Key Problems in Management of Airstar Inc - Case Study Example

Introduction The tragedy within Airstar Inc. is not that it can’t realize much profit; but the organization flaws that are in the organization. Indeed there is a big problem that continues to affect the company from realizing optimal results. The problem seems to stem from a lack of a succinct and well modeled organizational structure that will direct the company. A key problem lies from the many management issues that are not addressed in the executive level. A solution is imperative especially because the flaws are continuously affecting the growth and performance of the organization (Wheatley 2001). An overlap of the issues that exist within Airstar Inc. includes the following; the company has a flawed corporate governance structure. The level of respect at the very least seems to be highly none upheld. There are executives who are not co-operative. The conflict is especially evident in cases of management involving the President and the Vice President of Marketing. One of the realities of an organization is that, it is essentially a tall order for an organization to have no conflicts, however the extent to which an organization deals with the existing conflicting is usually the difference of performing and non-performing organization. Key problems There are several issues that the President needs to address very urgently. An optimal organization design involves a system or a structure that carefully analyses the pattern of relationships that exists in the organization involving the roles and the parts that are entrenched by the management. Through such an avenue the works, roles and responsibilities are clearly allocated and activities well directed, so as to achieve the organizational goals and objectives. Organizational structure is in most instances widely overlooked by organization. The importance however of embracing the same far outweighs the overlooking. Organizational structure assists any firm or company to achieve optimum performance. Some scholars have gone a mile to describe the importance of organization structure as that invisible hand that essentially brings life ton organization and also organizations to life (Mumford and Hendricks 2006). They underlie in every successful structure of the company. The visible and invisible structures within the organizations are often the thread that interwove the activities of the organization. Some of the organizational problems that come to the fore in the case of Airstar Inc. would essentially seem to stem from the transition of the management. The problems seem to stem from the death of the founder. It appears like after Roy Morgan took over as the President the organizational cracks started to become evident. This problem needs to be addressed urgently. Often the top executives determine the fate and success of an organization. Roy needs to instill confidence, upon the employees, executives and stakeholders that Airways Inc will continue to experience exponential growth even upon the demise of the founder. This issue is core to the organization achievement of goals and objectives. Another problem results from competition. The management is lagging behind in coming up with the best organizational practices that will propel the organizational sales and customer base. This is so evident from the level that the organization is receiving competition from such organization such as General Electric and Pratt and Whitney. Adaptation has led to so many organizations winding up. Airstar needs to embrace many key changes in order to stifle down from such competition. One of the major plus that the company needs to embrace is technology. Technology is synonymous with the current business success trend of any current organization. It is not clear whether Airstar Inc has embraced technology as an avenue of weathering the competition. A good recommendation would incorporate corporate brand visibility through the technology (Allen 2001). Another key problem in the current organizational design is the persistent problem of lack of command channel flow among the executives. This problems is evident from the current command problem between the vice-president of marketing and Mr. Morgan. Scholar’s points out that it is not necessary for an organization to a have a hierarchical system to enjoy optimal results. It has been a presumption that the command structure must have a vertical command sequence which finally trickles down horizontally. This classical science presumption have faded with time and overshadowed by the current management science proponents. Under the current organizational structure, which is not operationalized in Airstar Inc. stipulate a system which is not only hierarchical but also with a centralized fully fledged and functioning dynamics. The role of the management is now recognized as not only encompassing coordination but also embracing some key functions such as forecasting, planning, controlling and planning (Handy 2000). It is not clear whether the organizational structure embraces a segmented and linear structure with a hierarchical system. Another major problem within the organizational structure of Airways Inc. is bureaucracies within the management. It is clear from the article, that whereas merger and acquisition would be the ideal mode through which bigger sales and profitability would be realized, the current structure has made it so impossible to realize the same. The controller and Vice-president of marketing have persistently had wrangles from the issue of mergers. Such wrangling would not in any way facilitate mergers. They would essentially complicate the management and realization of the goals and objectives of the organization (Kauffman 2006). Current system The current system is shrouded in communications breakdown. This is very evident especially since the president learns the export finance