Reduction of trade barriers due to emergence of European Economic Committee and General Agreement of Tariffs and Trade (GATT)

Sony and Matsushita started production in Japan To cut down their costs, the companies had to achieve economies of scale Innovation increased due to decrease in product lifecycles Dominant global designs needed to have a competitive advantage

Multi domestic or divisional structure was followed by Philips National organizations had a sense of local responsiveness to satisfy local needs Country specific strategies was implemented The power, strategies, decision making was restricted to the respective companies Little coordination with the head quarters

There was a lack of alignment between strategy, structure and environment.

National organizations were responsible for marketing, manufacturing and strategizing

Product divisions were responsible for new product development. Dominance of national organizations Biasness of board members at the headquarters. Dominance brought duplication of manufacturing facilities and lack of coordination brought inappropriate marketing and slow production of products.

Head office staff was working for their own interest which brought inertia.

Reduce cost by coordination, which will also eliminate duplication of work. Products should be manufactured at a single location. Coordination will bring innovation. Philips should do strategic alliances with others to share the costs and risks associated with the new products Product divisions should have more power than national organizations, which will bring marketing and R&D together. Conflicts should be reduced. Headquarters bureaucracy should be reduced.

The Eindhoven bureaucracy should be reduced. More authority should be given to product divisions. Due to organizational design and culture, the heads national organizations resist a decrease in their power. Lack of diversified people Requirement of Leadership in the headquarters so that product divisions work is not ignored. Structural change is required, which is achieved by placing product divisions heads in the main management group

Continental Can Company of Canada, Ltd. (CCC) is about a routine mass-production organization that is experiencing conflict between the manufacturing and sales departments. Manufacturing has all the power, and managers are rewarded for reducing costs and increasing efficiency. They have no incentive to be responsive to the needs of the sales department. Sales are declining somewhat and quality is going down. The issue is how to change the way the company operates and improve its effectiveness.

Vertical Differentiation:

Levels in the hierarchy (5 Levels and 500 employees) Span of Control (Wide) Relatively tall structure Monitoring and coordinating activities Centralization Few multiple departments . All manufacturing. Low level of horizontal differentiation and complexity Functional structure as manufacturing and sales a separate units Geographic structure at company level.

Horizontal Differentiation:

Integration Mechanisms
Integrating mechanisms include: Budget Bi-weekly production control meetings Formal budget meetings once a month Some unscheduled meetings

StandardizationMutual Adjustment

Budget High level of Standardization Common goal towards efficiency not effectiveness.

It has a tall, highly centralized, highly standardized and simple functional structure. Mechanistic structure Top-down communication Authority relationships are clearly defined High level of personal supervision and control

Given Continental Can Companys efficiency driven approach a mechanistic structure is the most appropriate choice keeping in mind: Routine mass-producing technology low-cost strategy relatively routine, stable environment. mass-production technology Low level of skills and participation expected from its workforce.

The basic problems are:

Conflict and lack of integration between manufacturing and sales Falling sales and a lack of response to customer needs Deteriorating product quality Lack of cooperation and trust between foreman and schedulers

The main reasons of the problem are stated below:

Subunit orientation B. The budget C. Incompatible goals D. Structure

A.

Problem Area 1: Reporting authority of Fox and District Sales Manager.

Problem Area 2: Needs of sales are not being met.

Problem Area 3: Quality is falling

Two of the main recommendations are stated below: Changing the budget. The budget should be relaxed. Sales related goals should be added. Increase in product quality Changing the structure.

A sales manager could be assigned who reports to Fox and to the district sales manager. Fox and the district sales manager both respond to the same corporate executive. Sales, production control, and quality control can band together