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Mba540 Managerial Economics Ch. 13 Case Study

686 words - 3 pages

Specialized or Broad?
Adam M. Prins
Saint Leo University

Case Summary
The Bagby Copy Company is at a crossroads in terms of its organizational architecture moving forward. The company produces an array of copy machines and sells them worldwide. Currently, Bagby is deciding whether or not to specify production and sales by type of copy machine produced or by the country in which sales are to be made. Additionally, Bagby is deciding how to best group the makers of its wire harness assemblies which are required to operate its machines. The benefit of each of these options and the appropriate decisions remains to be discussed.
Bagby is weighing a choice between two types of ...view middle of the document...

There are also trade-offs for how the harness makers are grouped into subgroups. If they are all placed under the first alternative of one harness department, it will reduce communication and coordination costs because there will only be one manager. Grouping the harness makers in this way would be considered unitary form “because it places each primary function in one major subunit” (Brickley, Smith, & Zimmerman, 2016, p. 417). This type of grouping works best in smaller firms where managers are closer to actual operations.
The M form of organization allows lower level employees to make decisions because they have relevant specific knowledge in that area. This specific knowledge would only increase as this form of organization, in Bagby’s instance, would group individuals based upon product. Allowing the harness makers decision authority should increase productivity. “Decentralizing decision rights…also frees senior management to concentrate on other, more strategic issues” (Brickley, Smith, & Zimmerman, 2016, p. 421).
Bagby operates in five countries in Europe producing and marketing ten different products. If Bagby chooses a functional unit based upon product and country it will likely have more chiefs than Indians to speak figuratively. This...

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