Globalizing The Cost Of Capital And Capital Budgeting At Aes Case Study Solution


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Globalizing The Cost Of Capital And Capital Budgeting At Aes Case Study Analysis

Background and Facts

Globalizing The Cost Of Capital And Capital Budgeting At Aes a workplace materials merchant for tiny and medium sized businesses has just recently been associated with preparing for a merger with its rival Residence Deport, which has influenced performance levels in departmentswith the senior supervisor involved in lawful complications put forth by the government Trade Compensation. With the Advertising and marketing Head putting forward the news of his separation from the firm in one year, Jeannie Lewis, the current head of operations has been asked to take the role in the near future. With difficulties in the type of a possible social modification as well as low staff member spirits, the organization wants a total reengineering effort at the advertising and marketing division.

Problem Declaration

The prospective cultural adjustment at the marketing department of Globalizing The Cost Of Capital And Capital Budgeting At Aes is enhancing unpredictability in the workplace resulting in different obstacles for the Jeannie Lewis that would certainly be replacing the head of the division in one year. nalysis

PEST analysis

Political Factors: Political factors play a significant duty in impacting calculated choices since Stapes Inc. needed to desert its strategies of merging with Office Deport after the Federal Trade Commission's treatment at the same time. Given the fact that the store has a global existence with branches in UK, U.S.A., Canada and also Germany, political factors in each of these nations might have the ability to impact performance or strategic goals. Federal Profession Commission's antitrust match versus the merging took up useful time of the company's elderly management suggesting that 'political' factors can have serious effects for a worldwide organisation.

Economic Factors: Financial factors such as the emergence of small companies in the worldwide situation suggest that Globalizing The Cost Of Capital And Capital Budgeting At Aes is growing in an environment where there is prospective development of organisations. In addition to this, fact that store clients are mainly trying to find workplace products for office recommends that the market has a rising trend of business owners and online organisations.

Social factors: Social fads in the economic situation show that customers are searching for convenience in addition to eye-catching costs. Market research demonstrates how the consumer for Globalizing The Cost Of Capital And Capital Budgeting At Aes does not have awareness about discovering remedies which can use a mix of benefit as well as affordable.

Technical factors: Modern technology plays a crucial duty in Globalizing The Cost Of Capital And Capital Budgeting At Aes's service method particularly as the company is piloting Innovation centers which would certainly provide modern technology sales as well as support in the form of memory upgrades, peripheral setups. (Recap of PARASITE in appendix 2).

OB Issues and also Manifestations.

Numerous underlying Business Habits issues can be seen in Globalizing The Cost Of Capital And Capital Budgeting At Aes's case as highlighted in this area.

Apprehensions concerning cultural adjustment: There is uneasiness regarding a cultural change that would take place once Todd Krasnow leaves from his position as the Exec Vice President of Advertising And Marketing with the majority of the employee currently showing discontent over this possible move. This expected adjustment has actually produced anxiety in the workplace which has been combined with the previous anxiety of preparing the firm for a potential merging with Residence Deport.

Difficult Job Atmosphere for Newcomers: There is lack of personnel that can match the stressful environment of a busy company. Not only does this result in difficulty in discovering the appropriate individuals, it places stress on brand-new hires as can not stand up to the rate and pressure that the organization expects them to bear.

Twin Reporting Lines: Beginners locate this business culture cumbersome and difficult to deal with especially as dotted line relationships are implied to be weak as a whole as well as unbiased setup and efficiency evaluation is still done by the strong line manager. This indicates that newcomers could shed clarity about their particular functions and also purposes especially as dotted line coverage does not keep them in straight communication with the solid line managers.

Resentment From Cross Departmental Hiring: Krasnow's decision to make Lewis his successor rather than Bridget Coles although it had been guessed that the last would certainly take Krasnow's placement came as a strike to her spirits. Lewis may have been capable and appropriate for the task however the reality that Kransnow's departure would make Coles a straight report to Lewis may have been the factor for Coles' resignation from services.

Worry & Work Instability: Fear and also insecurity can be determined as 2 significant problems that Lewis would be managing especially as the merger has currently be terminated as well as 2 elderly execs of the advertising and marketing division would be leaving. The entire duty of the division would certainly be dropping on Lewis's shoulders who would certainly not simply be in charge of brining about a cultural modification however would also need to confirm herself in her brand-new function.

Incompatible Administration Design of Leader: Lewis's monitoring design as well as its incompatibility with the marketing department's function can likewise be seen as an OB obstacle particularly as she has been utilized to handling problems in the procedures division where workers are shown to focus on procedures as well as obtain them right. The advertising division on the various other hand can be seen as a group of individuals that are made use of to being supported by Krasnow who focused more on result than procedures.

Interdepartmental Arguments: Interdepartmental differences in between three departments, advertising and marketing, merchandizing and procedures respectively over the allotment of the advertising mix can be identified as an additional OB problem. The advertising and marketing department does not share the exact same vision as the various other two divisions concerning the aloocation of the advertising mix twoards promos and also advertsing, the merchandizing and procedures departments do not agree over the marketing mix allocation amongst one an additional either.

Fragmentation in Advertising Division: Disintegration in between the marketing and advertising departments can be identified as another OB concern which could require additional attention. The reality that the advertising and marketing sections in the marketing department are separated is preventing both departments from getting from each other's experience and also experience. Assimilation of advertising and marketing with retailing and also operations would come to be more difficult if the advertising division itself is disintegrated which can be one more prospective OB problem.

Globalizing The Cost Of Capital And Capital Budgeting At Aes Analysis

Various concepts have been made use of to discuss the circumstances to obtain additional quality concerning the circumstance at hand.

