Problem 1:
United Products was formed 46 years ago by the merger of two large commercial organizations: Bulk Foods and Rowbotham Enterprises. Over the years it has acquired and disposed of several businesses and now have operations in Europe and North America. It has wholly owned subsidiaries operating in flour milling; vineyards; grocery retailing; agricultural machinery manufacturing and distribution; chemicals (particularly fertilizers); publishing; film production; and forestry. It is also involved via joint ventures and partnerships in quarrying, electronics design and clothes retailing. The company is regarded by investors as fairly safe but dull. Its growth has not kept pace with its competitors and some of its divisions’ performance is distinctly poor.
UP is organised into divisions, some of which are product based and some geographically based. Control is devolved to the CEOs of each division, subject to the compilation and submission of detailed monthly performance reports to the corporate Head Quarters in Fazackerley. Corporate HQ requires that each division has identifiable managers responsible for production, sales and finance. These managers are frequently visited by senior members of the relevant head office staff. It is corporate policy to promote from within, and all divisional CEOs must have experience of working both at corporate HQ and in at least three divisions. There has been a history of disputes between HQ and the divisions. Many have complained about the complexity of the monthly reports and the cost of compiling them. Some have said that they find HQ requirements and visits to be disruptive and counter-productive. However, the corporate CEO is very concerned about the tendency of the divisions to go their own way.
Required:
Question1. Do you believe the way in which UP is currently organized a sensible one?
Question2. What is a virtual organization? Would such an approach be suitable for any UP’s operations?