Case

Acorn Industries $\backslash (\{\}^\{3\}\backslash )$

Harold R$.$ Kerzner, PhD

The following case describes a firm struggling with its organizational structure as it expands its successful commercial business into the governmental contracts arena. This new source of business, however, requires extensive competence in project management, which is new to the firm. As the governmental business grows, the firm has continued to alter its organizational structure, but its performance and incentive systems also need to be changed now, and the impact of those changes on the commercial business is unclear.

Acorn Industries, prior to July of $1996,$ was a relatively small Midwestern corporation dealing with a single product line. The company dealt solely with commercial contracts and rarely, if ever, considered submitting proposals for government contracts. The corporation at that time functioned under a traditional form of organizational structure, although it did possess a somewhat decentralized managerial philosophy within each division. In $1993,$ upper management decided that the direction of the company must change. To compete with other manufacturers, the company initiated a strong acquisition program whereby smaller firms were bought out and brought into the organization. The company believed that an intensive acquisition program would solidify future growth and development. Furthermore, due to their reputation for possessing a superior technical product and strong marketing department, the acquisition of other companies would allow them to diversify into other fields, especially within the area of government contracts. However, the company did acknowledge one shortcoming that possibly could hurt their efforts$-$it had never fully adopted, nor implemented, any form of project management.