McGregor's Theory X & Y: According to Douglas McGregor's Concept X, most managers think that staffs are passive and lazy, have little aspiration and also resist change. The circumstance at Globalizing The Cost Of Capital And Capital Budgeting At Aes is not entirely complying with Concept X, it can be seen that brand-new hires are discovering this atmosphere instead demanding which might at some point lead to a better inclination of the monitoring in the direction of Theory X. Also while assessing Lewis's management style, concept X might have been suitable in the operations division to some degree but the Advertising division would call for dependence on Concept Y in order to obtain the imagination and originality from the teams.

Tuckman's Team effort Concept: As much as Lewis's worry about bringing consistency between the advertising and marketing as well as marketing division is worried, this would initially lead to conflict as discussed by Bruce Tuckman in his 'Team effort Concept'. By combining the advertising and marketing as well as advertising division's job, there might be the same initial separate which can lead to the 2nd stage of 'storming' where the groups test one another.

Bridges' Shift Design: Based On William Bridge's concept (appendix 4), people are quite uneasy with modification, which is obvious by the situation at Globalizing The Cost Of Capital And Capital Budgeting At Aes The circumstance can be seen as a typical training course of life if is examined based on Bridge's concept where he describes that individuals experience 3 stages of shift when they experience adjustment. 'End, shedding and also Letting go', The Neutral Area and also 'The New Beginning' (Bridges, 2004). When people are presented with adjustment, they go into stage one and so there might be emotions like sadness, uncertainty, stress, temper, fear, rejection as well as disorientation.The situation at the advertising department of Globalizing The Cost Of Capital And Capital Budgeting At Aes is similar so Lewis can get comfortable with the idea that it is not remarkable behavior. In the second stage, there may be a demand to connect the gap in between the new as well as old society so Lewis might need to face this challenge when Krasnow leaves. There might be reduced morale as well as low productivity at this stage which must not be taken as a trouble. It is during this phase that Lewis will need to offer advice to the division so that they can discover a sense of direction. It can be seen just how Krasnow has currently made this shift much easier by making Lewis obtain associated with the department a year prior to his actual separation. As per Bridges' Model, phase three will cause visibility to learning, High power and also commitment as individuals will accept the modification (Bridges, 2004).

Maslow's Need pecking order: The OB problem related to insecurity at the workplace has been set off to start with by the adjustment in management and also secondly by the fact that the merger will certainly no longer be initiated. Abraham Maslow in his Theory of 'Needs Hierarchy' (appendix 5) has reviews the importance of 'security needs as being a reduced level demand of a human for triggering motivation. As seen in the pyramid cooperated appendix 3, we can see just how 'the need to feel secure and also out of danger' goes to the second degree of demands. Before a worker can be made to create emotionally, he needs to have his 'Physiological 'as well as 'Safety and security' needs fulfilled. This shows that unless the personnel are made to feel safe concerning their existing employment condition in Globalizing The Cost Of Capital And Capital Budgeting At Aes they might not get to 'Self-Fulfillment'. (King, 2009).

SWOT Analysis for Globalizing The Cost Of Capital And Capital Budgeting At Aes Case Study

Ramification of Analysis.

The OB analysis has checked out numerous concepts to understand just how to handle the existing scenario handy. The following three alternatives have been recommended to aid Lewis manage the business challenges in the advertising and marketing division. Each of these choices has been proposed for relieving the transition needed to bring the advertising and marketing department in line with the demands of the market as well as for making the social adjustment that would certainly adhere to when the present leader leaves.

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

Examination of Alternatives.

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

The advantage of this strategy is that it will incorporate both features while lowering the need for hiring an additional resource for advertising. Lewis would be heading the advertising division and in any type of case her substitute would certainly be needed for the current function that she is performing. The negative aspect of this option is that exterior hiring might produce bitterness from internal employees that might be eying the setting of EVP after Lewis takes control of Krasnow's setting.

Dividing Adverting as well as Production: Given the competitive pressures and excellent quality job required from the advertising agency, it is recommended that Lewis must enable the manufacturing device to be a separate function from the marketing device. Given that the majority of ad agency had these 2 features as different devices, it makes more feeling to adhere to the standard. Both functions may be able to focus on their core triggers much more effectively. The downside of this strategy would be that additional prices would have to be borne for setting up separate production functions. Along with this, a production head may need to be hired which can increase expenses for the organization.

Combination of Marketing with Workflows: Since Lewis is currently taking treatment of the advertising as well as operations departments concurrently; it makes sense to incorporate the 2 features considering that she has actually been efficiently taking care of both ends. The truth that Lewis has to adjust her management style for the marketing department recommends that these two departments would be culturally diverse.


An assessment of the 3 alternatives indicates that assimilation of advertising and procedures would certainly not be a practical relocation due to the large distinctions between the 2 divisions regardless of the reality that presently Lewis is dealing with both. While splitting up of the manufacturing feature may have been a favorable action for the advertising department, the fact that it would certainly indicate positioning a third function under Lewis's wing indicates this ought to be avoided.

Action Strategy.

Lewis will take over the role of EVP Advertising and marketing after Krasnow leaves.

Advertising and Marketing functions would certainly be merged.

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

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

Lewis will separate herself from procedures.

A democratic leadership style with employee empowerment will be made use of in advertising division.

Open door plan and emphasis on cross department interaction will be targeted at removing disharmony.

Contingency strategy.

If the combination does not work out as prepared, a contingency plan would certainly adhere to which would certainly divide the manufacturing feature from the advertising and marketing function to reduce the tons on the SVP of marketing and advertising. In case Judith Shapiro does not obtain employed, Lewis will certainly be heading the marketing division without an SVP. Because case the production function will definitely be divided by putting it under an SVP manufacturing.