Acme and Omega Managerial Styles - Case Study Example

Table of contents 1.0 Executive summary……………………………………………………………………………2 2.0 Introductions…………………………………………………………………………………..2 3.0 Acme and omega managerial styles…………………………………………………………...3 3.1 Organizational structure issue…………………………………………………………5 3.1.1 Impacts of mechanic structure (Acme) Employees…………………………5 3.1.2 Organizational performance…………………………………………………5 3.1.3 Impact of organic structure Omega (employees)……………………………6 3.1.4 Organizational performance…………………………………………………6 3.2 Final contract winning……………………………………………………………......6 4.0 Rational and open system theory……………………………………………………………...7 5.0 Recommendations and solutions ...……………………………………………………………8 6.0 Conclusion………………………………………………………………………………….....9 References..………………………………………………………………………………...........10 1.0 Executive summary Acme and Omega are two companies competing for the same subcontract. Each of the organization has a different form of organization with Acme using mechanic and organic form of structure. The main issue in this case study is raised by the different organizational structure they use which influences their management style. The structure determines the final winner of the contract which is the main issue here. Rational theory and open system theory are used to explain mechanistic and organic structure of Acme and Omega. It is recommended that Acme and Omega should consider adopting both mechanistic and organic structure to enable them survive in competitive market. With the high development in the industry, Acme should consider adopting a free exchange of ideas environment to promote innovation while Omega should reduce the integration since it slows down the speed of decision making and it increases production costs. 2.0 Introduction This case study focuses on the main issue in the two companies who used to be in the same division before their sale to different identities. Acme and Omega are competing to win a contract of manufacturing 100 memory units from a photocopy manufacturing. This report discusses the difference between organic and mechanistic structure of the two companies. Acme and Omega after their sale each adopted its own organizational structure with Taylor the Acme president retaining the original structure and its organizational chart. On the other hand, Omega hired a new president and promoted some of its employee. Omega president doesn’t believe in organizational chart and he terms it as an artificial barrier and encourages jointly working. The demand for memory unit is high and the two companies are given subcontract by a photocopying manufacturing company. Some component lack in the market and the two companies are both depending on external environment for the components. Omega which its decentralized decision making makes the memory unit prototype faster but an error is found in design. After correction, all their components are tested and their quality is high. On the other hand, Acme with its centralized decision making delivered the prototype late and even they are found to defective. Finally, Acme was allocated the final contract and this is where the issue arises. 3.0 Acme and omega managerial styles Acme and omega adopted different management style after their sale. Each company has its own structure which determines its management style of their organization. Below is the table comparing which of the two companies is mechanistic and which is organic? structure characteristic Acme (mechanistic) Omega (Organic ) Integration The organizational structure is hirechial. From the president to vice president and then bottom to departmental managers. This is stipulated well in the organizational chart. Each part in the hierarchy is entrusted with authority which defines their responsibility. The president believes organizational chart are just artificial barrier and therefore uses direct contact to communicate with managers and other employees in the organization. The integration mechanism here is direct contact Specialization The employees work as individual in accomplishing their tasks. Each of the employees is assigned a specific task. Therefore, there is a high degree of specialization.   Employees work as a team. There is no definite job which must be done by somebody. Therefore the employees here work jointly. Authority in the organization The authority is centralized. Taylor the president acts as an autocratic leader who makes a decision and then communicates to the lower management. The authority is decentralized and decisions are made by management team while vital decisions are left for experts. Rules and regulation There are defined rules and guidelines. Every activity to be done there is written orders to be followed. Therefore there is standardization of rules. There are no written rules or guidelines for any job to be done. Flexibility is applied. job is done on mutual adjustment. Formalization Communication runs from top management to the lower management by use of memos. Therefore the communication is through horizontal channel Communication is informal and freely. Both horizontal and vertical channels are used by the management to departmental managers to departmental managers with the staffs. 3.1 Organizational structure issue Understanding the organization structure makes it possible to coordinate each activity systematically by reducing redundancies and eliminating unproductive processes (Millett, B.1998).After the sale to individual investors, each company adopted its own procedures and policies. Acme retained the original structure and promoted its general manager to president. Omega hired new president and upgraded several existing individuals within the plant. Acme managerial style is of Mechanistic while Omega adopts organic. 3.1.1 Impacts of mechanic structure (Acme) Employees Specialization of activities is encouraged in Acme and employees follow rules and regulations to perform their duties. They are contented with their job. However, a number of managers aired their will to have their jobs cover a wide range of tasks. The communication in the organization is centralized and therefore the employees are not able to contribute much in decision making. One manager said he wished he had a little information about what is going on. Acme wins the final contract because the employees are able to reduce cost by maximizing efficiency. 3.1.2 Organizational performance Acme organizational structure has improved its performance because there is no wastage of time as each employee is committed. Acme had annual sale $10 million and achieved greater net profit than Omega. The president attributes this profit to their mechanistic structure. Acme produce large batch and mass production and therefore specialization cannot be avoided. The adoption of this method of production if favorable because it minimizes cost while maximizes profit. This attributed to the final contract which the company won. 3.1.3 Impact of organic structure Omega (employees) Organic structure emphasizes cooperation of employees within the organization and this worked for omega when they were manufacturing the chips and made them faster and effective. The employees’ roles and duties are not defined well; therefore some of the employees have an ambiguous view of their role as a new industrial engineer says that it took time for him to understand exactly what he was entitled to do. The president listens to individual suggestion but the employees find this as wastage time. Head of mechanical engineering complains that the president spends too much time by listening to each and every person’s suggestions. Because of time wastage Omega has not been able to win the final contract as it was difficult to reduce cost. 3.1.4 Organizational performance The flexibility of the organizational structure at Omega has helped to understand the working environment. This is because of freely flow of information which has improved performance in manufacturing. The flexible interaction within the departmental engineers saw the organization creates the units faster than their competitors .In organic structure, communication flow is both vertical and horizontal and as argued by Mohammed (2007) that Intellectual capital is a source of competitive advantage which helps the organization in understanding the environment . Omega organizational structure has failed the entire organizational performance because the company is unable to compete fairly in the market. 