Organizational Design of Bega Cheese - Case Study Example

Organizational Design case study: Bega Cheese Student Name: Institution: Date: Table of Contents The Organization Design Puzzle 3 A brief description of the organization-Bega Cheese 5 The Organization Design Contingency factors for Bega Cheese 6 The most optimal organization design (mechanistic or organic) for Bega Cheese Organization 7 The key issues that the managers of Bega must take into consideration to ensure that the organization survives into the long term 9 Conclusion 12 References 13 Agarwal, G.K., (2011). Open System Thinking. K.J Somaiya Institute of Management Studies and Research. MBASkool. 13 14 Introduction Mechanistic and organic organizations are the opposite ends of a particular continuum of organizational structure opportunities. In particular, mechanistic organizations are developed from rigid hierarchy, strict reliance on rules, procedures and policies, commonly identified with downward forms of communication flows, vertical specialization as well as high levels of organizational formalization and centralized decision making. On the other hand, organic organizations are more adaptable, flexible based on team direction, low levels of organizational formalization and free flow of communication in different directions, horizontal specialization with weak hierarchies, and support decentralized decision-making. In short, mechanistic organizations are bureaucratic-oriented, while organic organizations are more profession (Lunenburg, 2012). In order to determine the position of Bega Cheese on the mechanistic-organism continuum, critical analysis will be made to assess its structural aspects in terms of control, the level of centralization and formalization of policies and rules. Specifically, the organization design contingency factors for Bega Cheese will be identified. Suggestions will be made in regard to what the managers of Bega Cheese should take into consideration to ensuring that their organization survives into the long term. The Organization Design Puzzle Organizational design can be achieved when managers develop or change their organizational structure. It is a process that involves decision making about the key six aspects of work specialization and formalization. Organization design is also about departmentalization of functions, products, processes, customer base and geographical areas of operation as well as centralization/decentralization, chain of command and span of control (Connor, McFadden & McLean, 2009). Generally, organization design is all about creating roles, processes and structures so as to ensure that the goals of an organization are realized and it intersects the strategy, operations, human resource and the law as illustrated below; From the above illustration, it is important to note that strategy is a key driver for organization design. However, the design of an organization can as well influence they type of strategies that can be adopted in the organization. Organization design is concerned about managing people because they are the individuals who take on the roles defined within the organization design context or process. Furthermore, people actively contribute to the design process, implying that they influence the design of an organization both directly and indirectly. It is also important for the management to align their organizations with work processes. This clearly indicates that a close link exists between the operations of an organization and its design. Over and above, the laws, regulations and governance influence the design of an organization (Galbraith, 2002). Studies indicate that a well-designed organization provides clear interfaces as well as decision-rights to ensure that the most needed communications take place. The fact that organization design involves power allocation, it means that leaders must focus on achieving the right balance of elements in the structure. These include the competing objectives that comprise of the cost, quality, innovation and speed in functionality as well as geographical area of operation, products and customer management (Kates, 2014). A brief description of the organization-Bega Cheese Bega Cheese is the number one cheese-manufacturing brand in Australia. The company is a public listed manufacturing company, owned by their shareholders and is involved in dairy industry on the global scale. It supplies cheddar cheese and processed chedder into different retail and food service markets not only in Australia, but also overseas. As a manufacturing company of the natural cheddar cheese, they cut and pack the cheese into various retail packs ready to be sold to the supermarket. At times cheese is used as an ingredient to manufacture the processed cheese slices. The organization is ranked the number one Australia’s cheese manufacturing brand that has earned the company a reputation as a major contributor to the dairy industry, supplying both the natural and processed cheese on the global scale in retail and food service markets across the world. Bega Cheese contributes positively to the Australian economy, where over $100 million is achieved from exports sold every financial year (Philips, 2014). The Organization Design Contingency factors for Bega Cheese The working environment or conditions at Bega Cheese are very conducive because the company operates under a Consultative Agreement in collaborative with all its members of staff, union officials and the entire management. Ensuring safety is given the first priority at Bega Cheese, where the company has adopted a behavioural safety approach to allow or make the all employees have the freedom to give their views about the safe running of their operations. In terms of environmental management, it can be noted that the company operates under scrutiny from the Department of Environment, Conservation and Climate Change (DECC). Bega Cheese being a manufacturing company of cheese has little wastes. The company being the leading selling cheese brand within Australia, Bega Chees also focuses on offering quality and a healthy Australian-made product that meets their domestic market. Bega Cheese has grown from a small butter factory within the scenic Bega Valley to one of Australia’s top manufacturers of cheese and dairy products. The company has 1, 500 employees and makes over USD1 billion of annual sales. It is apparent that Bega Cheese has a strong balance sheet that strategically positions the company to grasp any