Problems in C and C Grocery Organization Design - Case Study Example

Executive summary Every organization has an organization structure which shows how authority and power is distributed. C & C Grocery has adopted a centralized structure. This report focuses on some the problems that C & C Grocery is facing and how these problems are related to the organizational design of the company. It also looks at why the current organizational structure is not working for C & C organization. Finally, the reports give a recommended structure that C & C Grocery can adopt to solve the issues that it is facing now. 1.0 Introduction Every organization has an organizational structure through which power and authority is transferred from top to bottom through defined lines of authority. An organizational structure can either be centralized on decentralized depending on how power is distributed from top to bottom. In the case of C & C Grocery, they have a centralized structure which means that the decision making process is mainly done at the higher levels of the hierarchy. There is no delegation of decisions to the middle or low levels of management. This structure has its own advantages but it also has its own share of disadvantages which have costed C & C grocery in a number of ways. This report looks at some of the problems that C & C has facing in the recent past and how these problems are related to the organizational design and the current organizational structure. It finally gives a recommendation of a suitable structure. 2.0 Problems in the organization C & C grocery store has adopted a goal approach that is committed to ensuring customer satisfaction and good customer service. This approach has enabled the company to achieve growth as well as profitability. The chains have been able to attain their operative goals and the store has about 200 outlets in operation. For many years now, the performance of C and C grocery has been exemplary and has come with a lot of ease for the company. However, in the recent past, the company has been facing challenges with its smooth operation and with dealing with the emerging competitors. As a result, C & C grocery store a team of consultants to investigate and give advice on what the problems were. The team of consultants sampled about 50 employees and managers to find out where the problem could have been. After thorough investigation they found out that the problems revolved around the organizational structure of C & C grocery stores (Daft, Murphy&Willmott, 2009). Some of the problem the organization was facing includes: Rigidity of the organizational structure C & C had been using the same structure that they had designed over 15 years ago. Each of the outlets did things the same way regardless of their location (whether they were in the suburban areas). The store was also not keen on adapting to the rapidly changing technology which was affecting all the firms in the industry. They had developed a computerized supply chain management some time back but had not implemented it in totality. The structure of C & C is therefore not flexible (Daft, Murphy&Willmott, 2009). Dissatisfaction in the roles of the store manager and district store supervisor The store managers wanted an opportunity to learn general management skills to enhance their chances of being promoted to regional or district managerial positions. However, from the organizational structure, their tasks were only limited to the operational activities and therefore they did not have a chance to learn about merchandising, produce and meat. Moreover, the district store supervisors in their visits concentrated on checking on cleanliness as opposed to training store managers and helping them to manage operations of the perishable departments (Daft, Murphy&Willmott, 2009).. There were low levels of corporation and low morale in members of different departments. From the finding of the team of consultants, the strict functional divisions made it impossible for different departments to work in harmony. They give an example of how the store manager and the grocery merchandiser thought of a strategy of boosting their sales by introducing the coke diet. However, people in the stockroom were not willing to corporate and that promotion strategy ended up failing. The team of consultant says that with this kind of structure, the informal atmosphere that the founders advocated for was no longer there (Daft, Murphy&Willmott, 2009). Reduced market share C & C Grocery sales have been declining in the recent past as a result of immense competition from large superstores as well as discount retailers. The team observed that there is need for the grocery to up their game by including non-food items so that it is a one-stop shop just like its competitors (Daft, Murphy&Willmott, 2009). 3.0 Problems in C & C Grocery Organization Design From the above analysis, the problems that C & C grocery is facing are as a result of its organizational structure deficiency. The organizational structure of C & C grocery show symptoms of structural deficiency including: Inability to respond innovatively to changing environment where the departments of C & C are coordinated vertically only from top to bottom. There is no room for interaction between departments which makes it impossible for them to be innovative as they are used to doing the same tasks repetitively. There is need for there to be coordination between the marketing department and the I.T department if there is to be innovation (Robbins, 2007). The organizational design of C& C grocery does not allow information linkages especially horizontal information linkages. Their organization structure is a traditional one and is designed for efficiency and it emphasizes on plans, hierarchy and rules. The grocery emphasizes only on the vertical linkages which allows information sharing from top to bottom only. The employees at the lower levels are expected to carry out activities that are in line with the top level goals. However, there is need for the grocery to adopt the horizontal information sharing as well which will break the barriers that are there between departments and give the store the opportunity to coordinate so as to achieve unity of effort in the employees. This will reduce the low levels of morale in the employees. Also conflicts such as those experienced between the store manager and the store room will be avoided as such communication will have been made in advance (Vitez, 2010). 