Back in early years, Tom and Jerry set up Cherish Drinks Co. with an idea for a tropical fruit drink. At the beginning of the business operation, both ran the entire operation on their own. These days, Cherish Drinks Co. has more than 200 staff members across its headquarters in Malaysia and Singapore, and several field branches. Due to the growing number of staff, the management has developed a more formalized organization structure to keep the business running smoothly, and the president says that he has many managers reporting to him. The company relies on cross-functional teams to handle special projects such as the implementation of new accounting software. These strategies have helped Cherish Drinks Co. successfully manage its rapid growth.

a. Cherish Drinks Co. may need to change its organization structure as it expands into new products and new markets. Under what circumstances would some form of departmentalisation be appropriate for the company?

b. Assume that Cherish Drinks Co. is purchasing a well-established beverage company with a tall structure stressing top-down control. What are the four problems that the management might face in integrating the acquired firm into the existing organization structure of Cherish Drinks Co.?