Home State Bank serves a relatively small number of customers in the Midwest. The bank has four locations spread throughout one larger town (the county seat) and three smaller nearby communities. Home State provides the same basic banking services as the giants, such as Bank of America, including home and auto loans, business loans, some insurance and travel services, and customary banking activitieschecking (including online banking), savings, and safe deposit boxes.

Home State Bank faces three primary competitors. The first, known by management as the "Big Boys," includes the major national banking corporations that enjoy the advantages of scale. At the same time, Home State has countered with personalized service and an emphasis on keeping local money in town in its advertising and promotions. Home State's managers believe they also hold the advantage of knowing how to work with local businesses without the rigid rules the Big Boys had to follow. The second competitor enjoys cost advantages. Credit unions offer fewer services than Home State Bank but do pay higher interest on accounts and charge lower interest on loans. The credit unions are not as convenient for customers in terms of locations and automatic teller machines. Online banking represents the newest form of competition. With more individuals conducting nearly all transactions with cards and Internet access, especially with new mobile technologies, Home State Bank's leadership perceives a potential strong new threat to its retail customer base.

The organizational structure for Home State Bank has remained the same for several decades. The company has been divided into three major divisions: retail, business customers, and special services. Retail includes the lending activities and routine bank accounts. Business customers are served with checking accounts, loans, and facilitation of transaction practices such as letters of credit. Special services, such as insurance and travel, are managed separately and are offered to both individuals and businesses.

The bank's CEO recently hired a new vice president of operations who was given the charge to "shake things up" and "keep us competitive." The individual had experience in one of the Big Boys but wished to move back to his original hometown. His challenge would be to balance the needs for innovative new technologies with hometown pride and traditional service.

Case Questions

1. What form of departmentalization does Home State Bank utilize?
2. Do you believe Home State Bank would be better served by a centralized or a decentralized form of structure? Defend your choice.
3. Should Home State Bank employ a mechanistic or organic type of structure?
4. How would the organizational structure of Home State Bank likely be different from that of the Big Boys?
5. Describe the impact of a change in structure on Home State Bank's employees, should the company reorganize in some new way.