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Leo Burnett TRW Systems

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Leo Burnett TRW Systems

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    1. Leo Burnett & TRW Systems Elizabeth Chung Guus Goorts Merete Aarhaug Stephanie Coyiuto Jaime Zhong

    2. Agenda Overview - The Link Leo Burnett TRW Systems Conclusion

    3. The Link

    4. Leo Burnett - History 1997 Advertising agency Started in 1935 and located in Chicago CEO and Chairman – Richard Fizdale World’s 8-th largest ad agency Clients: Kellogg’s, Marlboro Man, Coke 1916 full time and 218 part time employees

    5. Leo Burnett - Mission Current Philosophy – Brand Belief System (BBS) “The Leo BBS is driven by the concept of creating belief…”

    6. Functional vs. Divisional Structure

    7. Leo Burnett – Structure Comparison of new vs. old structure Old – Functional Slow response time to environmental changes Clients do not get one on one attention Coordination, communication slowed among departments Less innovation and creativeness Economies of scale In-depth knowledge and skill development New – Divisional Faster and better response to clients’ demands Full attention from agency Decentralized decision making Quality of communication improved No more economies of scale Poor coordination across the mini-agencies

    8. Leo Burnett - Reasons For Change External environment: Several major setbacks Loss of high-profile accounts - United Airlines Regulatory scrutiny of Marlboro Man ads for Philip Morris Internal environment Loss of morale among employees (74 employees laid off) Power struggle among top executives

    9. Leo Burnett – Evaluation Does it make sense? Will it work? Yes: Necessary shake up Client dissatisfaction Improved internal /external communication Customization for clients Stimulate creativity Increased responsiveness to environment No: Big organization Power of brand name Draw on Burnett’s global resources Acceptance by: Employees Clients Loss of specialization Need more coordination among divisions

    10. TRW Systems - History

    11. TRW Systems - Strategy No clearly articulated strategy Fortune: Professional personnel is competitive advantage Large competitors (Boeing, Lockheed, Northrop Grumman, BAE) Growth

    12. The Matrix Structure Question What are the characteristics of a matrix structure?

    13. The Matrix Structure Dual authority lines Any combination of function, product and geographic Shifting of project teams What are TRW’s focus dimensions (function, product, geographic)?

    14. Conditions for Matrix Structure Economies of scale in the use of internal resources Outside pressure for dual focus (function-product) State of the art technological know-how Responsive in the change in product line Environment is both complex and uncertain

    15. 1. Economies of Scale Project divided into sub-projects Sequential demand: Several stages in the project’s life cycle: different people are needed ? no waste of creative people

    16. 2. Outside Pressure for Dual Focus (Function-Product) Functional relationship: need of state-of- the-art technological know-how Product lines: Transitory Changes in customer requirements Possibility of cancellation of large projects

    17. 3. Environment is Complex/Uncertain From single customer ? competitive organization Creation of Aerospace Corporation (Air Force) Before: cost-plus-fixed-fee, now: incentive contracts rewarding performance Aerospace industry: Large job shop subject to frequent changes Rapid change in technology

    18. Information Processing at TRW Systems Purpose: Right balance between vertical & horizontal information flow Tension between mechanisms: Horizontal linkage: coordination/collaboration ? reduce control Vertical linkage: increase control

    19. Mechanisms to achieve vertical linkage

    20. Mechanisms to achieve vertical linkage

    21. TRW Systems: vertical linkage? No strict lines of authority Can’t rely on bureaucracy/power to solve problems Few formal rules/procedures Atmosphere of looseness/freedom Ambiguous/flexible

    22. Mechanisms to achieve horizontal linkage

    23. Mechanisms to achieve horizontal linkage

    24. TRW Systems:Full Time Integrators Temporary project/program offices Project manager: responsible for coordinating people from different functional departments No formal authority over project members

    26. Sources of Power Bottom-line responsibility Leadership at all levels of the organization Decentralized and unstable power structure Sources of Power/Means to maintain balance Pay Levels Job Titles Access to General Manager Situation of Offices Reporting Level

    27. Matrix Diamond Diagram Top Leadership

    28. Roles and Responsibilities Functional manager/Division manager Authority over promotion decisions and performance reviews Program/Project Manager Focuses on bringing project to a successful conclusion Subproject Manager (SPM) “prime mover in the organization” Represents both program office and his functional area

    30. Relationship between Managers Large gap between authority and responsibility Man in the middle is working for two bosses Multiple managers may result in confusion and ambiguity as to manager evaluation and accountability

    31. Relationship among Team Members Very democratic = anarchy? No clear leader Role ambiguity, conflicting obligations Potential duplication of work Less development of long-term relationships Career Development Program High interaction Good collaboration

    32. Career Development - Motivation Shared responsibility = Shared measurements and rewards (e.g. team rewards) Shift towards intrinsic over extrinsic motivation Focus on: personal contribution & self-learning; personal & professional growth High caliber individuals; Highly committed and motivated individuals Enhanced opportunities for visibility & career opportunities Low turnover TRW: ranked 1st in desirability as an employer; 2nd in salary

    33. Career Development (2 techniques: team development and t–groups) Pros More organic organization Team Development Efforts to get a new team started faster Ongoing group Critiquing of the meetings in the organization Provides employees with good interpersonal skills and training Helps deal with conflicts Creates openness Possibly greater employee satisfaction Cons Only a good thing idealistically Lack of well-trained people to handle employees Participation is involuntary Increased stress and pressure on employees

    34. Further Challenges with Growth Current problems amplified Increased conflicts and confusion More time consuming Possible loss of focus on strategy Human resources issues Loss of control

    35. Conclusion (Norhia et.al HBR 2003)

    36. Leo Burnett Looking at Nohria et. al.’s 2003 HBR work, there is an emphasis on Structure a primary mgt practiceLooking at Nohria et. al.’s 2003 HBR work, there is an emphasis on Structure a primary mgt practice

    37. Leo Burnett in 2004 End of the divisional structure in 1999 “… previous mini-agency arrangement worked well in that it brought together brand teams, but it was less effective as a business structure.” –Linda Wolf, CEO Unified Structure Brand Teams intact but agency acts as one business unit

    38. TRW Systems Looking at Nohria et. al.’s 2003 HBR work, there is an emphasis on Structure a primary mgt practiceLooking at Nohria et. al.’s 2003 HBR work, there is an emphasis on Structure a primary mgt practice

    39. Sales performance at TRW Systems

    40. Number of employees at TRW Systems

    41. TRW Systems in 2004

    42. Q & A

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