opportunity that comes along its way (Philips, 2014). As the organization’s strategic direction, acquisition, quality as well as moral guidance sets Bega Cheese ahead of others in manufacturing of dairy products. In a period of six years, Bega Cheese Company has acquired other major cheese manufacturing, packaging assets as well as Tatura Milk Industries in Australia and this has significantly improved its bottom line (Philips, 2014). Through research development and innovation, Bega Cheese Company responds effectively to domestic market in Australia for new products as well as the demands from their export customers in need of products that have low salt levels. The company is not only involved in Australian and international business, but it also makes long-term supply contracts to manufacture a product range comprising of the infant formula, cheddar and mozzarella, processed and cream cheese as well as milk powders and dairy-nutritional products. This implies that the company ensures that their dairy business responds effectively to the market changes. Research reveals that a wide product range combined with value added capabilities as well as the diverse customer-base have enabled Bega to appropriately mitigate their risks and achieve enhanced planning for certainties (Bega Cheese Limited, 2012). The most optimal organization design (mechanistic or organic) for Bega Cheese Organization Bega Cheese is relatively an organic type of organization because it is apparent that the organization has evolved from a small company that used to employ 60 people to having 1700 staff. Furthermore, the organization has experienced a growth in its turnover from $30 million to $1 billion and its operation includes the largest and most efficient infrastructure for cheese cutting and packaging. Bega Cheese has also been successful in diversifying its export from the common cream cheese to the infant formula, marketing its exports to more than 40 countries across the globe (HayGroup, 2014, p.39). This clearly shows that Bega Cheese organization is adaptable and flexible based on team direction to meet the dynamic needs of their customers by paying attention to the views from team members of the organization. Therefore, it is relevant to mention that building teams is one of the most appropriate ways of building an organization. Generally, one must keep in mind when assessing the position of an organization on the mechanic-organic continuum that: any organization will fall in the continuum between the ideal mechanistic and ideal organic organizations. This is simply because there is no organization that perfectly fits into a particular type of organization on either side of mechanic-organic continuum. This implies that nearly each organization will be positioned somewhere between the two ends of the continuum and neither of the mechanistic organization nor the organic organization is taken to be effective than the other. The fundamental idea is that each of the two types of organization is considered best in particular circumstances and conditions (Grimsley, 2014). Since 1899, Bega Cheese has been successful in conducting its business particularly in Bega, Australia where the organization has exercised strong moral values to areas of operation or the local community. The organization has a vision to create a sustainable future not only for themselves as a manufacturing and marketing company, but also for each and every farmer that supplies them with milk (Phillips, 2014). From organizational scientific perspective and way back when metaphorically describing society, organizations are regarded as machine and as organism. The machine metaphor looks at organization from the engineering point of view, where organizations are understood as networks of interdependent systems of different parts designed to enable the structure of an organization to operate more efficiently through standardization and centralization policies and procedures. The organism metaphor is a biological perception of organizations based on the relationship between an organization and its environment, analyzing its growth and development or survival (Bloisi, 2007). Bega Cheese has grown from a small butter factory within the scenic Bega Valley to one of Australia’s top manufacturers of cheese and dairy products. The organization’s domestic market in Australia and international business along with its long term supply contracts as well as a product range comprising of cheddar and mozzarella, milk powders and dairy nutritional products, processed and cream cheese, and the infant formula ensures the dairy business is competently respond to the market changes (Bega Cheese Limited, 2012). This means that Bega Cheese is an organic organization that is keen to respond to the changes occurring in the environment to ensure its sustainable growth and development in the dairy industry. Studies indicate that the commonly used approach to determine the position of an organization on the mechanistic–organic continuum is to evaluate its structural aspects in terms of control, the level of centralization and formalization of policies and rules. However, the perceptions of members in a particular organization about practices, policies, procedures and routines should not be ignored because they provide institutionalized feedback on how the organization operates (Dickson, Resick & Hanges, 2006). The key issues that the managers of Bega must take into consideration to ensure that the organization survives into the long term Since organizational design plays a significant role in identifying the most appropriate individual to make decisions, shape results as well as lead any change process within the organization, it would be important for the management of Bega Cheese to encourage creativity and flexibility in their operations and leadership. It is vital for the management to be aware that as modern organization leaders, they should continue to learn and understand the value of their organization design in manufacturing and delivering their dairy products to customers. The managers of Bega Cheese must take into consideration that a well-designed organization achieves sustainable competitive advantage, and thus they should focus on building designs that will fit strategies aimed at achieving growth and competitive advantage. In this case, therefore, the Bega Cheese organization should find new ways to ensure that their management processes and services are more adaptable to changes made for