usg organizational strategy

8/3/2019 USG Organizational Strategy

1/3

Strategy

USGs Organizational Structure (as of February 2010)

Key Characteristics

USG has a high level organizational structure focus on functional lines that are group together by similar

tasks. Functional organizations are caracterized by having a culture of strong command and control.

Most functional organizations have few product lines, sell to an undifferentiated market and its

products have long life cycles.

As of February of 2010, USG has three functional lines that are Finance and Strategy, General Counsel

and Operations. The finance and strategy line is reponsable for the financial accounting, cash

management, and corporate finance and investor relations activities. As well as leads the companys

strategic planning and information technology functions. The General Counsel line assures that the USG

is acting within the law frame as well managing litigation involving USG and its subsidiaries. The

Operations line is responsible for leading USGs manufacturing businesses on a worldwide basis. The

global operating unit leverages best practices of the current domestic and international organizations

for overall growth. Under Operations there are three direct reports with the following responsibilities


2/3

y International: responsible for USGs business in Canada, Europe, Mexico, Asia/Pacific and LatinAmerica.

y Business Development and Operational Services: leads USGs Joint Ventures and Alliances, aswell as identifies and develops other international and domestic growth opportunities. The area

provides operating management with operational and analytical support for the international

and domestic organizations.

y L&W Supply: responsible for managing the nationwide network of over 220 centers thatdistributes USGs products across the United States.

Some key stengths and weakness of about functional organizations are the following:

Strengths

y Facilitates the transfer of ideas, knowledge and contacts.y Allows a high degree of functional specialization.y It promotes economies of scale in the different functions.y Promotes standardization and reduce duplication of functions.

Weaknesses:

y Difficult to manage multiple product lines, markets and customer segments.y Tends to create barriers between different functions, inhibiting cross-functional processes. Also

encourages loyalty to the function, above loyalty to the company.

y Difficult accountability and coordination across functions, which depends on the involvement ofsenior management.

Core strategies Capabilities provides by the current organizational structureExpand Internationally The current structure has the capabilities of sustaining

expansion international because under the EVP Operation

there is international department that could grow by adding

region or country managers. The current organizational

structure focuses more on functional expertise than

geographic knowledge. USG could change its high level

organizational structure by changing the EVP of Operations

into Regional VP. For example; VP North America, VP

International (Similar to Wal Mart US).

Strengthen Core Business The current structure strengthens the core business by having

all its core business under one executive, the VP of

Operations which allows a high degree of functional

specialization and promotes economies of scale in the

different functions. The weakness of the organizational

structure is that it makes it complicated to manage difficult to

manage multiple product lines, markets and customer

segments. USG could change its high level organizational

structure by eliminating the position of VP of Operations and

having 1 VP of each of the 3 core business reporting to the


3/3

CEO (Similar to Pepsico).

Grow product adjacencies by

expanding the current product lines

Accelerate innovation The current focus on functional expertise fosters innovation

and facilitates the transfer of ideas, knowledge and contacts.

A change in the organizational structure might complicate theinnovative process.

Improve operational effectiveness

and reduce cost

As mention above USG has reduce its cost significantly by

reducing capacity and eliminating positions. Additionally,

structurally USG could centralize functional job in a Shared

Service Center (SSC) that could additional reduce costs and

foster efficiencies. The SSC could provide transactional

services to multiple geographic locations.

Financial flexibility

y

usg organizational strategy

Documents