Aol Time Warner B Recognition Of Goodwill Impairment Case Study Analysis


Home >> Harvard >> Aol Time Warner B Recognition Of Goodwill Impairment >>

Aol Time Warner B Recognition Of Goodwill Impairment Case Study Solution

Background and Facts

Aol Time Warner B Recognition Of Goodwill Impairment a workplace materials seller for little and also medium sized companies has actually recently been involved in preparing for a merger with its rival Home Deport, which has affected effectiveness degrees in departmentswith the senior manager associated with lawful problems presented by the federal Profession Commission. With the Advertising and marketing Head putting forward the news of his departure from the company in one year, Jeannie Lewis, the existing head of procedures has actually been asked to take the role in the future. With obstacles in the type of a possible cultural change and also low worker morale, the company wants a full reengineering effort at the advertising and marketing department.

Trouble Declaration
Porter's 5 Forces Analysis
The prospective cultural adjustment at the advertising and marketing department of Aol Time Warner B Recognition Of Goodwill Impairment is enhancing uncertainty in the workplace causing various obstacles for the Jeannie Lewis who would certainly be replacing the head of the division in one year. nalysis

PEST analysis

Political Factors: Political factors play a major role in impacting calculated decisions given that Stapes Inc. needed to abandon its plans of combining with Office Deport after the Federal Profession Payment's intervention in the process. Provided the fact that the shop has an international visibility with branches in UK, U.S.A., Canada and also Germany, political consider each of these countries might be able to influence efficiency or tactical goals. Federal Trade Commission's antitrust match versus the merger occupied beneficial time of the company's senior administration recommending that 'political' factors can have severe ramifications for an international service.

Economic Factors: Financial factors such as the development of small businesses in the global circumstance suggest that Aol Time Warner B Recognition Of Goodwill Impairment is flourishing in an atmosphere where there is possible development of companies. Along with this, truth that store clients are mostly trying to find workplace supplies for home offices recommends that the marketplace has a rising trend of entrepreneurs and home companies.

Social factors: Social patterns in the economy show that clients are searching for convenience as well as attractive prices. Marketing research shows how the client for Aol Time Warner B Recognition Of Goodwill Impairment does not have awareness about discovering solutions which can offer a mix of benefit as well as inexpensive.

Technical factors: Technology plays an essential role in Aol Time Warner B Recognition Of Goodwill Impairment's company method specifically as the company is piloting Technology facilities which would certainly supply technology sales as well as support in the form of memory upgrades, outer installments. (Recap of BUG in appendix 2).

OB Issues and also Manifestations.

A number of underlying Business Habits problems can be seen in Aol Time Warner B Recognition Of Goodwill Impairment's case as highlighted in this section.

Apprehensions concerning cultural modification: There is concern regarding a social adjustment that would take place when Todd Krasnow leaves from his placement as the Exec Vice Head Of State of Advertising with most of the personnel currently showing unhappiness over this potential step. This expected change has actually developed anxiety in the workplace which has been combined with the previous anxiety of preparing the company for a potential merger with House Deport.
Pest Analysis
Demanding Task Atmosphere for Newcomers: There is lack of workers that can match the demanding setting of a fast-paced organization. Not only does this cause problem in locating the best people, it places stress on brand-new hires as can not withstand the rate as well as pressure that the organization expects them to bear.

Dual Coverage Lines: Newcomers locate this organizational culture cumbersome and hard to deal with particularly as dotted line partnerships are implied to be weak as a whole and objective setting as well as performance examination is still done by the strong line manager. This means that novices could lose clearness regarding their corresponding functions as well as goals particularly as dotted line reporting does not keep them in straight communication with the solid line supervisors.

Resentment From Cross Departmental Hiring: Krasnow's choice to make Lewis his follower as opposed to Bridget Coles even though it had been hypothesized that the last would take Krasnow's position came as a blow to her spirits. Lewis may have been qualified as well as appropriate for the job yet the fact that Kransnow's separation would make Coles a straight report to Lewis may have been the reason for Coles' resignation from solutions.

Anxiety & Job Instability: Concern as well as insecurity can be recognized as two significant concerns that Lewis would be taking care of specifically as the merging has actually now be cancelled as well as two elderly execs of the advertising and marketing division would be leaving. The whole obligation of the department would certainly be dropping on Lewis's shoulders who would certainly not simply supervise of brining about a cultural modification but would certainly likewise have to confirm herself in her new role.

Inappropriate Monitoring Style of Leader: Lewis's administration style and also its conflict with the advertising and marketing department's function can likewise be seen as an OB obstacle specifically as she has actually been utilized to dealing with issues in the operations division where employees are shown to focus on procedures and obtain them right. The advertising division on the various other hand can be seen as a group of individuals that are used to being supported by Krasnow who concentrated extra on result than procedures.

Interdepartmental Disagreements: Interdepartmental disputes in between 3 departments, advertising and marketing, merchandizing as well as operations respectively over the appropriation of the marketing mix can be determined as an additional OB concern. Although the marketing division does not share the very same vision as the other two departments relating to the aloocation of the marketing mix twoards promos and advertsing, the merchandizing and procedures divisions do not agree over the advertising mix allotment amongst each other either.

Disintegration in Marketing Department: Fragmentation between the advertising and marketing divisions can be recognized as one more OB issue which can require further attention. The truth that the marketing and advertising sections in the advertising department are disconnected is stopping both departments from obtaining from each other's experience as well as knowledge. Assimilation of advertising and marketing with merchandising as well as procedures would certainly end up being harder if the advertising and marketing division itself is degenerated which can be an additional potential OB worry.

