Transfer Pricing For Aligning Divisional And Corporate Decisions Case Study Solution


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Transfer Pricing For Aligning Divisional And Corporate Decisions Case Study Solution

Background and Facts

Transfer Pricing For Aligning Divisional And Corporate Decisions a workplace products store for tiny as well as average sized services has actually just recently been involved in planning for a merging with its rival Residence Deport, which has impacted effectiveness levels in departmentswith the elderly supervisor involved in legal issues presented by the federal Trade Payment. With the Advertising and marketing Head advancing 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 type of a prospective social modification as well as reduced staff member morale, the organization needs a full reengineering effort at the marketing department.

Trouble Declaration
Porter's 5 Forces Analysis
The prospective cultural change at the advertising and marketing department of Transfer Pricing For Aligning Divisional And Corporate Decisions is boosting unpredictability in the workplace causing various difficulties for the Jeannie Lewis that would certainly be replacing the head of the department in one year. nalysis

PEST analysis

Political Factors: Political factors play a major function in affecting calculated decisions because Stapes Inc. had to desert its plans of merging with Workplace Deport after the Federal Trade Compensation's treatment in the process. Provided the fact that the store has a worldwide visibility with branches in UK, UNITED STATES, Canada and Germany, political factors in each of these countries might be able to influence performance or critical goals. Federal Trade Commission's antitrust suit versus the merger took up useful time of the company's senior administration recommending that 'political' factors can have serious implications for an international service.

Economic Factors: Economic factors such as the appearance of local business in the global scenario recommend that Transfer Pricing For Aligning Divisional And Corporate Decisions is flourishing in an atmosphere where there is possible development of businesses. Along with this, reality that store clients are primarily trying to find office materials for home offices recommends that the market has an increasing fad of entrepreneurs and also online organisations.

Social factors: Social patterns in the economy reveal that clients are searching for comfort in addition to eye-catching prices. Marketing research demonstrates how the customer for Transfer Pricing For Aligning Divisional And Corporate Decisions lacks understanding regarding locating solutions which can offer a mix of convenience as well as inexpensive.

Technological factors: Technology plays a crucial duty in Transfer Pricing For Aligning Divisional And Corporate Decisions's organisation approach specifically as the company is piloting Technology centers which would certainly supply modern technology sales and also support in the form of memory upgrades, peripheral installations. (Summary of PEST in appendix 2).

OB Issues and also Symptoms.

A number of underlying Business Behavior issues can be seen in Transfer Pricing For Aligning Divisional And Corporate Decisions's case as highlighted in this section.

Concerns about social change: There is apprehension regarding a social modification that would certainly take place once Todd Krasnow leaves from his setting as the Exec Vice President of Advertising with a lot of the staff members currently revealing discontent over this potential step. This anticipated adjustment has created anxiety in the office which has actually been paired with the previous tension of preparing the firm for a prospective merging with Residence Deport.
Pest Analysis
Stressful Job Environment for Newcomers: There is lack of personnel that can match the demanding environment of a hectic organization. Not just does this cause difficulty in finding the right individuals, it places stress on brand-new hires as can not withstand the rate as well as stress that the organization anticipates them to bear.

Twin Coverage Lines: Newcomers find this business culture cumbersome as well as challenging to cope with specifically as dotted line connections are implied to be weak in general and objective setup as well as performance evaluation is still done by the solid line supervisor. This means that novices might lose quality concerning their respective functions and also goals particularly as dotted line coverage does not keep them in direct interaction with the solid line managers.

Bitterness From Cross Departmental Hiring: Krasnow's choice to make Lewis his successor as opposed to Bridget Coles although it had been hypothesized that the last would certainly take Krasnow's placement came as an impact to her morale. Lewis may have been qualified and ideal for the job but the fact that Kransnow's separation would certainly make Coles a straight record to Lewis may have been the factor for Coles' resignation from solutions.

Concern & Job Instability: Fear as well as insecurity can be determined as two major problems that Lewis would certainly be handling especially as the merger has now be cancelled and 2 senior execs of the advertising department would be leaving. The whole responsibility of the division would certainly be dropping on Lewis's shoulders that would not just supervise of brining about a social modification but would also need to confirm herself in her brand-new duty.

Inappropriate Administration Style of Leader: Lewis's monitoring style and its conflict with the marketing division's function can likewise be seen as an OB obstacle especially as she has actually been utilized to dealing with concerns in the procedures department where personnel are shown to focus on procedures as well as obtain them. The marketing department on the various other hand can be seen as a team of people that are utilized to being nurtured by Krasnow that focused much more on output than processes.

Interdepartmental Disagreements: Interdepartmental disagreements in between three departments, advertising, merchandizing and operations respectively over the allowance of the marketing mix can be recognized as one more OB problem. Although the advertising division does not share the very same vision as the other two divisions regarding the aloocation of the marketing mix twoards promos and also advertsing, the merchandizing and procedures departments do not concur over the advertising mix allowance amongst each other either.

Disintegration in Advertising And Marketing Division: Fragmentation between the marketing and advertising divisions can be recognized as one more OB concern which could need further interest. The fact that the marketing and advertising areas in the advertising and marketing division are separated is protecting against both departments from acquiring from each various other's experience as well as competence. Integration of marketing with retailing as well as operations would end up being harder if the marketing department itself is disintegrated which can be one more potential OB concern.