3.2 Final contract winning Acme won the final contract, credit to its organizational structure which Taylor refers as a “tight ship”. Taylor also argued that, the reason for adopting such a mechanistic structure is because it’s the bests for production of high volume units. The production of memory unit requires a routine production which is favored by technical production of Acme. Acme learnt a new way to reduce cost of production by 20% and sell its product at lower price than Omega that’s why it won the final contract. On the other hand, organic structure of Omega allows for innovation and creativity. The company quality of memory unity is high and it’s reliable since it shipped the memory units on time and even beating Acme on quality and reliability. Omega though didn’t win the final contract. This is because its organizational structure could not allow for reduction of cost. Most of time is wasted in decision making and giving suggestion. The manufacturing manager complained that the president was wasting a lot of time listening to suggestions. The company uses batch production technology which is only used in production of low volume unit. Therefore they are unable to cut the production cost. 4.0 Rational and open system theory Rational approach theory allows formalization of the organizational structure which makes it possible to standardize the behaviors of employees hence making it possible to predict the end results of various actions (Alvesson & Willmott 2002). This theory applies to Acme because of its mechanic organizational structure which is formal. The behaviors of the employees are determined by the management because they work under rules and regulations. The theory recommends adoption of specialization in the firms so that several inter-related activities are grouped together into one department which is in turn put under supervision one superior (Alvesson & Willmott 2002). In Acme there is high specialization as each employee works as an individual. According to Das (2003), communication in the organization should be guided by certain principles while decision making is fast because there is no wastage of time in consultation. Rational theory recommends prioritizing some of the functions and assigning resources to organizations (Das 2003). Communication in Acme is vertically and formal, decision making is centralized and lies on the hands of top management. Taylor makes decisions of to take the contract and then send memos to all departments telling them to prepare. Open system theory visualizes an organization as one system that contains several components that are affected by the external environment. Each of these components has a unique part to play in ensuring that the organization remains competitiveness (Zoghi & Mohr 2011). Omega structure is flexible and provides environment for creativity and innovation since it allows the employees to interact and work jointly. Mohammed, (2007) argued that in an open approach is subject to many factors from outside which influence the internal environment of the organizations. Open approach theory views quality and cost as externally driven variable that must be managed by understanding the environmental changes and understanding what influences these variables. Omega not only focuses on internal environment it also focuses on external environment. When the company gets a contract to produce cables prototype, its internal environment which includes the innovative employees it is very fast in production. In contrast Acme is not concern much with the external environment and therefore this may make its forecasting fail, though the company has been operating at a profit. 5.0 Recommendation and solutions to Acme and omega Both companies should consider adopting both mechanistic and organic structure. Acme should encourage team working whereby an environment for exchange of idea is created. On the other hand, Omega should consider developing authority and standardization of its jobs and tasks. This will reduce time wasted by employees and increase its efficiency and reduce cost of production. Acme should consider improving coordination of all its activities from top management to lower management. This can be done by relenting the strictly channel of communication to make it possible for both top management and lower management to share their ideas. This opens a creativity and innovation chance and therefore the company will be at a greater opportunity to reduce its reliance on external environment. Omega, on the other hand, should reduce the time used for suggestions and adopt a communication channel which is formal and can reduce the time wastage. By doing this the company will be increasing its efficiency and increasing profitability. using meetings all time to listen to suggestions should be avoided and should only be used if necessary and the company should find an open way whereby, the employees suggestions and views can be expressed e.g. Use of suggestion boxes. 6.0 Conclusion As both companies are competitors in a very competitive environment each should fight hard to achieve the best in order to survive. Acme though won the final contract should check on its integration mechanism, communication channel, and allow team worker while Omega should adopt an authoritative structure which has defined rules and regulation. Merger should be given thought by the two organizations. When they merger the competition will be reduced and integration of both organizational structure will increase productivity of high quality products with low cost of production. Modern organization operates in a very competitive environment with both changes in both internal and external environment and therefore, modern there is need for creative minds and management team which allows freely exchange of ideas. The most valid theory in today’s global market is open system theory. Reference Alvesson, M., & Willmott, H. (2002), “Identity regulation as organizational control: Producing the appropriate individual”, Journal of Management Studies, 39, 619-644 Das, A. (2003), organizational theory, journal on Management Science, Vol. 49(4), pp. 416-31 Millett,B.(1998). Understanding Organisations: The Dominance of Systems Theory. International Journal of Organizational Behaviour.1 (1), 1-12. Mohammad, M.S, (2007), “organizational and research approach management”, Termer publications, Tehran. Tolbert, P. S. &Richard, H. (2008), Organizations: Structures, Processes and Outcomes, New Jersey: Prentice Hall Zoghi, C. & Mohr, R. (2011), “The Decentralization of Decision Making and Employee Involvement within the Workplace: Evidence from Four Establishment Datasets”, British Journal of Industrial Relations, Vol. 49(3) pp. 411–600 Read More