Problem Identification
Appex is a small but fast growing high-tech company in the cellular telephone industry, which is also showing rapid growth. In accordance with the increased revenue, the company continuously hires new employees. However, as being a small start-up company with pre-bureaucratic and informal structure, Appex doesn’t have the ability and the management structure to absorb the newly hired people thus resulting in a chaotic and inefficient environment.
Newly appointed CEO, Mr. Ghosh, changes the organizational structure 6 times in 1.5 years in order to overcome this problem but none of the structures completely solves the problems but still improve some aspects of the management problems. Mr. Ghosh believes that he has to change the structure every 6 months which we think that both the past and future frequent changes were/are unnecessary.
Analysis
In his first 2 trials of his quest (Circular & Horizontal) he follows the classic “Theory of Mechanistic and Organic Systems” and believes that by designing a less formal organization he can ensure creativity, less administrative cost, efficiency and so on. However what he tries is contradictory with the recent research which states that Bums and Stalker’s research is solely based on big corporations that already have a formal structure and corporate culture. This contradictive research suggests that actually the new firms that have higher administrative intensity and greater role formalization especially in the top management show better future performance .
After some time, Mr. Ghosh also realizes that he needs some sort of control and restructures Appex into a more mechanistic system (Hierarchical, Functional Structure) which he should have done in the first place. After som ...