4.0 Current organization structure As indicated in the C & C grocery organizational chart, they combine both a geographical and functional as their main organizational structure. The organization is divided into three main regions with each having 70 stores. Each of the regions is subdivided into five districts divided into 10 to 15 stores each. They have a divisional structure for the middle and lower level of the organization. Divisional structure is sometimes known as strategic business unit or a product structure. This is where divisions are divided into individual services or products. In the case of C & C grocery store, the middle and lower level district are divided into operations manager, grocery merchandiser, and meat merchandiser and produce manager. The C & C grocery store structure is a very centralized and their decision making is mainly concentrated to higher levels of the hierarchy with the vice presidents having much authority. There are several disadvantages of adopting the structure that C & C has adopted (Robbins,2007). To begin, the functional structure which groups all common functions into departments from top to bottom of the organization has several weaknesses including: It does not allow quick response to environmental changes. It is for this reasons that C & C grocery is experiencing problems adapting to environmental change. Also with this kind of structure, there is hierarchy overload where decisions pile up at the top level management level. This is because, with this structure, decisions can only be made by top level management and then passed down to the low level management. This means that for a decision to be made, it will take so long as it must be done only by the top level management (Robbins, 2007). The third reason why this structure is not working for C & C Grocery is that this structure leads to poor horizontal coordination among departments. It does not give room for interaction between departments and hence the departmental conflicts that C & C grocery is experiencing where one department feels that the other department’s goals are not in line with their goals. Also as a result of less interaction between employees in different departments, this structure does not allow innovation. Employees are restricted to knowing only what happens in their departments and not know what their colleagues in the other departments do. This monotony discourages an environment of innovativeness. Finally this structure only allows a restricted view of the organizational goals. The aim is to accomplish the top-level goals without making any effort to go beyond the set goals. All employees from top to bottom only seek to accomplish the laid down goals and therefore restricting them to the organizational goals (Vitez, 2010). The other structure that has been adopted by C & C is a divisional structure where different divisions are divided into different products, product groups, and service, businesses and profit centers. The disadvantages of this kind of structure to C & C Grocery include: the product line become separate from each other and coordination across product line can be difficult. It is for this reasons that C & C grocery is experiencing problems. The cooperation within the C & C grocery stores was very low and morale was poor. For instance, when store managers and grocery merchandiser in a Louisiana store decided to promote coke and diet a a loss leader, many cartons of coke were brought in for the sale but the stockroom was not prepared and did not have a room since manger refused the store manager to use the floor area. The other reason why this structure is not working for C & C Grocery is that the company loses economic of scales. Instead of the various divisional mangers sharing a common facility in the functional structure, they are divided into individual services or products. In the case of C & C grocery store, the middle and lower level district are divided into operations manager, grocery merchandiser, and meat merchandiser and produce manager and this has lead to duplication of roles between individual managers. Thirdly, divisional structure has brought about lack of technical specialization in the C & C grocery store as their employees are identifying themselves with the product line rather than with the functional specialty. The third structure that has been adopted by C & C grocery is geographical structure. The organization is divided into three main regions, namely; southern, southeastern and northeastern where each region has 70 stores the disadvantages of this kind of structure to C & C Grocery the vice presidents who head this regions rely on functional and divisional to take corrective actions as well as improve operations rather than giving a directive from their office. The is lack of coordination between the functional and division managers which means that the regional top managers may get wrong information which mean they will make bad decisions which will affect all the C & C grocery store since its decision are centralized. 