report from the secretary. For a harmonious relationship within the organization, there is a great need that the communication problem be solved. The ineffectiveness of communication in any organization leads to great number of problems (Mullins 2003). The problems associated with communication breakdown are strongly and often intertwined with the classical bureaucracies. For an ideal organization, the structures should be neatly organized into layers that are compartmentalized. Such compartmentalization is very important in Airstar Inc. this is so despite most scholar’s findings that delaying and even adopting an array of reshaping strategies do not necessitate the reduction of bureaucracies in most organization. Another key problem in the organization relates to implementation of the organizational goals and objectives. Even though most of the executives have recognized and identified the issues that have led to the disconnect, they fail to implement the findings. This is clear from the scenario given by the vice president of manufacturing who despite the knowledge of the organizations failure to uphold the principles of good governance lacks to give direction on how the effects can be mitigated (Allen 2001). Another example is where the management has learnt that potential acquisitions, research, imports and export would result in Airstar Inc. growth. The management does little to put the above suggestions into implementation. For a management to enjoy an organizational design and structure that is acceptable and transparent there is need for a SWOT analysis. This is an acronym of Strengths, Weaknesses, Opportunities and Threats. The current strength of the organization is founded on the goodwill the company has received over the years of quality service. However, the good will is slowly fading due to the threats the company is receiving from the current competition of organizations such as General electric. These threats cannot be adequately tackled before addressing the issues of Airstar Inc. weaknesses, which squarely lies in the mode of the management. It is also very clear that the management has not addressed the issues of responsibilities overlapping. This is an essential problem in the current structure. When the roles and responsibilities are overlapping, it means that the company wastes its resources, which should have been directed towards expansion and greater economic growth of the organization (Handy 2000). To this end, it is appropriate that the organization embrace and essentially implement of the suggestions pointed out by the Vice-president of manufacturing which is to make sure there is a clear delineation of the responsibility and authority of the workers. The current organizational structure can be modeled and enhanced. This can be achieved through getting case studies of the best current organizations. A decentralized structure is very important, it will involve the organization having a clear policy and system through which roles and responsibilities are divided. Decentralization is an important element in converging the synergies of the organization. It is important in the current system to determine who does what. It is clear that the responsibilities overlap and this has resulted in bureaucracies and growth that is hindered. For example it is not clear who should give clear information and direction on the issues such as mergers between the vice president of marketing and his counterpart the controller. This ought to be clearly set out so that the cogs of the organizational performance are realized (Stacey 2007). Another important element not enjoyed from the current organizational structure is the issue of the authority command. One of the proposals that encompass the principles of good governance that Jim Robinson puts forward is to make sure that the sources and authority commands are bare minimum. This is not so in the current management system in Airstar. A case scenario is where the president is belatedly learning that there is an export finance report from the secretary. As the President, such a report should be emanating from him and not catching him in surprise. This ought to be reversed urgently to ensure that the command system is reduced. Another important element of an ideal organizational structure and design is formality. There is a need to come up with a policy framework through which the responsibilities are succinctly laid down. A clear capture of the job descriptions is imperative for any organization that is set to enjoy exponential growth. Under the current system in Airstar. Inc there is a lot of informality as regards the responsibilities of the vice-president of marketing and the controller. While essentially the controller should play a key role in the mergers, this responsibility seems to be usurped by the vice-president of marketing. A clear policy document ought to be adopted setting out the guidelines to be followed for every method adopted by the organization to realize bigger profits and sales (Senge 2000). Teamwork is also an important element for any organization that seeks to enjoy growth of profitability and sales. Under the current system, the president points out the problem evident in the officers trying to outmaneuver each other. In such a system, the organization may fail to realize the objectives and goals since the executives instead of addressing the issue of company are focusing on their problems. The company should avoid the duplication of efforts and also ensure that instead of the employees concentrating their energies in conflict, they uphold division of labor and specialization (Wheatley 2001). Solutions One of the major tools that the CEO ought to employ under the current organizational structure is downsizing. Definitely such a decision would ruffle shoulders with both the senior and the junior executives of the Airstar Inc. the consequences of failure to respond