Page 348 - The Case Lab Book

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.
2: New product introduction is not left in the hands of a division but rather centralised to achieve strength
in depth based on the whole being greater than the sum of the parts.
3: Marketing and pricing may be adapted to the local market but synergistically it is more logical to centralise
when the product offering is global. It also avoids destructive inter division price wars.
4: Plant expansion is likely to be a major, long-term financial commitment which cannot be taken on a
piecemeal division by division basis. It must be centralised in order to maximise economies of scale, scope and
synergy.
5. Changes in personnel policies are likely to be based upon the global or regional markets rather on
division by division basis thereby avoiding conflicts.

PARAGRAPH 5

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 decentralising and
then centralising. Sweet worried about this problem, calls you in as a consultant to advise him what to do.

Board 11 allows the development of a variety of answers to the questions posed in the case study. These
answers may then be developed further to draw out a more in-depth analysis as shown in board 12

Should there be more centralisation of common or corporate function?

In addition should the CEO further address the organisation structure? Currently the structure is a
divisional one but one that is still functional in nature. Perhaps a multi-divisional or matrix structure would
be more appropriate and effective?

DIAGRAMS AND BOARDS
DIAGRAM 3: CRITICAL EVENT ANALYSIS DIAGRAM 4: FORMULA

DIAGRAM 5: FORMULA SOLUTION BOARD 1: INSTRUCTIONS