Organizational Design
Introduction
FedEx is a logistics company focused on the overnight courier business, but with brand extensions into ground courier, office supplies, and customs-related business lines. Based in Memphis, the company operates a highly centralized system where most key operating decisions are made at headquarters, and the different national and regional subsidiaries are to carry out the instructions. There are two reasons for this structure. One is that the entire company must be virtue of its business operate in a tightly coordinated manner, such that the different elements cannot simply do their own thing or packages will not be delivered on time. The other is that the founder, Fred Smith, is a former Marine and brought a lot of military influence to the company's culture and structure. This paper will examine the organizational design at FedEx, and perhaps make recommendations for the transformation of some aspects of it.
Formal Structure
The formal structure of FedEx is as follows. The highest level breaks the company down into its multiple operating subsidiaries. Many of these were brought into FedEx via acquisition, and therefore not fully integrated into the structure of the company, but rather left as standalone entities with only thin links back to the core overnight business. The structure of the overnight business focuses operating decision-making in Memphis, but then fans out to allow for certain operational decisions to be made at the regional subsidiaries.
By and large, FedEx works with a strict hierarchy for its chain of command, within the overnight business. Each manager will have a manager above – so a manager of a city facility will report to a regional manager, who will report to a national manager. The national manager reports back to Memphis. Within that, Memphis provides considerable operating support, including most scheduling. The job of local managers is to adapt their practices to meet organizational...
They do this by supporting the different functions and subgeographic groups such as those outlined in Exhibit C. Exhibit B. illustrates the role that each of the different functions plays - they are on a par with Ground Operations in the structure, but perform a staff function. c. The organizational design at FedEx best serves the company's needs. Despite the company having operations around the world, there is little need
Organizational Behavior In 1984, the movie The Gods Must be Crazy depicted a Kalahari bushman who finds a Coca-Cola bottle that was discarded from an airplane into the desert. The bushman does not recognize the bottle or the brand, and the situation leads to all manner of confusion among the tribe, who try to decipher the meaning of the bottle. Such a story would be rather incomprehensible today, that there would
FedEx was founded by Fred Smith, an ex-Marine who served in Vietnam, and the company retains strong elements of military culture (Smith, 2008). The company fosters its culture in several ways -- in the training process, through corporate lore, and through communications between different levels. As a result, FedEx has a fairly strong corporate culture. They have, however, had challenges in the past when growing via acquisition. Sometimes the
Org Structure An organization's structure affects many aspects of the organization. Kanter (1999) notes that people within an organization tend to operate in line with the messages that they are receiving, so structural elements do affect culture and vice versa. An organizational structure reflects how the people at the top of the organization view how the organization works. So if you have, for example, few new products, you might just work
Organizational Change In late 2003, FedEx announced the acquisition of Kinko's, the chain of office stores, for $2.4 billion. In part, the deal was a response to the purchase of Mailboxes, Etc. By UPS two years previous. The Kinko's deal with clearly a response to that move, but there were also some perceived synergies for FedEx. The customers of Kinko's tended to be small businesses, many of which overlapped with FedEx's
FedEx initiates the change process from its head office as the first step. The design of the change is made, and the implementation plan is then communicated to each regional station. The stations do not set their own implementation plans, but rather follow instructions sent from head office. When the change involves new training, this is also handled from head office. This high level of centralization can at times
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