Problems Faced by Airstar Inc - Case Study Example

Case study Short Report Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 26th July, 2012. Contents Contents 1 Problems faced by Airstar inc. 4 Unclear organizational design and lack of a strategic direction 4 Lack of clear communication 5 Lack of performance evaluation and appraisal 5 Executive organization 5 Competition 6 Low backlog 6 Lack of clear definition of roles and duties 6 Features of Airstar’s current structure and why they don’t work 8 Centralized Authority 8 Lack of Clear Authority at the management level 8 The organization is not streamlined 8 Ineffective and inefficient communication Structure 9 Lack of logical organization of Departments 9 Solution Based on a New Organizational Strategy/Structure 9 Conclusion 12 Executive Summary The report aims at carefully analyzing Airstar Inc. with emphasis placed on the problems that the company is facing from an organizational design perspective, examining the current structure or strategy employed in the organization and also propose recommendations that are to be implemented in the organization for the organization to get back on its course to the extent of having a competitive advantage over its competitors. The report unveils the way the problems experienced in the company are leading to the organization ineffectiveness and in thus doing bringing a lot of chaos and uncertainty in the organization. The findings of the report also shows that as long as there are problems that are unresolved in the organization, the organization cannot run smoothly and hence the analysis of the problems that Airstar Inc. is facing. The various problems that have been pin pointed in the report include; poor communication, low backlog and lack of performance evaluation and appraisal among other problems which have been highlighted in the report. In addition, the findings have also lead to the realization that the problems being experienced in Airstar Inc. are the ones contributing to the strategy/structure employed in the organization being ineffective. Therefore, from the above analysis, it is apparent that Airstar Inc. requires change from the management to the junior most employees for some of the problems which are leading to the organizational ineffectiveness for instance lack of clear communication touches on all employees in the organization. Therefore, the following recommendations have been made in the report; Airstar Inc. to implement clear goals, objectives, vision and mission statements Carefully analyze the industry in light of the entrant of competitors in the industry Clear communication channels to be developed and implemented in the organization Develop Statements of Work (SOW) and Work Breakdown Structures (WBS) to eliminate overlapping of duties Introduction This report sets out to offer some recommendations to the CEO this will be done by analyzing the key problems in Airstar inc. that are depicted in the case study from an organizational design perspective. The report will further define the current structure/strategy of Airstar inc. and at the same time offer some arguments as to why the existing organizational structure at Airstar does not seem to work. The report will further develop a solution based on a new organizational strategy/structure that needs to be implemented in Airstar inc. and develop some key arguments in support for the recommended organizational strategy/structure. Airstar inc. is an organization that deals with overhauling, repair and manufacturing pistons as well as jets engines considerably for smaller aircrafts. Most of the managers have been in the organization for about twenty years. The organization has a wide recognition and values customer loyalty (Daft 2007, pp. 84). The research for this study will be limited to literature on organizational structure/design. Problems faced by Airstar inc. Unclear organizational design and lack of a strategic direction Airstar inc. as provided in the case study is faced by a number of issues; one of such major issue is the lack of a clear and concise organizational design as well as lack of a clear strategic direction. Airstar seems to lack a concise strategic direction and organizational design. Through a clear and concise organizational design the managers are able to integrate the employees, technology as well as information that are available within the organization in the aim of improving the likelihood that the communal efforts of employees will be successful and will offer benefits to the organizations. Lack of clear communication Another issue that is facing the company is the lack of clear communication. The company’s president Roy Morgan comments that the communications in the organization are atrocious. He even commented that he did not get the report of the export finance in due time and if when he did the secretary was the one who made an effort to find it. Form the president’s statement; it is clear that there is lack of clear communication within the organization. Lack of performance evaluation and appraisal Another issue that is raised in the case study is the aspect related to evaluation and appraisal. Constant evaluation and appraisal of employees need to take place so as to ensure that they are working towards the accomplishment of the organizations goals. This issue is evident when the organizations president comments that his basis of evaluation as well as appraisal of the corporate executive performance and that of goal accomplishment is over time becoming obsolete (Williams 1999, pp. 76). Executive organization Executive organization is another major issue facing Airstar inc. as provided in the case study. Airstar seems not to be following the principles of good organizations. In respect to this Robinson was of the opinion that there are certain practices they should be following as administrators (Walker 2001, pp. 9). The tasks that they ought to be following include but are not limited to: a clear determination of the tasks to be done, the most suitable personnel to occupy certain posts within the company’s organizational structure and keeping the number as well as kinds of