Aol Time Warner B Recognition Of Goodwill Impairment Analysis

Different theories have actually been used to explain the conditions to get more quality regarding the circumstance at hand.
Swot Analysis
McGregor's Theory X & Y: According to Douglas McGregor's Theory X, the majority of managers think that subordinates are passive and also lazy, have little passion and also stand up to change. The situation at Aol Time Warner B Recognition Of Goodwill Impairment is not totally adhering to Theory X, it can be seen that brand-new hires are discovering this environment instead difficult which may ultimately lead to a better inclination of the monitoring towards Theory X. Also while evaluating Lewis's management style, theory X might have been ideal in the operations department to some level however the Advertising and marketing department would certainly call for dependence on Theory Y in order to get the creative thinking and creativity from the teams.

Tuckman's Teamwork Theory: As for Lewis's problem regarding bringing consistency between the marketing and advertising department is concerned, this would initially cause conflict as discussed by Bruce Tuckman in his 'Teamwork Theory'. (Tuckman, 1965). According to Tuckman's concept displayed in appendix 3, during the preliminary stage of group advancement, individuals might not bond, as they are busy locating their location in the group. By integrating the marketing and advertising division's job, there might be the same initial separate which might cause the 2nd stage of 'storming' where the groups test each other. Nevertheless, it is only during the 3rd phase or 'norming' when they would collaborate to share ideas before the team can produce harmony in the fourth phase 'doing'.

When people are offered with adjustment, they get in stage one as well as so there might be emotions like sadness, uncertainty, frustration, temper, concern, rejection as well as disorientation.The circumstance at the advertising and marketing division of Aol Time Warner B Recognition Of Goodwill Impairment is similar so Lewis can get comfy with the concept that it is not amazing actions. It is throughout this phase that Lewis will have to provide assistance to the division so that they can locate a feeling of direction. It can be seen exactly how Krasnow has already made this change much easier by making Lewis get entailed in the department a year before his actual departure.
Vrio Analysis
Abraham Maslow in his Concept of 'Requirements Hierarchy' (appendix 5) has discusses the importance of 'protection needs as being a lower degree demand of a human for setting off motivation. As seen in the pyramid shared in appendix 3, we can see just how 'the demand to really feel protected as well as out of risk' is at the second degree of needs. Prior to an employee can be made to create psychologically, he needs to have his 'Physical 'as well as 'Security' needs satisfied.

SWOT Analysis for Aol Time Warner B Recognition Of Goodwill Impairment Case Study

Ramification of Analysis.

The OB analysis has taken a look at various concepts to comprehend exactly how to manage the current situation at hand. The complying with 3 options have been proposed to help Lewis take care of the organizational difficulties in the marketing department. Each of these alternatives has actually been proposed for relieving the change required to bring the advertising division in line with the needs of the marketplace and also for making the social modification that would adhere to once the existing leader leaves.

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

Evaluation of Alternatives.

Judith Shapiro who has earlier been spoken with by Lewis throughout the earlier merger days has experience in business-to-business advertising and marketing along with firm and also retail advertising experience. As soon as Krasnow leaves, Lewis can employ Shapiro as an EVP for marketing to take care of both advertising and also advertising features.

The benefit of this method is that it will integrate the two functions while lowering the demand for working with an additional resource for advertising and marketing. In addition to this, Lewis would be heading the advertising department as well as in any case her replacement would certainly be required for the present function that she is doing. The downside of this option is that outside hiring might cause animosity from internal employees that might be eying the position of EVP after Lewis takes over Krasnow's setting.

Separating Adverting as well as Production: Provided the competitive stress and premium quality work required from the advertising agency, it is suggested that Lewis needs to allow the production system to be a different feature from the marketing device. Since many advertising agencies had these two features as separate devices, it makes more sense to follow the norm. Along with this, both functions might have the ability to concentrate on their core activates much more successfully. The disadvantage of this technique would certainly be that added prices would certainly have to be borne for establishing up different production features. In addition to this, a manufacturing head may need to be hired which might enhance overheads for the company.

Integration of Advertising with Workflows: Since Lewis is currently dealing with the advertising and also operations departments all at once; it makes sense to incorporate the two features considering that she has actually been successfully caring for both ends. The fact that both departments currently have significant differences over appropriation of resources suggests that this combination might have the ability to cause harmony especially as Lewis would certainly be heading both ends.However there are different disadvantages of this step specifically as it would put excessive worry over Lewis's shoulders. The truth that Lewis has to adjust her management design for the advertising and marketing department suggests that these 2 divisions would certainly be culturally diverse. Lewis might not be able to apply one kind of management style to both divisions which can result in inefficiency in either one of the 2 functions.


An assessment of the 3 alternatives indicates that combination of advertising and operations would not be a feasible move due to the large distinctions between both divisions although that currently Lewis is taking care of both. While splitting up of the manufacturing feature might have been a desirable action for the marketing division, the truth that it would certainly suggest positioning a third function under Lewis's wing means this need to be avoided also. The combination of the marketing department is the most effective alternative in regards to obtaining the optimum arise from the department. An action prepare for this alternative is discussed below.

Activity Strategy.
Lewis will take over the duty of EVP 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.

Production feature will certainly remain component of advertising under advertising feature.

Lewis will certainly divide herself from operations.

A democratic management style with worker empowerment will be used in advertising and marketing division.

Open door policy as well as focus on cross department communication will be targeted at getting rid of dissonance.

Backup plan.

If the assimilation does not exercise as prepared, a contingency strategy would comply with which would certainly separate the manufacturing function from the marketing function to decrease the tons on the SVP of marketing and advertising. In case Judith Shapiro does not obtain employed, Lewis will be heading the marketing division without an SVP. Because case the manufacturing function will most definitely be separated by putting it under an SVP production.