5.0 Recommended organization structure Base on the C& C grocery organization structure which has many disadvantages such as it does not allow quick response to environmental changes, hierarchy overload, poor horizontal coordination among departments, less interactions between employees in different departments, and duplication of duties. Therefore, C & C grocery needs a decentralized organization structure to cope with challenges and we have suggested that it should change its organization structure to a matrix organization structure. A matrix organization structure is defined as a structure that facilitates the horizontal flow of information and skills; it’s used mainly to draw employees from different functions, disciplines for assignment to a team without removing them from their respective positions (Usmani, 2012). This structure divides authority by functions where each employee answer to immediate supervisors; product and functional bosses. The matrix structure suits better when environment changes are high as there is an efficient exchange of information. Departments communicate with each other frequently and work closely which enhances productivity and allow quick decision making. For instance, in a matrix structure employees from the production, marketing, and finance may confer with each one another to formulate strategies (Guzman & Media, 2012). The environment in which C & C grocery is operating is experiencing high rate of changes. Customer test and preferences are changing day after day and the switch cost is very low. To increase your market share, a company in this industry is required to quickly respond to the needs of customers. Currently, C & C grocery organization structure is experiencing problems adapting to environmental change and this has lead to customer switching to competitors such a wal mart since they are not able to respond quickly to the needs of customers and the organization. By adopting a matrix organization structure, C & C will be able to respond to the highly changing environment as there is an efficient exchange of information which will allow its managers respond quickly to needs of customers and the organization. Matrix structure encourages a democratic leadership style since it incorporates the input of employees before the mangers make decision. Allowing employees to contribute valuable information before making a decision leads to increased motivation and employee satisfaction (Daft et al, 2009) . Employees in C & C grocery are not well motivated since they are not involved in contributing information before the organization makes a decision. Lower level managers and employees take instructions from top management since it current structure only allow all decisions to made at top level management. By adopting a matrix structure, the employees of C & C grocery will be able to bring their expertise to the table. This will allow C & C grocery middle and lower manager as well as supervisors who are involved in the day-to- day to make decisions through the view point of employees. Moreover, by C& C grocery allowing their employees to participate in the company’s decision making, it leads to job satisfaction and increased motivation on the part of the employees which makes them more productive. A matrix structure allows lower level managers and supervisors to focus on their area of expertise. This results a better coordination among all the departments (Daft et al, 2009). By adopting a matrix structure, C & C grocery will increase coordination among managers. Duties of every employee will be well defined and also there will be no duplication of roles as roles are well outline. Therefore, by reducing physical facility and roles duplication, C& C grocery will enjoy economies of scale. 6.0 Conclusion Since C & C grocery is facing many challenges will its current organization structure, it should adopting a matrix organization structure it will be able to facilitate discussion and adaption of unexpected problems as it tends to work best in organization with many product lines. Under this structure, the meat, produce and grocery department managers would be responsible for coordination of all the store activities. On the other hand, the district supervisors’ role will change from supervision to training and development, they will head a team that includes them and several produce meat, and merchandise specialists who would visit area stores as a team to provide advice and help for the store manager and other works. Therefore, as compared to the current structure, matrix structure will have some levels removed which means that middle and lower level managers will have more freedom and responsibility. Therefore, we believe that by adopting a matrix organization structure C & C grocery will experience long term growth and development as well as expend to accommodate non grocery lines and gourmet units. Moreover, in every store, a new department manager could be added for gourmet or other major department. We also believe that the proposed structure will enable the district team to expand to include specialists in these lines as well as an information technology coordinator to act as liaison for stores in the district. References  Daft R, Murphy J, Willmott H (2009) Organization: Theory and Design 2nd Edition: London Vitez o (2010) Centralized Vs. Decentralized Organizational Structure. Retrieved on 29th March 2013 http://smallbusiness.chron.com/centralized-vs-decentralized-organizational-structure-2785.html Robbins S. R (2007) Organization theory: structure, design, and application. Prentice Hall Usmani F (2012) what is a Matrix Organization Structure? Retrieved on 29th March 2013 from http://pmstudycircle.com/2012/08/what-is-a-matrix-organization-structure/#axzz2Owa89qMs Guzman S, Media D (2012) the Advantages of Matrix Organizational Structure Retrieved on 29th March 2013 from http://smallbusiness.chron.com/advantages-matrix-organizational-structure-286.html Read More