Centralized Structure and the Management Strategy of Sonoco - Article Example

The packaging industry in the early 1990s amassed an annual sale of US$400 billion worldwide. The major contributor was the United States (US) and then Asia and Western Europe. The packaging industry represented consumer packaging as the 70% contributor of revenue and the remaining 30% was through industrial packaging. Due to globalization, the industry was facing challenges along with noticeable growth opportunities.  Companies functioning in nations such as the US was shifting their businesses to other countries for cheap labor and were trying to gain profit. The packaging industry exhibited an increase in the market share from 40% to 60%. The packaging industry was changing its business strategy and increasing the level of profit. The changes in the industry were because of the changes in the preferences of the customers in the food and beverages industry. Packaging was now gaining its importance to promote a brand; it had now several versions of the products. Companies were strategizing their approaches by providing better packaging which would help them to advertise their product. Several strategies were being formulated to provide different packaging to attract the retailers. The idea of “One-Stop-Shop” was becoming attractive for the manufacturers as they now needed not to depend on several suppliers for their business. With this concept, they were now able to meet their packaging needs with a few suppliers. With the changes in the packaging industry, Sonoco was also changing its strategies to enable profit and augment its market share as per the changes in the global market. It started focusing not only on the requirements of the companies but also concentrated on meeting the consumers’ needs. The packaging of the products was not only attracting more customers but also increasing the profits of the company. Moreover, the company was using a competitive marketing approach and building strategies to coordinate with the businesses at a single point of contact (Thomas & Groysberg, 2010).

Question 2

The key strength of Sonoco is its culture of work. The company provided a family-friendly workplace for the employees, which helped the management in keeping the employees happy and motivated. The employees are provided flexibility and their issues were resolved by the management. This helped in retaining the employees and keeping them motivated. Moreover, the company followed the paternalistic form of leadership, which stated that the organizational power is used by the management to protect the need and welfare of the subordinates so that the employees turn out to be loyal to the company and work for the betterment of the company and their self. The work culture of Sonoco did also provide a collaborative form of leadership which was performed to secure results across functional and organizational boundaries. In addition, the other strength of Sonoco is its ethical approach towards the work and the employees. The employees are provided with a better work environment, all their issues are answered and the management is open to feedback, which makes the employees sustainable. It is observed that nearly 60% of the employees of Sonoco are with the organization for more than 20 years. Furthermore, another crucial strength of management is teamwork. The company focuses on team-oriented results.  Hence, the quality of the product and the end result facilitate the company to have sustainable growth in the packaging industry.

One of the key weaknesses faced by Sonoco had been its stagnant business strategy which required change. Growing competition in the market and the style of leadership had been making the employees reluctant towards their work. The other weakness of the company was its organizational structure which was decentralized. It meant that the decision regarding the business was taken by the management and was delegated to the employees. It at times brought in certain inconsistencies in decision making (Thomas & Groysberg, 2010).

Question 3

By taking the position of Cindy Hartley, the HR structure of centralization would be recommended for Sonoco.

The centralized form of organizational structure would demonstrate uniformity in the action established throughout the organization. This would also reduce the cost and increase the coordination between the management and the employee.  The disadvantage of this approach is that there is a lack of supervision from the management which hampers the performance of the employees. Secrecy is at times not maintained as the order and decision flow from one place to another.

The advantage of the other concerned structure i.e. hybrid structure is that it creates a shared mission, wherein individuals work together to attain a common goal. Each individual performs his/her work with full efficiency for the benefit. Moreover, the hybrid structure uses the spider web structure which involves individuals and management to accomplish a common goal. The disadvantage of the hybrid structure is that the decision might be late as it will include the concern of every individual. Furthermore, it will demonstrate a lack of control from the management side.

It is observed that with the implementation of a centralized structure, Sonoco would observe a cost saving of US$ 3.1 million. In this form of structure, the company would focus on the uniformity of decisions. It would reduce the cost of production and hence would enable to form of a better budget and compensation system for the employees of Sonoco. This would in turn motivate them to perform better and ensure the profitability of the company (Thomas & Groysberg, 2010).