Page 13 - Ice Breaker Article

13

Paragraph 2 allows the class to draw out elements of strategy, structure and growth and allows
the lecturer to augment a number of the implications of these identified elements (Board 6).

Asking the question about the type of growth implied in paragraph 2 should lead to discussion
about diversification and geographic growth and the advantages and problems associated with such.

This paragraph also raises questions about responsibility and accountability and where they
lie. The lecturer acting as the CEO and pointing the finger at a student and telling him that he is the
marketing director and that he is fired because revenue has fallen by 10% should illicit from the student
that it is not his fault rather it is productions fault as they failed to produce the products in time (Board
7). The lecturer then turning to another student and saying that she is the director for production and
that she is fired will probably get a similar response from her in that it is not her fault but rather R&D’s
as they have not produced new innovative products to sell and so it goes on with no director accepting
responsibility for the fall in sales and revenue but blaming another director.
Initiating a discussion on the appropriateness of the functional structure will lay the foundation for
the actions subsequently taken by the CEO. It can be argued that the structure is late functional early
divisional when, given its size, it ought to be multi-divisional. Consequently, structure does not support
strategy

PARAGRAPH 3

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
without regard to company policies and strategies, and it became apparent to Sweet that the company
was disintegrating into a number of independent parts.

Asked what the CEO has done in this paragraph the students answer that he has created 15
independent domestic/foreign divisions each with profit responsibility but this did not work. Pushing
the students on why this is so it is possible to draw out the serious loss of synergy associated with
this. Moreover, when pushed on what strategy the individual divisions will follow, whether the
parent or their own, the answer is usually their own. But when asked who picks up the bill if a
division makes a loss or its director engages in a fraudulent or criminal act the answer is usually
the parent thereby opening up a wider debate.
PARAGRAPH 4

Having seen several large companies get into trouble when division directors made mistakes and
the division suffered large losses, Sweet concluded that he had gone too far with decentralisation. 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: unplanned capital expenditure (over £10,000)
2: new-product introduction
3: marketing and pricing strategies and policies
4: plant expansion
5: changes in personnel policies

Q: Analysis of these areas shows increased synergistic value plus a tighter control
mechanism. But, what types of decisions are these?

A: All are strategic in nature

1: Any additional expenditure must gain central approval first – a means by which to ensure
budgets are well thought through and adhered to unless a case can be made otherwise.