Daka Computer Enterprises was one of the fastest growing companies in the 2000s in Zambia, and its stock price increased at a rate of 50 percent a year on the Lusaka Stock Exchange, delighting its stockholders. Achieving this high return has been a constant challenge for Michael Daka: one of the biggest battles has been to manage and change the companys organizational structure, control systems, and culture as his company grows. Daka was forty when, in 1990, he found himself without a job after IBM Zambia Limited decided to pull out of Zambia. He took the generous US$ 25000 paid to him as terminal benefits and spent it on purchasing computer parts that he assembled himself into PCs that he then sold by personally visiting institutions of higher learning. To his utmost surprise, demand for his product increased, and he started receiving more orders not only from institutions of higher learning but also from companies and private institutions such as NGOs and churches. He decided that he needed to hire people to help him, and soon he found himself supervising three employees who worked together around a three-metre table to assemble computers while two more employees took orders over the phone. By 2003, Daka employed 150 workers and was hiring over 2 new workers each week just to keep pace with the demand for the computers. When he found himself working eighteen-hour days managing the company, he realized he could not lead the company single-handedly. The companys growth had to be managed, and he knew that he had to recruit and hire strategic managers who had experience in managing different functional areas, such as marketing, finance, and manufacturing. He recruited colleagues who were former executives at IBM Zambia Limited and with their help created a functional structure, one in which employees were grouped by the common skills they had or tasks they performed to organize the value-chain activities necessary to deliver his PCs to customers. As a part of this organizing process, the companys organizational 3 structure also became taller, with more levels in the management hierarchy, to ensure that he and his managers had sufficient control over the different activities of his growing business. Daka delegated authority to control the companys functional value-chain activities to his managers, which gave him the time he needed to perform his entrepreneurial task of finding new opportunities for the company. Dakas functional structure worked well, and under its new management team, the companys growth continued to soar. By 2010, the company had sales of over ZMW 2 million, twice as much as in 1992. Moreover, Dakas new structure had given functional managers the control they needed to squeeze out costs, and Daka had become the lowest-cost PC maker. Analysts also reported that Daka had developed an organizational culture, meaning that employees had developed norms and values that emphasized the importance of working hard to help each other find innovative new ways of making products to keep costs low and increase their reliability. Indeed, with the fewest customer complaints, Daka rose to the top of the customer satisfaction rankings for PC makers; its employees became known for the excellent customer service they gave to PC buyers who were experiencing problems with setting up their computers. However, Michael Daka realized that new and different kinds of problems were arising. Daka was now selling huge numbers of computers to different kinds of customers, for example, home, business, and educational customers and the different branches of government. Because customers now demanded computers with very different features or different amounts of computing power, the companys product line broadened to cater for the special needs of his diverse customers. It started to become more difficult for employees to meet the needs of these different kinds of customers efficiently because each employee needed information about all product features. In 2012, Daka changed his companys organizational structure to a market structure and created separate divisions, each geared to the needs of a different group of customers. In each division, teams of employees specialized in 4 servicing the needs of one of these customer groups. This move to a more complex structure also allowed each division to develop a unique subculture that suited its tasks, and employees were able to obtain in-depth knowledge about the needs of their market that helped them to respond better to their customers needs. So successful was this change in structure and culture that by 2015 the companys revenue rose to over ZMW30 million and its profits were in excess of ZMW2.5 million, a staggering increase by industry standards. Daka has continued to alter his companys structure to respond to changing customer needs and to the companys increase in distinctive competencies. For example, Daka realized he could leverage his companys strengths in materials management, manufacturing, and Internet sales over a wider range of computer hardware products. So he decided to begin assembling servers, workstations, and storage devices to compete with South African and Chinese made computers. The increasing importance of the internet led him to split the market divisions into thirty-five smaller subunits that focus on more specialized groups of customers, and they all conduct the majority of their business over the internet. Today, for example, Daka can offer large and small companies and private buyers a complete range of computers, workstations, and storage devices that can be customized to their needs. To help coordinate its growing activities, Daka is increasingly making use of its corporate intranet and using information technology (IT) to standardize activities across divisions so as to integrate across functions. Dakas hierarchy is shrinking as managers are increasingly delegating everyday decision making to employees who have access, through IT, to the information they need to provide excellent customer service. To help reduce costs, Daka has also outsourced some of its customer service activities. As a result of these moves, Dakas work force has become even more committed to sustaining its low-cost advantage, and its costconscious culture has become an important source of competitive advantage that is the envy of its competitors. 5 Source: Adapted from Charles W.L. Hill and Gareth R. Jones, Strategic Management (New York: Houghton Mifflin Company, 2007) p.450 Required: (a) Identify the strategies that have been employed by Daka Computer Enterprises from the time it was founded, and describe the organizational structures that were employed to ensure that the strategies were effectively implemented. (26 marks) (b) Explain what constituted Organizational culture and what role it played in the companys development. (14 marks)