Sherman, Alex, Lillian Rizzo, and Sara Salinas
CNBC.com
Posted 11/22/2022
Key words and Definitions
Restructuring – a reorganization of a firm to respond to changing conditions or achieve greater efficiency.
Strategic decision-making – the act or process of making decisions that have substantial importance on the organization's future.
Core competencies – advantages or capabilities that set an organization apart from its competitors.
Summary: Key Points of the Article
New Disney CEO Bob Iger's first moves included announcing a restructuring effort that would no longer require the services of Disney's ousted CEO Bob Chapek's right hand man Kareem Daniel. Daniel was the head of the firm's media and entertainment component during Chapek's short tenure.
Iger announced that he and a team of top executives would begin working on a new organizational structure that would put "more decision-making back in the hands of our creative teams." He also stated the new structure would rationalize costs. Disney's budget powers were concentrated under Daniels during Chapek's leadership.
Iger stated this was a time of change and opportunity for Disney, but he believed the firm the firm should regain its focus on storytelling since that was what fueled the company. Reorganizing the business structure around storytelling swiftly unwinds the changes Chapek instated when he took the helm in 2020. Disney's stock increased by 6% after Iger announced the changes less than 24 hours after reassuming the role of Disney CEO.
News Topic
#11 Organizational Structure
Exercise 1 Multiple Choice Questions
- The degree to which lower level employees provide input or actually make decisions is called __________.
a. decentralization
b. centralization
c. employee empowerment
d. all of these
Answer: The degree to which lower level employees provide input or actually make decisions is called decentralization. Centralization concentrates decision making at the upper levels of the organization. Employee empowerment is the action of giving employees more authority to make decisions. - A(n) __________ organization is one that adapts very quickly and is flexible.
a. mechanistic
b. organic
c. simple
d. none of these
Answer: An organic organization is one that adapts very quickly and is flexible. Mechanistic organizations are rigid and tightly controlled. A simple structure is an organization with little departmentalization, wide spans of control, and little formalization. - Bob Iger fired the former CEO's right hand man Kareem Daniels.
True
False
Answer: Iger announced Daniels' departure from Disney within 24 hours of taking over as CEO.
Exercise 2 Critical Thinking Questions
- What are Disney's primary core competencies?
Answer: Storytelling and creativity are Disney's core competencies. Firms should identify what their focus is and define strategies to help them achieve that focus. Disney develops entertainment and they need creativity to accomplish that mission. - Why did Disney fire Bob Chapek and Kareem Daniels?
Answer: Disney's racked up several billion dollars in losses under Chapek and Daniels and the trend did not appear to be stopping. Just days before their termination Chapek announced moves that most firms would define as defensive financial strategies. Apparently Disney's board did not believe that was the appropriate strategy to return the firm to profitability. - How will the restructuring impact Disney?
Answer: Ousted CEO Bob Chapek reorganized Disney and concentrated budget power in Kareem Daniels. Former and returning CEO Bob Iger immediately announced plans to decentralize this power and put decision making authority back in the hands of Disney's storytellers. Iger's focus is on returning Disney to a structure that will generate profits and give Disney's creative divisions more control over output.
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