divisions, advertising and marketing, merchandizing and procedures specifically over the appropriation of the marketing mix can be determined as another OB problem. Although the advertising division does not share the same vision as the various other two divisions pertaining to the aloocation of the advertising mix twoards promotions as well as advertsing, the merchandizing as well as operations divisions do not concur over the advertising mix allotment among one another either.

Fragmentation in Marketing Department: Disintegration in between the marketing and advertising departments can be recognized as one more OB concern which might need additional attention. The reality that the advertising and marketing sections in the marketing department are disconnected is preventing both divisions from gaining from each other's experience and expertise. Combination of advertising and marketing with retailing and also operations would certainly come to be more difficult if the marketing department itself is disintegrated which can be one more potential OB problem.

American International Group Inc Analysis

Different concepts have been used to clarify the conditions to get more clarity concerning the situation at hand.
Swot Analysis
McGregor's Concept X & Y: According to Douglas McGregor's Concept X, a lot of supervisors believe that juniors are passive and also lazy, have little aspiration and also stand up to adjustment. The circumstance at American International Group Inc is not completely adhering to Theory X, it can be seen that new hires are finding this environment instead difficult which may ultimately lead to a higher inclination of the monitoring in the direction of Theory X. Also while analyzing Lewis's management style, theory X may have been ideal in the operations division to some level however the Advertising and marketing department would certainly require dependence on Concept Y in order to get the imagination and creativity from the teams.

Tuckman's Teamwork Theory: As far as Lewis's problem about bringing consistency in between the advertising and marketing department is worried, this would originally bring about clash as discussed by Bruce Tuckman in his 'Synergy Concept'. (Tuckman, 1965). According to Tuckman's concept shown in appendix 3, throughout the first stage of team advancement, individuals might not bond, as they are active discovering their area in the group. By integrating the marketing and advertising division's job, there might coincide preliminary disconnect which could lead to the 2nd phase of 'storming' where the groups challenge each other. Nevertheless, it is just during the 3rd stage or 'norming' when they would come together to share suggestions before the group can bring about harmony in the fourth phase 'executing'.

When individuals are presented with change, they get in stage one and also so there might be emotions like despair, uncertainty, disappointment, rage, anxiety, rejection and disorientation.The situation at the advertising department of American International Group Inc is similar so Lewis can get comfortable with the concept that it is not extraordinary behavior. It is during this stage that Lewis will certainly have to give guidance to the division so that they can discover a feeling of direction. It can be seen exactly how Krasnow has actually currently made this shift simpler by making Lewis get entailed in the department a year prior to his actual separation.
Vrio Analysis
Maslow's Need power structure: The OB problem related to insecurity at the work environment has actually been activated first of all by the adjustment in management and second of all by the reality that the merger will certainly no longer be started. Abraham Maslow in his Theory of 'Needs Power structure' (appendix 5) has goes over the value of 'security requires as being a reduced degree need of a human for setting off motivation. As seen in the pyramid cooperated appendix 3, we can see exactly how 'the demand to really feel safe and secure as well as out of danger' goes to the 2nd level of needs. Prior to a worker can be made to develop mentally, he requires to have his 'Physiological 'as well as 'Safety and security' needs fulfilled. This indicates that unless the workers are made to really feel safe concerning their present work status in American International Group Inc they might not get to 'Self-Fulfillment'. (King, 2009).

SWOT Analysis for American International Group Inc Case Study

Implication of Analysis.

The OB analysis has actually looked at different concepts to comprehend exactly how to manage the present scenario at hand. The adhering to three options have actually been recommended to help Lewis deal with the organizational challenges in the advertising department. Each of these alternatives has actually been suggested for relieving the transition required to bring the advertising and marketing department in accordance with the needs of the marketplace and for making the cultural adjustment that would follow once the existing leader leaves.

Integration of advertising and marketing functions. Separating Adverting as well as Production features. Assimilation of Advertising And Marketing with Procedures.

Examination of Alternatives.

Assimilation of Marketing & Marketing Functions: The internal marketing company of American International Group Inc is currently strength for the company in terms of saving up on overheads connected to advertising as well as promo. Given that no brand-new employment has actually been done after Bridget Cole's separation with the reporting line being directly designated to Krasnow for the marketing feature, this is a favorable chance for incorporating the advertising and marketing functions. Judith Shapiro who has earlier been interviewed by Lewis during the earlier merging days has proficiency in business-to-business advertising along with firm and also retail advertising experience. Once Krasnow leaves, Lewis can work with Shapiro as an EVP for advertising and marketing to deal with both marketing and advertising functions.

The advantage of this technique is that it will incorporate the two functions while minimizing the requirement for employing an added source for advertising. Lewis would certainly be heading the marketing department and in any case her replacement would certainly be needed for the present role that she is executing. The disadvantage of this choice is that external hiring may cause animosity from inner workers that might be looking at the setting of EVP after Lewis takes over Krasnow's setting.

Dividing Adverting and Production: Provided the affordable stress and also high quality work called for from the ad agency, it is advised that Lewis must enable the production system to be a different feature from the marketing system. Because the majority of advertising agencies had these two features as different systems, it makes even more feeling to adhere to the norm. Both features may be able to concentrate on their core turns on a lot more efficiently. The downside of this method would be that additional costs would have to be birthed for setting up separate production features. Along with this, a production head may have to be employed which could boost overheads for the company.

Combination of Marketing with Procedures: Considering that Lewis is already caring for the advertising and operations departments simultaneously; it makes sense to integrate the two features considering that she has actually been efficiently looking after both ends. The fact that the two divisions currently have significant distinctions over appropriation of sources recommends that this assimilation may be able to cause harmony specifically as Lewis would certainly be heading both ends.However there are various drawbacks of this move specifically as it would certainly place too much problem over Lewis's shoulders. The truth that Lewis has to adjust her administration style for the advertising and marketing division suggests that these two divisions would be culturally varied. Lewis might not be able to apply one type of leadership design to both departments which might result in ineffectiveness in either one of the 2 features.


An analysis of the three choices indicates that assimilation of marketing as well as procedures would not be a possible step because of the substantial distinctions in between both divisions although that presently Lewis is dealing with both. While splitting up of the production feature may have been a positive relocation for the advertising and marketing division, the truth that it would certainly mean putting a third function under Lewis's wing indicates this must be prevented. The integration of the marketing department is the very best option in regards to obtaining the optimum arise from the department. An activity prepare for this option is reviewed below.

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

Advertising and Marketing features would be merged.

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

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

Lewis will separate herself from operations.

An autonomous leadership style with employee empowerment will be used in advertising and marketing department.

Open up door policy and emphasis on cross departmental communication will certainly be aimed at eliminating disharmony.

Backup strategy.

If the combination does not exercise as intended, a contingency plan would certainly follow which would certainly separate the manufacturing feature from the marketing feature to decrease the lots on the SVP of marketing and advertising. In case Judith Shapiro does not get hired, Lewis will certainly be heading the advertising and marketing department without an SVP. In that case the manufacturing function will most definitely be divided by positioning it under an SVP manufacturing.