Read the following article. Sull, D. & Eisenhardt, KM. 2012. Simple rules for a complex world. Harvard Business Review Sept. 2012. II. The ALL (America Latina Logistica) example presented in the reading is perhaps more commonly known in business strategy parlance as an example of a “turnaround strategy.” Turnarounds are usually initiated because an organization is performing poorly.
Q1: The article never mentions the financial performance of ALL prior to the turnaround. However, it does suggest that the ALL has several weaknesses which, if addressed, might improve performance. Make a list of the weaknesses ALL inherited.
Q2: Clearly there are changes in this case which might affect the performance of ALL yet fall outside the purview of its “planning system.” For example, the use of a cross-functional team may be regarded as a change in organizational structure. Too, the pervasive use of simple rules might be regarded as an attempt to either change a bureaucratic culture or an attempt to further change the organization’s structure. However, we are concerned in Chapter Two with the planning system of the organization, especially how we can also change it to address the weaknesses inherent in ALL. Thus, we look to its functions. One of the functions of the planning system is to prioritize. At the senior level, priorities are simplified in this case: -Only 4 company-wide objectives are chosen -Only one process is chosen -Similarly, at the level of the cross-functional team, only 4 rules for the one selected process are chosen. Q2: How do these simplifications and priorities address the weaknesses of the firm?
Q3: On the one hand, while simplification certainly appears to be a goal in this case, nevertheless the rules set by senior management and the cross-functional team also appear to be quite broadly stated.
Q4: What function(s) of the planning system might this practice serve?
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