Bega Cheese - an Appropriate Form of Design and Implications for Its Future Survival - Case Study Example

Bega Cheese: An Appropriate Form of Design and Implications for Its Future Survival (2641 words) Table of Contents Introduction This essay is based on the case study on Bega Cheese, a leading Australian company in the dairy sector with a rich heritage as one of the oldest companies in the country which has remained largely successful in the global dairy sector. In the essay, a detailed analysis of the organisational design and structure adopted by the company is analysed in light of the effect of different factors operating in its external environment. In order to achieve this objective, the essay is divided into three sections which contain different information as follows. In the first section, information about the proposed position within the mechanistic-organic continuum in which Bega Cheese should be is presented. This is done by describing several important characteristics that the design and structure of the company should have when it is in an appropriate position. In the second section, reasons as to why it is suggested that Bega Cheese should take a more adaptive design as opposed to a mechanistic and bureaucratic one are presented. The reasons are based on different factors that are peculiar to the company and the environment in which it operates. In the last section of the essay, information about what the managers of the company need to do to ensure that the company survives in the long-term is presented. Proposed design position for the company In general, Bega Cheese should be shifting towards a more adaptive form of organisational design as indicated on the mechanistic-organic continuum. What this means is that the company should adopt a more organic structure as opposed to the highly bureaucratic ones that are related to the mechanistic end of the continuum. This is because such a structure would be ideal for the design of the company as a way of helping it to not only achieve its objectives but also successfully manage different competing factors in its external environment. In principle, organisational design, which is the process by which organisations choose the right structures and allocate resources for their missions, is important in that it helps them align their structures with different factors in the environment (Schermerhorn et al., 2013, p. 261). On the other hand, organisational structures can be understood in terms of how labour is formally divided within organisations and how different activities taking place are connected, controlled and coordinated (Mills, Bratton & Forshaw, 2007, p. 458). Although there are different forms of organisational design that can be adopted by different organisations, the guiding principle is that the kind of organisational design and structure selected depends on the unique needs that an organisation is facing within its environment at a specific time. The mechanistic-organic continuum of forms of organisational designs is based on the idea that an organisation can take any position ranging from the strictly mechanistic approach to the completely organic forms of organisational design (Plunkett, Allen & Attner, 2012, p. 243). What really matters is the nature of the environment in which the organisation is operating – since this keeps changing over the course of time, and the nature of the business in which the organisation is involved. By suggesting that Bega Cheese adopts a design position that is more adaptive rather than that which is mechanistic, it is expected that the organisation restructures its internal organisation in such a manner that it meets the demands and requirements of such an approach. This will happen in several ways. First, there is need for the organisation to change the way authority is practiced within its structure from a more centralised way to one that is completely decentralised. This approach is important since it helps an organisation to be more dynamic as it reduces the level of bureaucracy involved in decision-making and other activities. Secondly, a more adaptive form of organisational design as recommended for Bega Cheese is characterised by few rules and procedures that are used to govern the way employees go about their business. According to Schermerhorn Jr (2010, p. 249), having few rules and regulations is one of the hallmarks of a more adaptive organisation. This is because such an approach underlies the belief that adaptive organisations are built on the concept of self-organisation, which means that people are trusted to do what is right by reducing the level of inhibitions that they are likely to experience in the form of many rules and regulations. Besides, having few rules and regulations within an organisation is an indication of one of the most important trends in organisational structures in which many organisations are seeking to reduce the levels of management by cutting down the vertical chains of command (Schermerhorn Jr, 2010, p. 250). The third point is that a more adaptive position within the mechanistic-organic continuum for Bega Cheese will mean that the company widens its span of control and increases the level at which tasks are shared by employees. This implies that with the total figure of about 1,500 employees who are organised in terms of the specialties in which they are working such as human resource management, sales, supply chain and finances (Bega Cheese, 2012, p. 10), the company will have to encourage sharing of different tasks among the workforce while widening the span of control. Lastly, the more adaptive position for Bega Cheese will be characterised by more