HP followed a highly centralized organizational structure till 1950s. In 1960s the company adopted a divisional structure as the top management thought that the divisional structure would give considerable autonomy to its employees. The company brought in certain changes in 1968. With increasing number of operating divisions and product lines, the company adopted a group structure. Under the group structure, related divisions were combined and a group manager headed the group. The company's orientation towards decentralization process enabled it to improve its field marketing activities. In early 1970s, the company moved towards decentralization from its traditional centralized structure. A new concept 'local decentralization' has emerged. The objective of this concept was to reduce the level of bureaucracy and enable the company take decisions immediately. With the increase in the number of divisions there seemed to be lack of synergy between the divisions. However, the then CEO, John Young, further decentralized the decision-making process. In the mean time, there were reports that innovation was getting bogged down by high level of bureaucracy. Revenues stagnated and profits started declining. This was the time when Carly Fiorina took the mantle at HP. Immediately after taking over, Fiorina brought in certain changes. Some of the changes were demanding regular updates on key units, inculcation of discipline in salesforce, focus on breakthrough projects, etc. Finally, in 2000, Fiorina dismantled the decentralized organization structure. At that time, there were 83 independent product divisions. Fiorina reduced the number to 6 centralized divisions. Fiorina expected that there will be more collaboration between sales and product development executives. However, according to experts, this approach requires lased focus and superb coordination between thousands of product lines of HP. The new approach smoothened the company's operations. Previously, the product chiefs used to take care of operations from designing to selling of products. Now, the onus of marketing and selling of the product was on sales department of the organization. Therefore, R&D people were unable to allocate R&D funds due to lack of authority to set sales forecast. According to analysts, the R&D product designers would not able to deliver products as per the requirements of customers since, they were not involved in the interaction process with customers. Further, there was no clear assignment of responsibility for profits and losses. Even there were many complaints from HP customers about the operations of the company. One of the customers said, “It’s beyond my ability to communicate our frustration. It’s painful to watch them mess up million-dollar deals.” There was not much improvement with regard to structural problems and the company's business performance under Fiorina. According to one HP manager, “The people who deal with Fiorina directly feel very empowered, but everyone else is running around saying, “What do we do now?” Even there were accusations by some analysts that Fiorina is overambitious with regard to tackling of all HP’s problems at one go. Analysts feel that bringing such substantial changes was tough anywhere and specifically in the case of HP, which was traditional and further suffered from slowdown in the technology sector.

1. The organizational structure of HP was changed several times under various heads. What are the structural choices available with HP and which according to you is the best structure for HP? Justify your answer. 2. Under Carly Fiorina, there were dynamic changes in organizational structure of the company to accommodate the needs of strategy. With reference to the cases discuss the relationship between strategy and structure.