urgently and swiftly are however very dire. Downsizing will essentially assist the company in coming up with a structure that does not facilitate duplication of the efforts and a scenario where the officers seek to outmaneuver one another in their activities. Closely connected to the downsizing of the company is the element of business re-engineering. This will require an element of lots of resources but it is essential. One of its element is to require Airstar Inc. invest in the ultramodern technology. Technology not only necessitates the efficiency of services but also assists in doing away with officers who remain a baggage to the organization. This responses should however be carried out carefully and strategically so as all the consequences of perpetuating the same are forecasted and dealt with urgently. Business re-engineering should not be used as a short-term element. Insights and efforts should be geared towards realizing optimal growth in the end. Effectiveness of Airstar Inc. should be a long-term strategy and not a stint to be enjoyed for a short time, efficiency is important and can be realized upon the management adopting ways that not only cut on the cost of operations but also enhance professionalism among the remaining employees. Importance of downsizing and business re-engineering trickle down to ensuring that there is reduction of all kind of bureaucracies within the organizational structure. Such a process is not an easy process. It is often courted by a lot of opposition from the employees and their trade unions. The period is often described as ‘apparent chaos’. The approaches adopted by the organization should be multispectral in nature. These methods could encompass outsourcing and networking (Kauffman 2006). The long run merits however should be the guiding light for Airstar Inc. in embracing such a paradigm shift. In line with the above methods, there is a great need that the organizational structure embraced by the company be supplemented by the optimization standards. The optimization standards would essentially be compounded by performance contracts and an incentive model. Under the performance contract, the employees, both senior and junior, would be required to sign an agreement that requires them to get maximum benefit for the company. Such agreements are vital for such an organization at this precarious time when it is facing stiff competition from General Electric and Pratt and Whitney. An incentive model on the other hand acts as a catalyst for the company efforts and activities (Mullins 2003). The employees would work hand to attain the goals of the company. Another solution to the current problem is a clear succinct policy guideline on the command authority. Such a policy would essentially give the job descriptions, responsibilities and roles. A clear policy would describe the formality of each post and department. The informality in the current system has hindered economic development and also a blur and undermining of authorities. It is unfortunate and even atrocious for the president to be learning of finance report from the secretary. The current wrangling between vice-president and controller cannot exist in such a system. This policy should also have an organizational corporate chart that shows the flow of authority (Stacey 2007). Airstar Inc. also needs a Human Resource department. In as much as there is a fully fledged manufacturing, accounting and marketing department, and human resource department is becoming indispensable in any organization. The current disorganization structure and design would be avoided if a fully supported human resource department is in force. The duplication of efforts and the wrangling would be at their bare minimum. A human resource is not only important in organizing the employees but it also supports and complements the goals and objectives of the organization (Mumford and Hendricks 2006). A human resource department would result in growth and development of the company. Conclusion An important element in Airstar Inc. apart from reorganization of organizational structure and design is corporate governance. Corporate governance results in the principle that ensures that the interests of the management, employees and stakeholders are guarded very jealously. Corporate governance essentially boosts the level of accountability in an organization, ensures adherence of the enterprise priorities, effectively facilitates the best controls of an organization, ensures operational effectiveness and in addition ensures that the products and services are of quality (Stacey 2007). The current structure in Airstar Inc. without doubt requires not a complex and dynamic system but an acceptable understanding of structure and principles. There is need for a complete paradigm from the current structure to a structure that ensures accountability, transparency, lack of redundancy and duplication of efforts and essentially a system that embodies authority and respect. Effectiveness requires a sustainable model that will assist the company to stay afloat despite competition. References Allen, P.M 2001, A Complex Systems Approach to Learning in Adaptive networks International Journal of Innovation management, Vol 5. Handy, C 2000, Understanding Organizations, 4th Edition, London: Penguin Books. Kauffman, S 2006, At Home in the Universe: The Search for the Laws of Self-Organization and Complexity, London: Penguin Books. Mullins L.J 2003, Management and Organizational Behavior, 3rd edition, London: Pitman Publishing. Mumford, E and Hendricks 2006, Business Process Re-engineering and Personnel management, Institute of Personnel and Development. Stacey R.D 2007, Strategic Management and Organizational Dynamics, London: Pitman Publishing. Wheatley, M 2001, Leadership and the New Science, New York: Penguin Books. Senge, P 2000, Managing Learning, International Journal of Management. Read More