informal networks among employees who operate within different teams and taskforces. This means that such a position will change the way the company operates to a form that is more informal and made up of a complex network of teams working with little bureaucratic inhibitions. This will create an environment that is conducive for innovation. Also, an environment that allows informal interaction among the members of an organisation is important because it promotes engagement among the members, which is a key element of good teamwork (Pentland, 2012, p. 64). According to Hitt, Ireland and Tuggle (2006, p. 137), the ability of organisations to innovate over a long period of time is one of the most important characteristics that can be used to differentiate between completely mechanistic and fully organic organisations. Whereas highly mechanistic organisations are seen to be less innovative in their growth strategies, organisations that have completely organic structures are seen to be more highly dependent on innovation and internal development as a way of achieving growth in the market. Therefore, for Bega Cheese, which is an organisation that seeks to achieve growth through innovation, the best type of design will be the more organic form as opposed to the mechanistic designs that emphasise on bureaucracy. Reasons for the proposed design position There are several reasons as to why it is suggested that Bega Cheese adopts a more adaptive form of organisational design based on the mechanistic-organic continuum. These are discussed as follows. In general, the form of design that organisations adopt depends heavily on the impact of a number of contingency factors on the way the organisation goes about its core operations (Chitale, Mohanty & Dubey, 2012, p. 375). This denotes that organisations tend to adopt designs that best suit their positions in the environment and which can help them take advantage of the factors in the environment to achieve their set objectives. The first reason for this proposal regards the nature of the environment in which the organisation is currently operating. In general, the environment in which an organisation operates determines the form of design that is appropriate for it to succeed. Environments that are certain are characterised by elements that are stable and predictable (Schermerhorn et al., 2013, p. 273). Under such environments, organisations that have mechanistic designs are able to succeed because few changes are required of them. On the other hand, uncertain environments are characterised by numerous and frequent changes that cannot be predicted with certainty. For organisations to be able to cope with such a degree of uncertainty, they have to be more adaptive. For the case of Bega Cheese, it has been pointed out that the overall dairy industry is one that is characterised by sudden and frequent changes. Matters are complicated by the fact that there are many other organisations that are seeking to gain a foothold in the market while at the same time, Bega Cheese is seeking expansion into the international market that already has other players. Therefore, for the organisation to be flexible enough to adapt to such rapid changes in its external business environment, it has to adopt a much adaptive form of design and a more organic structure that eliminates bureaucracy and other formal structures which only act as obstacles to rapid decision-making. Another reason as to why the organisation should adopt an organic structure with regard to the demands of its external environment arises from the characteristics of the organisation as an open system. In general, organisations which act as open systems not only affect the external environment but are also affected by the way the way external environment operates (Champoux, 2010, p. 433). The way Bega Cheese operates can be interpreted in terms of the elements of an open system comprising of different processes symbolising input of resources from the external environment and output of products back to the environment. Since this is the case, it is necessary for the organisation to adopt a design that is appropriate for its operations. The second reason as to why Bega Cheese should adopt a more adaptive design is associated with its own strategy in the market. Essentially, strategy, which includes the mission, vision and objectives of an organisation, influences the kind of structure that is adopted for the organisation (Kim & Mauborgne, 2009, n.pag). This is reflected in two broad ways as follows. Organisations that pursue strategies emphasising on stability in the market tend to be built on structures that reflect little changes in the market. On the other hand, organisations which pursue growth strategies need to adopt structures and designs that support such a strategy. For the case of Bega Cheese, it has been seen that the company is pursuing a growth and diversification strategy that is characterised by three things: a rapid expansion into the international market, development of new product lines and takeover of companies as a way of strategic intervention in the target markets (Bega Cheese, 2012, p. 10). In addition to this, the company has been on the forefront in enhancing innovation in the industry. This has been done through its contributions to the Dairy Innovation Australia, a body concerned with research and innovation in the dairy industry. Because of this strategic approach, what the company needs is a form of design and organisational structure that fully supports its aggressive growth and diversification strategy. Since an adaptive structure allows an organisation to have a high degree of flexibility in