Page 12 - Articulate Files

basis of this BCG had achieved a current annual turnover in

excess of $2 billion and an IPO after five years. With its high
profit margins, and continually rising share prices, it had

rapidly become one of the favourites of investors. However,

it had recently become apparent to Sweet that the

organization structure, no longer supported the company's
strategy.

For years the company had been organized along functional
lines, with directors in charge of finance, marketing,

production, personnel, purchasing, engineering, and

research and development. In its growth, the company had
expanded its product lines beyond its original product of

network systems, Satellite Communications Systems, and

Network applications. However, concern had arisen that its

organization structure did not provide for profit
responsibility below the office of the CEO, did not appear to

fit the product or geographic dispersion of its businesses,

and seemed rather to accentuate the "walls" impeding

effective communication and coordination between the
functional departments of marketing, finance, production,

personnel and Research & Development; there seems to be

too many decisions that could not be made at any level
lower than the CEO.

As a result, Sweet decentralized the company into twelve
independent domestic and foreign divisions, each with

complete profit responsibility. However, after this

reorganization was in effect, he began to feel that the

divisions were not adequately controlled. There developed
considerable duplication in purchasing and personnel

functions, each division manager ran his or her operations