innovation as well as the ever-changing environment (Bolser, 2014). Although corporate changes have taken place at Bega Cheese Group, it would be important for the managers to ensure that their dairy business continues to perform in a manner that meets the changing needs of its customers as well as to respond to dynamic market circumstances. This means that the management of Bega Cheese should focus more on adding value to their dairy products in addition to balancing or building synergistic business areas as well as building long-term customer-and-supply relationships. In so doing, the Bega Cheese Group will be capable of developing a unique market position that can place the company on a robust foundation for achieving sustainable future growth (Bega Cheese Limited, 2012). The management of Bega Cheese must be aware that the survival and prosperity of their organization can be sustainably achieved only if they adapt effectively to the environment. This implies that the management should continuously identify and adopt appropriate strategy marketing their dairy products and services as their outputs by acquiring the necessary resources as well as dealing amicably with external threats. In addition, the management of Bega Cheese should take into consideration that ensuring that their organization survives into the long term will involve them to apply efficient transformation process to sustainably produce its dairy products as well as undertake worker motivation and cooperation. By adopting more rational strategies to organize and perform their work, making decisions on how to utilize the available technology, resources and personnel will enable Bega Cheese to develop an efficient transformation process. In the same way, a system is considered sustainable only if it delivers output that that can be re-used for new inputs. The top management must responsibly take on the role of designing the most appropriate structure for their organization by determining and balancing authority relationships as well as coordinating operations across the organization’s subunits (Waldron, Vsanthakumar & Arulraj, 2005). In this 21st century, the managers of Bega Cheese need to know that a part from the traditional success factors such as size and role definition, control and specialization, other success factors which comprise of speed and flexibility, innovation and integration will be crucial in ensuring that their organization survives into the long term. Thus, the organization will be able to learn that valuable organizational design must secure flexibility and adaptability to achieve its future growth and sustainability (Bolser, 2014). The open systems thinking approach described by Daniel Karz and Robert L. Kahn (1978) should be appropriately applied by the management of Bega Cheese in their pursuit to achieving long-term performance and survival in the manufacture of dairy products. The theory is based on a framework that will require the managers of Bega Cheese to accomplish four key aspects. To use passionate and energetic inputs, develop a clear process of transforming such inputs in their organization as well as create outputs that match with the energy levels of inputs used to allow sustainable reforming to take place in the organization. Since there are through puts existing between the input and outputs linked to an organization, the management should be able to identify the throughput and use it to align people in order to achieve their goals in dairy production (Agarwal, 2011). This implies that the managers of Bega Cheese need to view their organization as an open system and sustainably compete with their competitors for manpower, innovation and resources. Conclusion Based on the above discussion, it can be concluded Bega Cheese is an organic type of organization. Therefore, it relevant for the organization to adopt more rational strategies to organize and perform their work, make decisions on how to utilize the available technology, resources and personnel to develop an efficient transformation process. It is vital for the top management of Bega Cheese to take on the role of designing the most appropriate structure for their organization responsibly by determining and balancing authority relationships as well as coordinating operations across the organization’s subunits. The survival and prosperity of any organization can be sustainably achieved only if the organization adapt well to the environment. Organization design is basically concerned about managing people because they are the individuals who take on the roles defined within the organization design context or process. It cannot be doubted that people participate in the design process of an organization, implying that they influence the design of an organization both directly and indirectly. References Agarwal, G.K., (2011). Open System Thinking. K.J Somaiya Institute of Management Studies and Research. MBASkool. Bega Cheese Annual Report (2012). Bega since 1899: Overview of Bega Cheese Group. Retrieved August 29, 2014 from, Bolser, K., (2014). The importance of Organizational Design in 21st Century Organizations. The Bolser Group, LLC. Bloisi, W., (2007). Management and Organizational Behaviour. Maidenhead. McGraw-Hill. Connor, G., McFadden, M & McLean, I., (2009). Organizational Design. CIPD. Available online from, Dickson, W.M, Resick, J.C & Hanges, J.P., (2006). The systematic variation within organizationally-shared understanding of models of effective leadership based on organizational design. The Leadership Quarterly, Vol.17, pp.487–505. Grimsley, S., (2014). Organic Organizational Structure: Definition, Examples & Quiz. Retrieved August 29, 2014 from, Galbraith, J., (2002). Designing Organizations. San Francisco. CA by Jossey-Bass. HayGroup, (2014). Leading Transformation: In anticipation of tomorrow. Retrieved August 28, 2014 from, Kates, A., (2010). Why organization design is so important right now? Kates Kesler Organization Consulting. Retrieved August 28, 2014 from, Katz, D & Kahn, R.L., (1978). Open Systems Theory: The Social Psychology of Organization. New York. Wiley. Lunenburg, F., (2012). Mechanistic-Organic Organizations: An Axiomatic Theory about Authority-based Bureaucracy. Sam Houston State University. Phillips, A., (2014). Bega Cheese Tastes Victory. Retrieved August 29, 2014 from, Waldron, M. W., Vsanthakumar, J. & Arulraj, S., (2005). Chapter 13: Improving the organization and management of extension. Guelph. University of Guelph. Read More