Transcript JC - BrainMass

Organizational Analysis
Organizational Theory and Design
ORG/716
Instructor: Gregory Berry
02/15/2016
Team C:
Jerilyn Collins
Lisa F. Peters
Cassandra Shabazz-Williams
Pariss Woolridge
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Corporate Strategy Changes
• Restructure of R&D
▫ Small more focused (efficient and Effective)
▫ More virtual R&D models
• Restructure Sales force and Management teams
▫ Business acumen
▫ Cross functional experience
▫ Innovative thinkers
• Alliance with academic institutions
• Building relationships and collaborating
▫ Supplier/customer relationships
▫ Holistic approach to healthcare
• Integrated digital systems
CSW
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An Analysis of Corporate Strategy Changes
Top Three Pharmaceutical Drugstores in US
7800 Stores
$38.6 Billion Sales
8200 Stores
$28.5 Billion Sales
Merger
4600 Stores
$25.5 Billion Sales
Health Care Industry Changes
•Affordable Care Act (Obamacare)
•Aging Population
•Offering Clinical Services
•Merger allow the consolidation of services to provide more
health Care & Wellness solution in Stores and online.
•Merger repositioned Walgreen to aggressively compete with
#1 competitor
•Innovation – cost savings ~$1 Billion dollars
•Health management
•Strategic market access
•Patient centered
•Expanding their health care offerings
•Coordinated care systems w/Doctors & ins companies
•Minimize competition
•More leverage to negotiate with drug companies (lower
prices)
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Market Position
US Pharmacy & Drug Stores Industry Concentration based on Revenue
Before Merger % of Market
After Merger % of Market
10%
41%
CVS
31%
CVS
Walgreen
58%
58%
Walgreen_Rite Aid
Rite Aid
% Market Focus
23%
Pharmaceutical
Retail goods and services
77%
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Necessary Changes to Organizational Structure
• Downsizing of Rite Aid 50,000 employees
and layoffs of Walgreens employees to
reduce duplications of jobs
Walgreens (Current) Senior Team
• Store closures
• Convert to one centralized regional hub for
both organizations
• Combine administrative duties and
department functions
• Eliminate healthcare workers union (Rite
Aid) and re-negotiate salaries of
pharmacists
• Realignment of cultures to create synergy
The "Walgreen World " (2014)
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Necessary Changes in the Organizational Structure
Advantages and
Disadvantages of Changes
Advantages
 Fill gaps in geographical
coverage in United States
 Market penetration
 Competitive advantage
Disadvantages
 Job loss
 Market saturation
 Monopolistic
The "Walgreen World " (2014)
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Implications to Leadership
• Walgreen’s Strategy is to “Integrate,
Consolidate and Develop” (Durham, 2016)
• Leadership will turn Walgreens into a “Mass
Specialist”
• Long Term Objectives:
▫ Expansion of instore clinics
▫ Further retail acquisitions
▫ Increase expansion of products to satisfy
consumer health
▫ Development of private label
▫ Building Partnerships with entrepreneurs
▫ Negotiate lower drug prices
• Utilize Boots Alliance European Experience to
develop future Omni channel Plan
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Change Process
• The company took an initiative to make the business entirely customer focused and
thus decided to change the divisional structure into operational leadership structure.
• The company provided autonomy and authority in decision making to the employees
at all levels.
• The company also took initiatives in changing the performance management system
and also encouraged employee engagement.
LFP
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Span of Control
Walgreens will allow Rite Aid to function independently under their
current name until full integration.
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Role of Innovation
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Promote higher levels of efficiency
Design thinking
Develop systems to drive change
Place focus on desired goals and outcomes
Competitive advantage
Support change strategies
Create employment opportunities
Shift(s) in paradigms
Organizational growth & sustainability
Inspire extrinsic and intrinsic rewards
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System Thinking Paradigm
• It is developed by integrating the business functions with the ever changing
environment thus establishing an open link between them.
• It is used to attain an overall development along with better and transparent
communication.
• Providing autonomy and responsibility to every employee is also another way of
managing the system along with the provision of feedback.
LFP
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Best System Thinking Paradigm
Simon’s Theory of Administrative Behavior (Characteristics)
 Simon distinguishes between the decisions a person makes to enter or leave an organization and the
decisions they make as a participant.
 Organizations simplify decisions and support participants in the decisions they need to make.
