Article Review

– Organization Essay, Research Paper

Concept: Organizing

Wright Time

Richfoods Turns to Supervalu After Stock Hit

Pg. 42-43

Corporate Report

March 2000

Organizing is the process of developing functional departments within a company that are assigned tasks and provided resource to perform activities that are consistent with the companies strategic goals. Supervalu, the nations largest grocery distributor recognized the need to structure their organization in a way that allows them to continue their success. They have identified competing companies who share similar organizational structures and have acquired them. By focusing on the organizational structure Supervalu has been able to successfully merge and acquire companies without major human resource issues that are common in these activities.

The Grand Strategy of Growth is being pursued by Supervalu. Growth is defined as continuing to strive for new or better products or markets rather than solely focusing on existing business. Supervalu is achieving growth by identifying companies that are similarly organized and merging/acquiring them. By choosing organizations that are similar, it allows Supervalu to expedite the merger/acquisition process and continue to grow rather than focusing on internal issues.

By merging similar cultures and continuing to organize into retail entities Supervalu has the purpose of Value Creation. They acquired Richfoods to help “fill a geographic void in Supervalu’s operations.” By merging with a company that shared a similar structure very little of the value created was lost on the merger and could therefore be passed on to profits.

As with most organizations of this size, the true structure is defined at the Corporate-Level. Supervalu could have chosen to roll all of Richfoods services into existing business units, however they have remained somewhat separate and therefore more in touch with the customers they serve. This Geographic structure is more effective than other organizational models.

Supervalu developed this model in response to an External Opportunity that presented itself. Richfoods was struggling financially and became an attractive target for Supervalu. The organizational structure made the merger quicker and easier to finalize. Supervalu’s structure may seem diverse therefore making it difficult to compete on the basis of cost leadership however, the internal systems that they have developed provide staff services throughout the organization. Specifically, Supervalu is an industry leader in the Electronic Data Interchange field. The can link all stores in terms of sales and distribution whch leads to cost savings.

Without the leadership of Mike Wright, Chairman, President and CEO of Supervalu in developing the organization it would not have been possible to merge these two organizations so effectively.