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Detroit Electric - Case Study Example

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DETROIT ELECTRIC Name: Institution: Detroit Electric Organisational Structure Detroit Electric Company is believed to be using the Division of Labor organisational structure. This structure involves the management of the organization dividing the overall task of the organization into precise jobs having accurate activities…
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Detroit Electric Case Study
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Download file to see previous pages He continues to claim that this kind of organisational arrangement is highly dependent of the ability of the organisation involved to clearly and unambiguously describe the specialised jobs that are required to see the organization achieve its goals. Detroit Electric Company invests in outlining what work it requires to be done, and then outsources the services of other companies. It does not do any design or manufacturing. The company maintains that this kind of organizational structure helps it escape capital expanses which may be too huge for it to afford at this point in time, bearing in mind that it is still at start up level. However, there is indication that this company may slowly stop outsourcing its operations as time goes by and as their revenues continue to build on. This is due to the fact that they attribute their outsourcing arrangement to ‘avoiding capital costs which could be fatal to its start-up’ (p. 512). The reason why Detroit Electric chose to use this structure is to capitalize on the economic advantage that is brought by division of work into highly specialised or precise jobs. The company realised that there was already the presence of specialised vehicle manufacturing companies such as Proton Holdings where manufacturing resources could be outsourced to. Proton Holdings was chosen to do the manufacturing activities of Detroit Electric because it had a modern production facility was committed to research and development, was cost efficient, stable, and had a highly qualified labor-force. Relationship between Organisational Structure and Pace of Development Detroit Electric Company is on pace to present its electric vehicles to the market only three years after its inception. On the other hand, Ford will have taken forty years to produce a viable electric car by 2011. The pace of development in these two companies is affect by the organisational structures the two companies have deployed in their organisations. Organisational structure defines the manner in which the human resource are organised and their reporting arrangements. Ford, apparently, has deployed the traditional centralised approach to organisational management. Decisions are made at top management levels and little authority is delegated to subordinates as this may indicate loss of control. They review decision made by lower level management and decide on thefate of their implementation. As a result, there is a lot of duplication of functions at different levels of management.This kind of arrangement may create a conservative culture in the organization which will result to everyone wanting to maintain the status quo. This affects the success of the electric car project at Ford because the personnel ‘have become used to the routine activities they perform’. As Jacobides puts it, getting so used to routine activities in an organisation makes it difficult for them to focus on the organisation’s projects, follow schedules, and meet deadlines. It also makesit difficult for information to flow across the departmentswhich in turn makes it difficult to share resources efficiently, agree on development agenda, and implement new strategies. In addition, Ford has specialized in the manufacturing of usual cars (those powered by fuel). It was therefore reluctant to diversify into electric cars due to market uncertainties and risks. Manufacturing electric cars would also demand a huge extra investment in infrastructure and human ...Download file to see next pagesRead More
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