ExcelPte Ltd supplies quality products to its customers. It has never experienced a stockout as it believes that if stock out occurs, customer satisfaction will fall. Sam, the sales manager prepares the sales budget by setting the selling prices and determining the quantities to be sold. The sales budget is then reviewed by his superior before it was accepted by senior management and thereafter set as the sales target for each year. For the last three years, the sales team were able to exceed the sales target by 10%and they were rewarded with an extra half month salary each.

However, Paul, the production manager complained that this has caused him to incur extra costs to produce units to meet ‘adjusted’ sales quantities to prevent a stock out for the last three years. This resulted in him missing the production costs targets every year and hence missing out on his bonuses. He believes the reason is that the sales budget was deliberately made lower and therefore not accurate.

To maintain product quality, the company’s policy is to source raw material from the same supplier and this supplier charges 10% extra if orders are rushed. Charles, the Financial Director, wants to cut costs and maintain Excel’s reputation for quality. He wants to ‘use’ the organization architecture (OA) to achieve the goals:

•maintain customer satisfaction, by achieving no stock out for the year, and

•cutting operational costs by 5% across all units in the firm.

Required:

(a) Evaluate the current OA of Excel Pte Ltd. Is the OA effective?

(b) Give three possible changes to the OA in order for Charles’ goals for Excel Pte Ltd to be achieved.

Answer rating: 100% (QA)

a The current organizational architecture of Excel Pte Ltd appears to be functional It is effective ... View the full answer