Transfer Pricing For Aligning Divisional And Corporate Decisions Analysis

Various theories have actually been utilized to describe the situations to obtain more quality regarding the situation available.
Swot Analysis
McGregor's Concept X & Y: According to Douglas McGregor's Theory X, many managers think that staffs are easy and also lazy, have little aspiration as well as resist change. The tough variation of this theory stressed coercion, tight controls, hazards as well as punishments. Gradually it creates low performance, subtle sabotage and also rivalry (Offer, 2003). Although the scenario at Transfer Pricing For Aligning Divisional And Corporate Decisions is not totally following Concept X, it can be seen that brand-new hires are locating this setting rather stressful which may eventually bring about a higher inclination of the administration towards Theory X. According to McGregor's advocated view, which he called Theory Y, the crucial job of the management is to set up organizational conditions to ensure that people can achieve their very own goals best by guiding their initiatives towards organizational incentives. If individuals find no fulfillment in their job, the administration would have little option however to rely on theory X as well as exterior control (Deal, 2003). Also while assessing Lewis's monitoring design, theory X may have appropriated in the operations department somewhat however the Advertising division would require reliance on Concept Y so as to get the creativity as well as creativity from the groups.

Tuckman's Synergy Theory: As far as Lewis's concern concerning bringing consistency in between the advertising and marketing and marketing department is concerned, this would originally lead to conflict as reviewed by Bruce Tuckman in his 'Synergy Theory'. By integrating the marketing and advertising and marketing division's job, there might be the exact same first disconnect which could lead to the 2nd stage of 'storming' where the teams challenge one an additional.

When people are offered with change, they enter phase one as well as so there may be feelings like despair, uncertainty, frustration, temper, concern, rejection and also disorientation.The situation at the marketing department of Transfer Pricing For Aligning Divisional And Corporate Decisions is similar so Lewis can obtain comfortable with the suggestion that it is not amazing actions. It is throughout this stage that Lewis will certainly have to provide support to the department so that they can find a sense of instructions. It can be seen how Krasnow has already made this shift simpler by making Lewis get involved in the department a year prior to his actual separation.
Vrio Analysis
Abraham Maslow in his Theory of 'Requirements Pecking order' (appendix 5) has talks about the relevance of 'security needs as being a reduced degree demand of a human for triggering motivation. As seen in the pyramid shared in appendix 3, we can see just how 'the need to feel safe and also out of danger' is at the second level of demands. Before an employee can be made to establish psychologically, he needs to have his 'Physical 'as well as 'Safety and security' requires met.

SWOT Analysis for Transfer Pricing For Aligning Divisional And Corporate Decisions Case Study

Effects of Analysis.

The OB analysis has considered different theories to recognize exactly how to deal with the present situation at hand. The complying with 3 options have been suggested to assist Lewis manage the organizational obstacles in the marketing division. Each of these choices has actually been proposed for reducing the change needed to bring the advertising and marketing division in line with the requirements of the market as well as for making the cultural modification that would adhere to when the present leader leaves.

Combination of marketing and advertising features. Dividing Adverting and also Production features. Combination of Marketing with Procedures.

Analysis of Alternatives.

Combination of Marketing & Advertising And Marketing Functions: The internal advertising company of Transfer Pricing For Aligning Divisional And Corporate Decisions is already stamina for the company in regards to saving up on expenses connected to advertising and also promo. Given that no brand-new employment has actually been done after Bridget Cole's separation with the reporting line being directly appointed to Krasnow for the advertising and marketing function, this is a positive chance for integrating the marketing and advertising functions. Judith Shapiro who has actually earlier been interviewed by Lewis during the earlier merging days has knowledge in business-to-business advertising and marketing along with agency and also retail advertising experience. When Krasnow leaves, Lewis can employ Shapiro as an EVP for advertising and marketing to handle both advertising and marketing functions.

The advantage of this technique is that it will certainly integrate the two functions while decreasing the demand for working with an additional resource for advertising. Along with this, Lewis would certainly be heading the advertising and marketing department as well as in any case her replacement would be required for the existing function that she is carrying out. The downside of this choice is that outside hiring may bring about animosity from interior personnel who might be considering the placement of EVP after Lewis takes over Krasnow's position.

Separating Adverting as well as Manufacturing: Offered the affordable stress as well as high top quality work called for from the advertising firm, it is recommended that Lewis should permit the production unit to be a different feature from the advertising system. Given that a lot of advertising agencies had these two features as different devices, it makes more sense to comply with the standard.

Integration of Marketing with Procedures: Considering that Lewis is already dealing with the advertising and marketing and operations divisions all at once; it makes sense to integrate the two functions considering that she has been successfully taking care of both ends. The reality that the two divisions already have significant differences over appropriation of resources suggests that this combination may be able to bring about harmony especially as Lewis would be heading both ends.However there are various negative aspects of this move specifically as it would put way too much problem over Lewis's shoulders. The reality that Lewis needs to adapt her monitoring style for the marketing division recommends that these two departments would certainly be culturally diverse. Lewis may not be able to apply one type of management design to both departments which might result in inadequacy in either one of the two features.


An analysis of the three choices indicates that assimilation of advertising as well as procedures would certainly not be a possible move due to the huge distinctions between the two departments despite the truth that presently Lewis is handling both. While separation of the manufacturing feature may have been a beneficial action for the marketing department, the reality that it would mean placing a 3rd feature under Lewis's wing means this should be stayed clear of.

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

Marketing and advertising features would be combined.

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

Manufacturing feature will certainly remain part of advertising and marketing under advertising and marketing feature.

Lewis will certainly divide herself from procedures.

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

Open door plan and focus on cross department communication will certainly be aimed at removing disharmony.

Contingency plan.

If the assimilation does not work out as intended, a contingency plan would follow which would certainly separate the production function from the advertising and marketing function to lower the load on the SVP of advertising and marketing. In case Judith Shapiro does not obtain hired, Lewis will be heading the marketing division without an SVP. Because case the production feature will absolutely be separated by placing it under an SVP manufacturing.