pursuing its growth strategy, it is important that Bega Cheese adopts such a structure so that it can successfully pursue its growth and diversification strategy in the market. The last reason why Bega Cheese should adopt a more adaptive design is related to its core values with regard to managing its human resources. It has been seen that the company has put in place important measures to enhance the manner in which it manages its employees. One of them is that it takes into consideration issues related to gender and diversity among its workforce (Bega Cheese, 2012, p. 19). To this end, the company is working with other organisations to ensure that all genders are fully represented within its workforce. The second policy with regard to human resource management that has been put in place by the company is the need for the safety of the workers. This is seen in the form of the various safety measures that have been put in place to ensure the safety of employees while at work (Bega Cheese, 2012, p. 24). Therefore, since the company puts much emphasis on the safety and wellbeing of employees, it is only a design that is amore adaptive than bureaucratic that can enable it uphold such values. Implications for long-term survival There are several things that the managers of Bega Cheese need to do to ensure that the company survives in the long-term period. However, one of the most important things that need to be taken into consideration is the need to strengthen the corporate social responsibility (CSR) initiatives being run by the company. Ideally, organisations operate within a complex external environment that is composed of a number of different entities who have a direct interest in the performance of the business and are directly affected by the activities being carried out by the organisation (Schermerhorn et al, 2013, p. 135). To this end, organisations are obliged to operate in such a manner that they not only meet their own interests but those of the external stakeholders also. There are several benefits that organisations derive from engaging in CSR. Benefits such as increased profitability over the long-term, an improved public image for the organisation and the ability to avoid more regulatory measures by the government are a direct result of business organisations integrating different elements of CSR into their activities, mission and overall vision (Keinert, 2008, p. 89). From the case study, it can be seen that the company has taken a proactive approach to the issue of CSR. This is demonstrated in several ways. To start with, the company has taken a keen interest in the needs of the community within which it exists. The company has put in place measures to ensure that it plays a key role in helping the local community to develop sustainably (Bega Cheese, 2012, p. 23). This approach has been based on the need to maintain the strong heritage of the community as a dairy centre in Australia. Therefore, by employing local people in many of its factories which are located within rural communities, helping keep the dairy traditions of the community and supporting the local farmers, the company has a direct involvement in the affairs of the community. The second approach to CSR that has been taken by the company is the need to participate in managing the natural environment. This has been demonstrated by the activities of the Bega Environmental Management System which gets involved in a number of different environmental conservation activities in the local area (Bega Cheese, 2012, p. 22). In essence, what the management of Bega Cheese needs to do to ensure that the company succeeds over the long-term is to strengthen the proactive CSR initiatives that have already been adopted. Such a strategy seeks to help an organisation take a leadership position in matters of social concern as a way of meeting economic, legal and ethical responsibilities (Schermerhorn et al., 2013, p. 139). By enhancing and strengthening the various initiatives that the company is currently involved in, the management will enable the organisation to achieve its long-term objectives as well as maintain a good reputation among its stakeholders and the public in general. This approach will be in agreement with the general idea that business organisations that operate within healthy local communities, treat the natural environment with respect, and put in place policies that support work-life balance among their employees, benefit from long-term success and profitability (Schermerhorn et al., 2013, p. 137). Conclusion In conclusion, it has been seen that Bega Cheese should be in a position of a more adaptive design within the mechanistic-organic continuum. This is because of the fact that the nature of the environment in which the business operates is highly dynamic and requires such a flexible structure for an organisation to succeed. Further, with the growth and diversification strategy being pursued by the company, an adaptive design is the most appropriate one. It has also been seen that for the company to succeed over the long-term, there is need for the management to strengthen the proactive approach to CSR which is already in place. References Bega Cheese (2012). Employee handbook. Champoux, J. E. (2010). Organizational behaviour: Integrating individuals, groups and organizations. New York: Routledge. Chitale, A. K., Mohanty, R. P. & Dubey, N. R. (2012). Organizational behaviour: Texts and cases. New Delhi: PHI Learning. Hitt, M., A., Ireland, R., D. & Tuggle, C., S. (2006). To make or buy growth decision: Strategic entrepreneurship versus acquisitions. In E. D. Hess & R. K. 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