Chapter 4: External and Internal Organizational Environments and Corporate Culture

Organizational Structures

Thanasi Filip, a successful businessman and a good negotiator had used his life savings to purchase a large hardware supplies store named Hardware Shack. The store sold all sorts of goods for a wide variety of trade work. Hardware Shack serviced both buyers for personal projects and large. His first couple of years were profitable, and he was seeing plenty of customers come through the door. Hissaleswere growing, so he employed more and more staff to keep up with the demands of the workplace.

Hardware Shack had 20 employees when it first opened. Two years later, it now has 45 employees and 5 supervisors of different sections of the store. The supervisors are mainly present to supervise and train employees and deal with customers. Hardware Shack sells goods that can be broadly divided into:

• Lawn & Garden
• Plumbing & Electrical
• Paint and Dcor
• Heating & Ventilation
• Building Supplies

Thanasi disliked sharing information with others because he felt only he knew what was best for his business. Thanasi handled all managerial responsibilities, including ordering stock, hiring employees, determining new products to sell, and being a sales representative for larger customers. He tended to keep his deals with customers and financial numbers confidential. His hesitation in sharing details about the business extended to withholding information from store supervisors. Despite requests from the staff to trust them with decisions and details, he wouldn't share the information that he thought only he should be privy to. Because of the lack of autonomy among supervisors, there were many problems on which they were unable to make timely decisions. Employees and supervisors had to wait for Thanasi to give them his attention.Thanasi's attention was required for even minute details, including how much product to order, special customer requests, and price matches. Ensuring a consistent customer experience, no matter the purchase, was important to Thanasi.

The business was growing and Thanasi was falling behind. All important decisions were put on hold until he could spare time for them. Initially, when Hardware Shack was smaller, this problem was minor. Now that Hardware Shack is larger, it has become a serious issue.

The large clients who had given more business to Hardware Shack, after being impressed by the quality of service during the company's initial years, are now looking for faster and more efficient service providers. Customers are getting responses to questions weeks after they were asked. Hardware Shack's sales are starting to fall.

After a particularly long day where Thanasi felt he accomplished nothing, he phoned you for help. He said out loud to himself, "I can't keep working like this. Is there an organizational structure I can use to improve my situation?"

Questions

1. What are the problems with Hardware Shack's current organizational design? Hint: You may find the materials in Section 4.1 helpful.
2. What organizational design should Thanasi Filip use and why? You must explain your reasoning. You will find the materials 1n Section 4.2 - 4.4 helpful. Draw an organizational chart to visually show what Hardware Shack's organizational design should look like.
3. Change in an organization can be difficult. How would you implement the new organizational design? Specifically, you should consider who does what, when, and how.