levels of authority at a minimum. Competition Airstar is been faced by a threat been posed by competitors. Over time certain companies have emerged in the industry and they are posing possible threats to the company. Some of the major competitors of the organizations are companies such as General electric and Pratt. The managers need to put some strategies in place so as to be able to deal with the company’s competitors. Low backlog Low backlog is another common issue that is depicted in the case study. Low backlogs indicate that the organization is not performing well as expected and the managers are supposed to look at the issue leading to a low backlog and solve. From the case study it is evident that Airstar inc. is experiencing one of kits lowest backlogs over a long period. Lack of clear definition of roles and duties This is another common issue facing Airstar inc. as demonstrated in the case study. Most effective organizations seem to have clear articulation duties and roles that all the employees working in the organization are supposed to perform (Seijts & Latham 2006, pp. 45). With the clear articulation of the duties employees will perform all the duties that are assigned to them and this will also avoid overlapping of tasks (Walker 2001, pp. 9). In the case study it is evident that there is no clear articulation of the roles and duties that the employees are supposed to perform, for example there has been outright conflict between the controller and the marketing vice president over the merger and acquisition opportunities (Daft 2007, pp 84). If the roles and duties were clearly outlined there would be no conflict since each of them would be aware of the duties as well as the roles that he is supposed to perform. In Airstar inc. there are many instances of work duplication and a number of corporate officers were trying to outmaneuver each other Airtstar’s Current Structure Airstar has a Pre-bureaucratic structure common among entrepreneurial business. From the Case study it is shown the organization decision making was mostly done by the founder until his death. He was assisted by a number of middle managers who had little authority over the activities of Airstar. This structure is very effective in an environment where decision making is simple and the market is not very competitive (Diefenbach and Sillince 2011, pp. 1515-1537). Thus, Airstar’s niche marketing strategy is was very effective until the entry of competitors in the market. This organizational structure has several intrinsic characteristics that are hindering its success in the business environment it operates in. To start with the managers lack clear authority to oversee the running of their department as there are no clear job descriptions. Secondly, the organization management is not streamlined and the roles of corporate officers overlap each other as they are too many. Thirdly, the communication structure at Airstar is ineffective and efficient as information does not get to the intended recipients on time. Fourthly, the organization is not divided into structures that reflect the kind of work done by each division of the organization. Moreover, the organization does not have a clearly set organizational vision and other performance objective for its employees. Finally, authority within Airstar is not spread out to the lower employees and they have little autonomy over the tasks they perform. Features of Airstar’s current structure and why they don’t work Centralized Authority Airstar’s decision making authority is mostly vested in the CEO of the company. The other line managers lack authority over their own departments and this explains the chaos that was experienced after the death of the founder. The line managers were unable to deal with issues arising in their departments after the death of the manager as they had no experience of dealing with these issues. The centralized authority at Airstar means that authority is limited to the organizations top management and other lower level stuff lack autonomy over the tasks they perform meaning workers are not motivated to perform better in the organization (Hornung and Rousseau 2007,pp 420). Lack of Clear Authority at the management level Airstar does not provide its management employees with a description of the key roles and responsibilities they are supposed to supervising the activities of the organization. This means tasks are not easily accomplished as the responsible person is not easily identifiable once the task needs to be done. The organization is not streamlined Airstar organization has too many managers some of whom seem to have nothing to do. The conflict between the Vice President of marketing and the Controller is evidence of this problem. This means Airstar is paying for the services of two managers while it only needs the services of one. Ineffective and inefficient communication Structure It is worrying to note in the case study that the CEO of the company does not receive important reports on time and it takes the efforts of his personal secretary to obtain a copy of the export finance report. This shows that Airstar does not have a clear defined communication structure and does not use modern technology especially IT to ease its internal communication. This problem means that decisions that are informed from communication such as the export finance report are delayed and may see the company lose out on commercial deals that have constrained deadlines (James 2010). Lack of logical organization of Departments This problem means that Airstar activities are not efficient as there is no particular department that is responsible for specific aspects of Airstar activities. Task redundancy is common in organization lacking a clear division of responsibilities among their various work departments (Truss, pp 1125). Solution Based on a New Organizational Strategy/Structure The organization strategy/structure to be developed or recommended to Airstar Inc. should help the organization evolve and continue evolving in light of the assessments done on the organization. Airstar Inc. should clearly specify the organization mission statement, goals