Business and Economics of an Organization

 

Think about these three basic strategies discussed in Chapter 11 (text attached):
Cost Reduction
Product Differentiation, or
Reduction in Competitive Intensity
Explain how a manager’s ability to effectively develop, manage and allocate the budget will influence one of
these strategies?

Sample Solution

In the case of Marimekko, we are introduced to the structure of this company, which Kirsti Paakkanen has reworked. She found incredible success for Marimekko, despite the lack of diversity among the company and the lack of hierarchy within the organization’s structure. Marimekko is a design company that produces different apparel, accessory, and furniture products (Mitchell 8). They pride themselves on their brand image, their mainly female oriented company, and their sense of patriotism for Finland. There is a set structure in the sense that everyone ultimately answers to Paakkanen; she is the heart and the center of the network chain. Paakkanen strives to apply continuous improvement processes by enforcing the designers put their name on the products they personally produce (Mitchell 5). This gives a sense of responsibility to the designers, who then strive to produce their best work. The company is extremely organized and works through methodical processes. Each designer has a role, each designer is accountable for their work, and the design process is very methodical. The designers must complete certain tasks in a certain order to create the whole picture or product. Paakkanen has a mentality of efficiency and high-quality products (CVA 11). Failure is not an option for Paakkanen, which is exactly what the red or control quadrant stands for. She states, “I knew that it would be a tough job to turn Marimekko around, but I knew I would not and could not fail […]” (Mitchell 3). Lastly, the control quadrant is also known as the optimizing quadrant (CVF 1). Marimekko strives to optimize their company by expanding their product line, hiring more designers, and potentially growing internationally (Mitchell 11).

Marimekko is now in a place of wide-spread success after their downfall during Finland’s recession. Paakkanen reworked this company from the ground up and now finds herself at the head of a successful company. The company has created value through their attention to detail along with ability to recognize incremental opportunities. For example, “Paakkanen boosted the role of the individual designers by giving them profit responsibility on their designs, […] emphasizing the profitability of their designs” (Mitchell 5). Clear roles and value is created when a unit connects practices, processes, an

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