Detroit Electric Organisational Structure - Case Study Example

? DETROIT ELECTRIC 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. These activities outline what exactly the person performing the job is supposed to do. Each division within the organizational structure has all the obligatory resources and utilities within itself so that it can produce the expected product according to Robbins (2007). 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 resource, something that Ford was not ready to do yet. On the other hand, Detroit Electric has deployed a flatter organisational structure that has facilitated easy and effective communication across departments. The management is more dynamic (the current Detroit Electric is an iteration established in 2007).This vibrancy and young enthusiasm has led to the company coming up with creative solutions on how to manufacture electric cars despite have less capital base and human resource than Ford. This has resulted to their venture paying off after a very short time. Detroit Electric has divided labor through outsourcing. Out sourcing has left them with fewer problems to worry about. They are therefore able to think of how they can improve and market their product as production has already been taken care of. This has led to their fast pace in the Electric Cars Industry. Issues in International Companies Cooperative Arrangement As companies like Detroit Electric operate in different countries, various issues emerge from this arrangement. The issues may be social (e.g. communication barriers), political (e.g. government policies), cultural (e.g. religions and ethnic diversity), or legal (e.g. legislations on taxation). All these issues are different in various countries or economic regions and affect the MNCs in one way or the other. MNCs tend to replicate the organizational structures found in their countries of origin. These structures may not always work in other countries. This calls for a change of strategy that may be expensive to implement. Some firms end up withdrawing their business operations from some countries altogether if the cost doing business becomes unfeasible (Jacobides, 2007). Promoting Ethical Behavior at Detroit Electric Ethics is about acceptable behaviour, doing the good or right thing (Markie, 1990). At Detroit Electric, there should be a statement on the core values of the company. The core values guide the employees of the company and serve as reference of what the company upholds. These core values could for example be Honesty, Integrity, and Transcendence. All workers should also ensure that they report to work in time – at least some fifteen minutes prior to their sessions. This enhances their respect towards their job at Detroit Electric. It also increases their productivity at work (Markie, 1990). It should also be emphasised that all personnel at Detroit Electric preserve professional demeanor at all times. They should be cordial to all other employees and clients. They should not allow their home life and family affairs spill over to the work place. They should respect and appreciate other people’s contributions in debates and discussions. Conclusion DetroitElectric is a good example of how an effective organizational structure can drive a company into success even in a field dominated by old well established competitors. Detroit Electric presents to us some substantial evidence that companies should start focusing on the ‘ends’; and creatively look out for ways to have the ‘means’ taken care of. Companies should also evaluate the sectors that that are more expensive to run between governance and production. If production takes up the lion’s share, then it would be smart to consider outsourcing it. Finally, organizations should be encouraged to be dynamic and keep reinventing themselves in order to remain competitive by innovating new products and adding value to existing ones. References Ivancevich, J. M., Konopaske, R., & Matteson, M. T. (2008). Organizational behaviour and management. Hoboken, NJ: Wiley & Sons. Jacobides, M. G. (2007). The inherent limits of organizational structure and the unfulfilled role of hierarchy: Lessons from a near-war. Organization Science. Mackie, J. L. (1990). Ethics: Inventing Right and Wrong. London: Penguin Robbins, S.F., Judge, T.A. (2007). Organizational Behaviour.12th edition. Pearson Education Inc. Read More