Global Business Principles

1.Billy Wagner was a born salesman. He had worked for several companies over the years as a successful salesman. Several times he had been named salesman of the year.

Billy foresaw that metal buildings were a new frontier, and he began to sell themmetal buildings for farms, small businesses, schools, and churches. Billy covered all of Iowa, and he was quite successful in selling the metal buildings. Business was booming so much in Billy's territory that the metal-building manufacturer and the construction crews were having a problem keeping up with his sales.

To add to the problem, the original manager of the firm (the woman who had hired Billy) resigned and took a job at an airport. Her replacement was full of vim, vigor, and vitality and was determined to get the company rolling again, even though there were some logistical problems that caused the firm to fall further and further behind schedule. After talking to many people (but not Billy) in the firm about the lag in schedule, the new manager finally arrived at a solution. He decided to talk to Billy.

"Billy," the new manager said confidently, "I know how we can keep up with the schedules. We just need to place a little responsibility in some hands that are strong enough and mature enough to handle it. My investigations have led me to conclude that you can handle this assignment. Now, here's the plan. Once you have sold a metal building and the construction contract is signed, you are responsible for seeing that the building is erected by the completion date specified in the contract. Understand?"

Billy Wagner thought a moment. He realized this was the kind of challenge that he had always wantedsupreme authority over metal-building delivery. To make sure he understood the new manager, Billy wanted to check one minor item.

"I take it that this means that I'm in charge of the construction crews and can order extra workers and assign overtime as needed, right? And those crews and their straw bosses will know that my word is law, right?"

"Hold on," the manager choked, "You can't be in charge of the crews."

Billy wasn't through with this argument. "Boss, if I can't be in charge of the crews and get them moving as I see best, then there's no way you can hold me responsible for having those buildings up in time."

These were not words that the new manager wanted to hear. "Now, Billy, you just have to learn how to get along with those crew chiefs, to work with them, and to be cooperative. You just don't get the point."

Actually, it was the manager who was not getting the point.

Questions:

a.Identify and explain the organizational problem in this story (4 marks)?

b.Can someone be responsible for something over which that person does not have authority (1 mark)? Why (1 mark)?

c.How should the new manager have handled Billy's request to be in charge (4 marks)?

2.Which organizational structure would be best for the following situations? Draw an organizational chart that would be appropriate for each of the situations on the following pages.

a.The owner of a real estate agency has opened an office with three real estate agents. The owner directs the agency (10 marks).

b.The real estate agency above has grown in the last five years. The business has grown in two different directions: residential and commercial. The owner still directs the real estate agency. He now has five agents handling commercial real estate details and 15 agents handling residential real estate details. He would like to appoint one of the agents to be manager of the commercial division and another agent to be manager of the residential real estate division. (15 marks)

c.Another five years have elapsed. The same real estate agency has grown. Most of the business is still centered in two divisions: residential and commercial. The owner has now added a vice president to oversee the residential and commercial divisions. Also, the agency has added advertising and office management departments; the purpose of these staff departments is to provide advice and support to the residential and commercial divisions. (15 marks)