Acme and Omega Electronics - Paradoxical Twins - Case Study Example

Paradoxical Twins Your name University name Introduction Technological products of Erie, a company in Pennsylvania were sold out to a Cleveland manufacturer who then sold the company’s electronic unit to two investors; Acme electronics and Omega electronics. Both of the companies specialized in making printing circuit boards. Acme promoted the general manager to be the head of the new company and maintained its former management. Omega, on the other hand, hired a former director of a large electronics research laboratory to be its chief. The overall net income for Acme was $10 million, and that of Omega was $8 million. The former had 480 employees while the latter had 550 employees (Viega, 1981). The situation in the case, paradoxical twins Acme maintained the basic structure from Technological Products, which was suitable, for large scale production. Communication was vertical from top to bottom (Courpasson, 2000). The president was the overall manager of all decisions at the company. Some of the employees at Acme wished that they would be informed about what went on in the company; however, most of the employees feel satisfied with their work. Interdepartmental interactions were minimal (Conner, 2006). Omega electronics had no definite organizational structure which indicated the chain of command. The president, Jim Rawls viewed structures in an organization as barriers to effective communication. He believed in dialogue and discussion rather than communicating through memos. The decision makers were the senior management but all the employees had a voice in giving their opinions for consideration (Gandz & Murray, 1980). Rawls felt that a company, which specializes in small scale production like Omega, was better off without structures which may limit interdepartmental interactions. A new employee at Omega is bound to feel lost because of the nature of the working environment. One could be assigned to work in different sections of the company as the need arises (Elsass & Viega, 1994). Other employees felt that a lot of time is wasted by interactions which did not guarantee a solution. Transition from analog to digital technology during the mid-1960s led to a deep cut in the demand for printed circuit boards (O’Rilley, 1989). This made Omega and Acme seek customers aggressively to maintain their annual earnings. In July 1966, a major photocopy manufacturing company wanted to get subcontractors to be in charge of assembling its memory unit for a new copier. Acme and Omega presented competitive bids for the tender and were both selected for the task of producing 100 prototypes. The photocopy manufacturer wanted the task to be handled in a period of two weeks so that the overall task of producing a copier by Christmas could be completed in time as he had indicated to other manufacturers (Poole & Van de van, 1989). After being issued with the blueprints, Acme’s president John Tyler issued two memos; one to the department heads and executives indicating the time constraints of the new task and the need for efficiency and the other to the purchasing, drafting and industrial departments. He requested the purchasing department to get all required materials, the drafting department to prepare manufacturing prints and the industrial engineering department to prepare methods design for use by the production department. Production reported a two weeks delay in purchasing a component needed for the memory unit because the supplier had closed for the summer vacation. The president was concerned about the short time and put a lot of pressure on the production and industrial department to begin the assembly. This made the production foremen start the assembly without the report from the methods engineers leading to a conflict. The head of industrial engineering assumed the method engineer’s concern on the inefficiency and instability of the method chosen by the production foremen. The method engineers backed out, and the work went on without them. Delays became inevitable as the production department waited on the chassis from the manufacturing department. The whole process was further hit by information on a manufacturing error on the original blueprints. This forced the engineers to dismantle the whole structure and build it with instructions from the methods engineers. Acme delivered the prototypes ten days later than Omega. 50 of them were shipped without testing while the other 50 were shipped after one of them was tested and found to be functional. At Omega, Jim Rawls called for a meeting in which he informed all department heads of the contract. When the blueprints arrived, the industrial and drafting department started designing the methods design and manufacturing prints respectively. Production indicated a two weeks delay on a component needed just as Acme had. The electrical department proposed a Japanese model of the component with the same efficiency. As they were assembling, production foremen found an error in the connector cable which they corrected with permission from the copier manufacturers. The final prototypes were assembled, tested and shipped to the manufacturer one week earlier than Acme. The manufacturer found 10 of the 100 prototypes from Acme defective, in addition to their late deliveries. Omega’s prototypes were all working. The contract was divided between the two manufacturers on a 50/ 50 basis with a directive on both investors to cut on costs and ensure efficiency. Acme was able to cut costs by 20% and was awarded the full tender (Chia, 1999). Issues to identify What is the role of management theory in predicting outcomes and employee’s attitudes and behavior in an organization (O’Rilley, 1989)? How does an organization’s hierarchy shape communication patterns, formalization levels and centrality of decisions? To determine which management model works best, how and why (Sine et al, 2006)? Analysis Acme’s retained the original hierarchical structure and promoted its general manager to be its president. The president made sole decisions, which were passed, down to the lowest level through memos. The employees had clearly defined roles; one was not allowed to do beyond their job description unless they are told so by the management. Most of the employees were satisfied with their work but wished for an open communication system which involved them. Acme utilizes the bureaucratic model propagated by Weber. The theory proposes the running of organizations from the ‘desk’ (Pugh et al, 1968). Acme’s management is centralized; it involves the president