Page 19 - Articles Written by JGJ EF DPS

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.