and vision in addition to developing sound policies that are to complement the vision, mission and the objectives of the organization (Setayesh, Leyland, & Albert 2011, pp. 285). The mission, vision and goals to be achieved will ensure that the employees work towards achieving certain objectives in the organization other than working blindly. Among the recommendations that Airstar Inc. should put in place is to keenly study the business environment in which the company is operating in. This recommendation has been inferred from the fact that the organization has experienced chaos as a result of some of the competitors (General Electric, Pratt and Whitney) that has entered the industry and thus making the organization experience a fall in their sales and also contribute to chaos in the company (Namara, Vaaler & Devers 2003, pp. 270). This should be clearly done through use of such tools as the Porters Five Forces model and the Swot Analysis with competition being a theat. However, this should not be a mere assessment of the environment as measures need to be put in place, that is after the assessment, the organization clearly needs to identify how well to approach the current environment it is operating in for gone are the days when it was the only monopoly in the industry. This therefore follows that Airstar Inc. having existed in the industry for longer than its competitors needs to carefully evaluate whether to approach the competition it is facing form an outside in approach from or from an inside out approach to which as a consultant, I would greatly advise that the approach that the organization needs to adopt is the inside out approach (Broadman, Daniel & Aidan 2004, pp. 40). As a consultant, I also feel that the organization needs to employ clear Statements of Work (SOW), whose function would be to define the activities that are to be carried out in Airstar Inc., the deliverables and the time plans for attaining the activities. WBS (Work Breakdown Structures), whose functions would be to divide the work that is to be carried out in the whole organization into components and therefore all the employees would be very sure of the duties that they are supposed to perform and thus eliminate the overlapping of duties in the organization and thus eliminate chaos. This would eliminate the dilemma the President of Airstar, is facing of organizing. Clear channels of communication in the organization needs to be effected in such a way that there would be flow of information in the organization but nonetheless should be ones that follow the organizational chart specified by the organization itself. As the consultant, my advice is for Airstar Inc. to have an upward, downward and horizontal communication to eliminate the communication chaos in the organization. To further support my argument of Airstar Inc. implementing all the three types of communication is the fact that, according to the case study, it is reported that the Company’s Marketing Vice President and Controller had conflicts over mergers and acquisitions. This emphasizes that there are conflicts across departments which can only be eliminated through horizontal communication (Summers 2000, pp. 29). Conclusion Airstar as an organization of its caliber deserves strategies and structures that are to shake it even if competitors are to make an entrant into the same industry. In light of the problems highlighted above among them, the unclear organizational design and lack of a strategic direction, lack of clear communication, lack of performance evaluation and appraisal and the organization having executive organization, the report shown that it is without a doubt that change is needed for the organization to run smoothly. In addition, other problems highlighted in the report and to which are having an effect on the way Airstar is running includes but nonetheless not limited to competition for instance the entry of firms like General electric and Pratt, low backlog in the organization and the lack of clear definition of roles in the organization which raises chaos in Airstar as a result of employees roles overlapping. The report also gives an insight on the features of the current Airstar structures with emphasis laid as to why the current structure does not work. Among the features that make the organization structure ineffective are; centralized authority in such a way that the death of the former president of the organization brings the organization into a standstill which shows portrays negatively for Airstar Inc. and the presidents also failing in giving clear authority to employees a fact that can be seconded when the current presidents complained during the meeting in the case study that he was not given the financial reports. This leaves the question of the authority in the company, for the president of the company is among the people whose orders are carried out by employees without much questions. Other issue that contributes to Airstar Inc. ineffectiveness includes; the organization not being streamlined, Airstar failure of an effective communication structure and lack of logical organization in the departments. The report on the organization finally culminated into finding a solution for the organization upon which, the recommendations which have been suggested for Airstar Inc. are in light with the organization having a new organization structure or strategy while still augmenting the existing strategy/structure. Some of the recommendations in the reports includes, Airstar Inc. clear identifying the company’s vision, mission and the objectives/goals, carefully analysis of the environment it is presently operating in, for instance, an environment which have competitors unlike when the company was the only monopoly in the industry, division and specification of work to avoid work overlaps and the employment of clear communication models. With all said, the finding and the recommendations suggested in the report will help Airstar to be back on its feet. References Broadman, A. E., Daniel, M. S. & Aidan, R. V. 2004 A Framework for Comprehensive Strategic Analysis. 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