In 1979, Larry Merritt and his wife Bobbie bought The Cake Box, a small business located in a tiny 42-square metre store in Tulsa, Oklahoma. The couple were the only employees. "I would make cakes and Bobbie would come in and decorate them," Larry recalls. Bobbie Merritt was already skilled in decorating cakes, whereas baking was a new occupation for Larry Merritt, who previously worked as a discount store manager. So, Larry spent hours pouring over baking books in the local library and testing recipes through trial-and-error experimentation. "I threw away a lot of ingredients that first year," he recalls.

Sales were initially slow. Then, a doughnut shop around the corner was put up for sale and its owner made it possible for the Merritts to buy that business. They moved to the larger location and changed the company's name to Merritt's Bakery to reflect the broader variety of products sold. The Merritts hired their first two employees, who performed front store sales and service. Over the next decade, Merritt's Bakery's physical space doubled and its revenues increased 13-fold. The company employed 20 people by the time it made its next move.  

In 1993, Merritt's Bakery moved to a 557-square metre location across the street. The business becan1e so popular that customers were lining up down the street to buy its fresh-baked goods. "That looks like success to a lot of people, but that was failure," says Bobbie Merritt. The problem was that the couple didn't want to delegate production to employees, but they couldn't produce their baked goods or decorate their carefully crafted cakes fast enough to keep up with demand. "We felt like failures because we had to work those 20 hours (per day)," she reflects........

Discussion Questions

I. How have the division and coordination of labour evolved at Merritt's Bakery from its beginnings to today?

2. Describe how span of control, centralization, and formalization have changed at Merritt's Bakery over the years? Is the company's organizational structure today more mechanistic or organic? Are these three organizational structure elements well-suited to the company in their current form? Why or why not?

3. What form of departmentalization currently exists at Merritt's Bakery? Would you recommend this form of departmentalization to this company? Why or why not?