ExcelPte Ltd supplies quality products to its customers.Ithas never experienced a stock outas itbelieves that if a stock out occurs, customer satisfaction will fall. Sam,the sales manager prepares the sales budgetby setting theselling prices and determining the quantitiesto be sold. The sales budget is thenreviewed by his superior before itwas accepted bysenior management and thereafter set as the sales target for each year. For the last three years, the sales team were able to exceed the sales target by 10%and they were rewarded with an extra half month salary each.

However, Paul, the production manager complained that this has caused himto incur extra costs to produce units to meet adjusted sales quantities to prevent a stock outfor the last three years. This resulted in him missing the production costs targets in every year and hence missing out on his bonuses. He believes the reason is because the sales budget wasdeliberately made lowerand therefore not accurate.

To maintain product quality, the companys policy is to source raw material from the same supplierand this supplier charges 10% extra if orders are rushed.Charles, the Financial Director, wants to cut cost and maintain Excels reputation for quality. He wants to use the organisation architecture (OA) to achieve thegoals:

maintain customer satisfaction, by achievingno stock out for the year, and

cutting operational costs by 5% across all units in the firm.

Required:

(a) Evaluatethe current OA of Excel Pte Ltd.Is the OA effective?

(b) Give three possiblechanges to the OA in order for Charles goals for Excel Pte Ltdto be achieved.