 Organizations simplify decisions by restricting the ends toward which activity is directed. Goals supply
the value premises that underlie decisions. Value premises (assumptions of desirable ends ) are combined
with factual premises to make decisions. The more precise the value premises, the greater effect they
have on decisions.
("Simon's Theory Of Administrative Behavior", n.d.)
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Best System Thinking Paradigm
Simon’s Theory of Administrative Behavior (Characteristics)
 Participants in high positions make decisions with a higher value component, people in lower positions
make decisions with a higher factual component. The top makes "what" decisions, the bottom "how"
decisions. Choice of ends can only be validated by fiat or consensus, choice of means empirically.
 Goals can be delegated to different units which simplifies the decision making process for participants.
Scott notes that "from this perspective, an organization's hierarchy can be viewed as a congealed set of
means-ends chains promoting consistency of decisions and activities throughout the organization". p. 46
 Overall, Simon helps us understand how the decisions of hundreds or thousands of individuals in an
organization can be directed toward ultimate organizational goals.
("Simon's Theory Of Administrative Behavior", n.d.).
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Best System Thinking Paradigm – Development, Usage &Management
• 4 key marketing points and strategies to emphasis
Walgreens thinking process:
• New Beauty Experience:
▫ Introduction to new brands, consultant model and
enhancements
• Rationalizing Merchandising Mix
▫ Developing into a Health and Beauty Model
▫ Increase in more disciplined promotional strategy
• Investing in Omni channel
▫ Incorporating photo printing capabilities into
smartphone apps as profit generator
▫ Ex: Apple Pay incorporated into Walgreens rewards
program
• Walgreens “One Plan” progress
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Reorganized field management structure
Improvement in efficiency of customer service
Consolidation of distribution centers
Reduction of costs and working capital
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References
•
Bells, S. (2015). Walgreen-Rite Aid Deal: How would it impact the industry? Retrieved
from http://finance.yahoo.com/news/walgreens-rite-aid-deal-impact-182614606.html
• Bird, J. (2015). 10 emerging healthcare trends for 2016. Retrieved from
http://www.fiercehealthcare.com/story/10-emerging-healthcare-trends-2016/2015-12-08
• Galliers, R. D. & Currie, W. (2011). The Oxford Handbook of Management Information
Systems: Critical Perspectives and New Directions. OUP Oxford.
• Farrell, M. (2016). Regulatory fears over the Walgreens-Rite Aid merger. Retrieved from
http://blogs.wsj.com/moneybeat/2015/12/10/regulatory-fears-over-the-walgreens-rite
- aid-merger/
• Luciew, J. (2016). Here's how much Rite Aid Execs stand to make from Walgreens take
over. Retrieved from
http://www.pennlive.com/news/2016/02/heres_how_much_rite_aid_execs.html
• Luciew, J. (2016). Rite Aid’s merger with Walgreens could still be derailed by this big issue.
Retrieved from
http://www.pennlive.com/news/2016/02/rite_aids_merger_with_walgreen.html
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References
• Johnsen, M. (2014). Walgreens outlines new operational leadership structure. Retrieved on:
January 3, 2016, from http://www.strategy-business.com/article/00195?gko=242ae
• Johnsen, M. (2016). Walgreens Boots Alliance outlines 3 growth initiatives at shareholders meeting.
Retrieved from http://www.drugstorenews.com/article/walgreens-boots-alliance-names-initiatives-shareholders-meeting-will-fuel-growth
• Orr, T. (2016). Rite Aid shareholders announce sale merger with Walgreens. Retrieved from
http://fox43.com/2016/02/04/rite-aid-shareholders-announce-sale-merger-with-walgreens
• Simon's Theory of Administrative Behavior. (n.d.). Retrieved from
http://faculty.babson.edu/krollag/org_site/encyclop/simon.html
• Stern, C. (2015). CVS and Walgreens are completely dominating the US drugstore industry. Retrieved
from http://www.businessinsider.com/cvs-and-walgreens-us-drugstore-market-share-2015-7
• Wagner, M. & Orvis, W. (2013). Changing Structures and Behaviors at Walgreens. Retrieved on:
January 3, 2016, from http://www.strategy-business.com/article/00195?gko=242ae
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References
• Wahba, P. (2015). Walgreens-Rite Aid deal could lead to elimination of 3,000 stores. Retrieved from
http://fortune.com/2015/11/05/walgreens-rite-aid-store-closings/
• Walgreen World . (2014). Retrieved from
http://www.sec.gov/Archives/edgar/data/104207/000119312514343198/d791091d425.htm