Corning 1975 Case

Corning's television products division faced some downward pressure on prices, because some competitors were outsourcing key inputs. As the industry was maturing, technological change was becoming less important, and overseas sales were crucial to growth. The electronics division faced some price competition, as price was a major demand driver. International sales were important, but there were a handful of major customers driving that. The consumer products division had the highest demand for technological innovation, overseas sales were moderate and price was about as important as overseas sales.

For Behm, coordination between subsidiaries, international operations and head office was the key issue. What Behm saw was that as Corning grew internationally, the linkages between head office and the remote locations grew weaker. The problem is that many competitors were beginning to globalize at this point in time. In televisions, some parts were being sourced overseas.

In many markets, while there was local responsiveness, Corning felt that there were opportunities to build the economies of scale and marketing coordination that would allow Corning to develop a global brand presence and be better equipped to compete on price. Behm definitely saw that the landscape was shifting for Corning, and that the ad hoc organizational structure and attempts to restructure the organization were not doing enough to position the company for the future. 3.

Until 1972, Corning had used a geographic structure, with an International Division as the head of all international operations no matter what product line. This was clearly a starting point, and as international sales grew it would become evident that such a structure was not going to take the company forward. Thus, Behm initiated a few changes. The first was simply to institute more controls over the foreign entities, some of which were minority positions and partnerships. But the most important work was done on the organizational design side of things.

Behm decided to go with a structure that had both area and business managers. This structure would allow for the businesses to work with each other, but it also created a complex, confusing power structure that impeded the company. The company was developing global product lines, but this was reducing local responsiveness. There was also very little buy-in with respect to this plan -- Behm had implemented it, but never really explained why or how it was going to work.

This created a lot of problems for managers at Corning who had little experience with large-scale organizational change. The next step was the creation of "world boards," as a replacement for the business manager concept. This was a product-oriented structure, so that each product has its own board, but then would work with geographic managers as well. The boards were to determine their own schedules for meetings and communications, so were fairly autonomous from head office. Some boards were successful, others not so much.

After the failure of the business manager idea, another change so quickly was a problem for many managers, who still were not sold on the need for change. Further, the boards.