and senior managers only. The president controls all activities by making decisions and giving orders. Departmental managers then pass these orders to lower levels up to the least level. Taylor is an autocratic leader who makes decisions for Acme on his own without consulting his employees. He runs the organization with strict control of the managers since we see him give directives to the managers of the various departments in the company during the assembly of the prototypes. It is the president’s word that counts over procedure. The industrial head and production foreman neglected normal procedure of consulting the method engineers before assembly because the president had given a deadline for the work. Tasks are divided into areas of specialization. This is evident from the various departments in the organization; production, industrial, electrical, mechanical, drafting, shipping and purchasing (Meyer, Tsui & Hinings, 1993). Employees in the purchasing departments deal with the purchasing only and not shipping or any other function. The same applies to the other departments. Communication is from top to bottom, from the president to the lowest employee of the company. Systems in Acme are highly formalized with little or no interactions between departments. The organizational structure in Acme is mechanistic. This structure coaches employees to behave in an expected way because of the way it runs (Kerr & Slocum, 1987). Acme experiences difficulties in developing prototypes because of the minimal interactions between members of different departments. Internal communication channels are weak and sometimes personal interests are promoted over organizational interests. The industrial manager promotes the interest of the president to finish the task over that of the organization of producing efficient prototypes in time. Mechanistic organizations are effective in mass production like Acme (Courpasson, 2000). Mass production cuts costs and increases efficiency. Acme finally wins the whole contract because its model enables it to cut costs while they maintain efficiency. Acme produces a 20% decrease in costs. Mechanistic organizations can only work well within bureaucracies where tasks are divided, and a formal hierarchy exists. This ensures proper monitoring of all employees thereby increasing efficiency and reliability (Chia, 1999). When the proper chain is not followed, the model is bound to fail like when the production foremen assume the right procedure and decide to go ahead with assembling without approval from methods engineers. There are clear rules, regulations and principles guiding every task in the organization. Omega electronics is contrary to Acme. While Acme has a hierarchy, Omega is a flat organization. It has no formal structure, in fact, Jim Rawls; the president believes that these formal structures are barriers to effective communication (Gandz & Murray, 1980). Interactions across departments are common because of the non-formal nature of the communication channel. Any issue to be discussed or communicated is passed round by word of mouth by the president or the head of department. When the purchasing department informs the rest on the missing component, there is a contribution by the electrical department proposing a substitute from Japan and their contribution is taken to point. The manufacturing department also informs the rest of the probable delays in assembling if the component is not available from the start. This open communication enabled Omega to finish the task in the time ahead of Acme. Rawls is a democratic manager who encourages everyone in the company to contribute their ideas openly. Major decisions are made by the president in consultation with other managers. Management is decentralized as there is no outlined chain of command; both junior and senior workers work together for the common good of the organization (Sine et al, 2006). Duties are not specialized; an employee can be assigned to work in a department that they are not trained. New employees can have a problem adjusting to this environment especially when they have not been to such a setting. We see the new employee at Omega getting confused about what they should do because he is allocated work in two different departments in a single week (Karreman et al, 2002). The organizational structure in Omega is organic. Organic structure is characterized by no definite hierarchy, and the chain of command is not clear (Meyer, Tsui & Hinings, 1993). This structure is efficient for small scale production. That is why when assembling the 100 prototypes they are able to come up with the most efficient. However, small batch production is not cost effective (Conner, 2006) and this cost Omega the contract of assembling the copier for the photocopy manufacturers because they were unable to reduce production costs. Recommendations Acme should improve internal communication so as to support the rules and procedures in place to an organization and help save time. Improved communication channels will ensure that a breakdown in procedures can be avoided (Pugh et al, 1968). The president should try and involve other employees in decision making so that they feel a part of the organization as proposed by the classical management theory [Hawthorne studies (O’Rilley, 1989)]. All principles of a bureaucracy must be followed for the success of an organization. When one of them is left out, functionalism is affected (Courpasson, 2000). This is evident when the industrial manager favors the president's interest over the collective interest. Omega should introduce a hierarchical structure that outlines a clear chain of command for easy supervision. A formal communication channel should be integrated with the current non-formal so as to reduce the time wasted in passing information from person to person (Viega, 1981). Division and specialization of labor should be introduced so as to improve efficiency; Omega should discard the jack of all trades and master of none policy. Omega should borrow the mechanistic approach from Acme to enable it to compete relatively with competitors through mass production and cost reduction. The mechanistic approach, which runs on the principles of a bureaucracy, has proved to be better because it was able to survive the market dynamics. The employees in the structure were satisfied with their jobs, and the output was above that of the competitors. The mechanistic structure was able to beat the organic structure in efficiency and cost reduction (Sine et al, 2006). References Chia, R. (1999). 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