Page 11 - Ice Breaker Article

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Moreover, the process aims to enable students to construct their own solutions to future cases by
applying the same questioning and relationship building steps without being mired in the all too
rigorous application of accepted diagnostic tools advocated in their course literature. These tools
should and must be adapted to circumstances existent in the case study under examination. In a sense
the lecturer is trying to show by example and the process of questioning and adaptation that the mantra
for students should be ‘don’t do as I say do as I do!’ both look, see and comprehend.

Learn by example but adapt where necessary.

BUSINESS COMMUNICATIONS GROUP (BCG) CASE STUDY

The Business Communications Group (BCG) had, in its seven years of existence, established for
itself a dominant position in a number of global markets in the US, Europe and latterly China. The
credit for its success lay at the feet of one man, its founder; Chairman; and Chief Executive, Richard
Sweet. Sweet had developed the company on the basis of planned introduction of new products
supported by imaginative marketing, and good customer service. On the basis of this the BCG had
achieved an 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 fitted
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 director ran his or her operations
without regard to company policies and strategies, and it became apparent to Sweet that the company
was disintegrating into a number of independent parts.

Having seen several large companies get into trouble when a division manager made mistakes
and the division suffered large losses, Sweet concluded that he had gone too far with decentralization.
As a result, he withdrew some of the authority delegations to the division directors and required them
to get top corporate management approval on such matters as:

(1) any unplanned capital expenditure over £10,000,
(2) the introduction of any new products,
(3) marketing and pricing strategies and policies,
(4) plant expansion, and
(5) changes in personnel policies.

The division directors were understandably unhappy when they saw some of their independence
taken away from them. They openly complained that the company was on a "yo-yo" course, first
decentralizing and then centralizing. Sweet worried about this problem, calls you in as a consultant to
advise him what to do.

1. In your opinion, what did the CEO do wrong when he set up the twelve independent divisions?

2. Do you agree that what the CEO did to regain control was correct?

3. What would you have done under the circumstances?