CASE STUDY On a Medical Equipment Company (XYZ)

Evolution of Organizational Structure

The company historically had been U.S. oriented with an international manager
overseeing businesses outside the U.S. Traditionally, country managers were responsible for
sales and marketing efforts in their countries and were compensated for achieving yearly
sales and profit targets. They made key decisions, such as whether to introduce particular
products in their countries. While manufacturing for most products was done in the United
States, XYZ also manufactured products in Europe, Mexico, Brazil, and Japan with these
factories reporting to the appropriate country manager.
In the early 1980s, growth opportunities in Europe and a desire to build a global business
convinced top management that the company could no longer allow country managers to
make product marketing choices (e.g., a country manager might resist introducing a new
product if launch costs would lead to lower country profits). There was also concern about
uneven quality and cost standards in European plants. Accordingly, a new structure defined
Strategic Business Units (SBUs) across Europe; as a result, the role of country managers in
product strategy decisions was diminished. While top management viewed the new
organizational structure as beneficial, tensions between European SBU presidents and
country managers persisted. Some people believed that, with the new structure, XYZ was
running the risk of weakening its country management capabilities around the world as
product line authority was strengthened. There was also concern that worldwide product
divisions—headquartered in the United States—would simply reinforce the U.S. view, rather
than promoting a global perspective.
By 1993, the organizational structure of the company was built on the foundations of the
restructuring of the 1980s. The company was broadly divided into two sectors—Medical
Products and Diagnostic Products. The Medical sector encompassed products including
hypodermic supplies (syringes and needles), diabetes care products, intravenous catheters,
and surgical supplies. The Diagnostic sector produced sophisticated systems for diagnosis of
diseases, including instruments for monitoring the health status of patients and devices that
identified and tested for organisms causing infectious diseases.
Each sector was headed by a sector president who was responsible for key decisions
affecting the U.S., European, Asia-Pacific, and Latin American divisions that comprised the
sector. Exhibit 1 illustrates XYZ’s organizational structure for one sector.
In 1994, the company was reorganized into four sectors. The role of the sector president
remained pivotal in key decision processes affecting sector divisions and businesses. Refer
to the below Exhibit.
 EXHIBIT I

1. What do you feel were the reasons for the organization reorganizing its structure within a year (1993-1994)?
2. Do you think the sector president should have a role in all the decision making processes?
3. In the present scenario, what are the policies that the HRs should incorporate to accommodate the gig workers?
(suggest suitable organizational re-structuring)
4. Owing to the criticality of the sector, should the HRs focus more on skill hire or culture hire?