The first Abraham's Grocery Store was started in 1967 by Bill Abraham and his sister Doris. They used a small inheritance to start a small grocery store in a suburb of Atlanta, Georgia, and it was immediately successful. The location was good, and both Bill and Doris had winning personalities and a "serve the customer attitude. Abraham's rapidly growing number of customers enjoyed an abundance of good meats and produce, for which Abraham's became well known. By 2007, Abraham's had over 200 stores. Company headquarters moved to downtown Atlanta to supervise stores throughout the southeastern United States. There were four regional managers responsible for about 50 stores each. Within each region, there were four districts of 12 to 13 stores each.

Because the stores specialized in excellent meats and produce, there was a separate meat department manager, grocery department manager, and produce department manager within each store. The grocery department manager also served as the store manager, but this person did not have direct authority over the meat department or the produce department. The store meat department manager reported directly to a district meat manager specialist, and the store produce department manager reported directly to a district produce manager specialist. The store manager (who is also the grocery department manager) reported directly to a district store supervisor. This direct line of authority for each store department provided excellent quality control over the meat, produce, and grocery departments within individual stores.

However, there was growing dissatisfaction within the stores. The turnover of store managers was high, mostly because they had no control over the meat and produce departments within their stores. Coordination within stores was terrible, such as when a store manager decided to promote a sale on Coke products as a loss leader. Hundreds of cartons of Coke were brought into the store for the big sale, but the meat and produce department managers would not give up floor space to display Coke cartons. The frustrated store manager insisted that this was no way to run a business and quit on the spot. Many stores experienced conflict rather than cooperation among the meat, produce, and store managers because each was very protective of their separate responsibilities. Doris Abraham asked a consultant for advice. The consultant recommended a reorganization within each store so that the meat, grocery, and produce departments would all report to the store manager. The store manager thus would have complete control over store activities and would be responsible for coordinating across the meat, produce, and grocery departments. The meat department manager in each store would report to the store manager and would also have a dashed-line relationship (communication, coordination) with the district meat specialist. Likewise, each store produce department manager would have a dashed-line relationship with the district produce specialist. The store manager would report directly to the district store supervisor. The district meat and produce specialists would visit individual stores periodically to provide advice and help the store department heads to ensure top quality in the meat, produce, and grocery areas.

The consultant was enthusiastic about the proposed structure. Store managers would have more freedom and responsibility. By assigning responsibility for all store departments to the store manager, the new structure would encourage coordination within stores and give managers the ability to adapt to local tastes and customer needs. The dashed-line relationships would ensure excellent meat, grocery, and produce departments across all stores.

What are some of the advantages and disadvantages you see for the two types of structures? Which structure do you think will work best for Abraham's? Why?

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Vertical functional structure and Matrix organization structure both have their own merits and demerits Merits and demerits of Vertical functional str... View the full answer