14.1 Why It Matters: Organizational Structure
Why learn about common organizational structures?
In March, 2018, Walt Disney Company announced a major restructuring of their business. The Los Angeles Times reported the following:1
The Burbank-based entertainment giant said it would combine its international media business and its content streaming operation into one unit and create another division to house its consumer products business along with Walt Disney Parks and Resorts.
The move—Disney’s biggest restructuring in recent years—is the latest effort by a legacy entertainment and media company to adapt to rapid changes in consumer behavior driven by digital technology.
Disney had been expected to make structural changes as it prepares to launch two streaming services and buy film and TV assets owned by 21st Century Fox—a $52.4-billion deal that requires federal regulatory approval.
Disney’s new direct-to-consumer and international unit will include the upcoming ESPN+ streaming service, which launches later this year, and a Disney-branded film and TV streaming offering scheduled to debut in 2019.
Disney is a company that has proven they can change with the times. As they near their 100th anniversary, they are preparing to take on some new environmental shifts in the business. Now customers demand streaming media as a part of their entertainment. Disney is ready to answer that call.
But do they need to change the way their business is structured—who reports to whom, functional groupings, span of control—to adapt? Does this restructuring support the company’s strategy? Ultimately…will the restructure increase their profits?
Organizational structure is an important aspect of the organizational behavior framework, and organizations refer to them time and again as they prepare to take on the changing headwinds of their business environments. Disney feels these structure changes will set them up for success. But don’t take the word of a man and his mouse. The many benefits of a solid, appropriate organizational structure will follow. It may surprise you just how much of a difference it can make.
Miller, Daniel, and Jaclyn Cosgrove. “Disney Restructures Its Business as Digital Disruption Shakes up the Media Industry.” Los Angeles Times. March 14, 2018. Accessed April 24, 2019. https://www.latimes.com/business/hollywood/la-fi-ct-disney-restructuring-20180314-story.html.