Gallo Wine Company Management - Assignment Example

MANAGEMENT AND OGANISATION THEORY NAME INSTITUTION TUTOR Question one Gallo wine company is a winery maker and distributor company. It is located in California in a town called Modesto. It is an international company as it distributes its wine all over the world. It is known to be the largest and well appreciated exporter of wines in California. This company was started in 1993 by two brothers. It was opened after the prohibition made on the growth and selling of grapes was lifted. The two brothers Ernest and Julio were competing against companies that had a strong basis even before they got their business idea. These companies were financed in a much better way. They started with a capital of approximately $6000. They leant the now well mastered art of making line by reading pamphlets on the same. This is a business making enterprise and it is a family business. It has a range of between 1500 to 10000 employees. It is recognized as the largest winery in the United States. The company has existed since 1993 and it has been very successful up to date. It makes and distributes wine under more than sixty labels. The secret to their success is their ability to treat its members very well. The salary there is recommendable depending on the field one is involved in. though it has a lot of competition, the company has remained at the top. It faces the problem of counterfeit wines from other companies but it always deal with those cases appropriately suing those involved if it calls for it. Question two In this assignment, I have selected two theory frames discussed in the subject to date. One of them is the contingency theory. This one maintains that there is no way an organization or corporation can be organized in the best way. However, the alternative course of action is dependent on the internal and the external conditions facing the organization. For a leader to be described as contingent, they must effectively apply unique and own leadership style in every situation in the right way. The main reason I chose this frame is because every organization, Gallo wine included is an open system. They therefore require to be managed carefully to balance both the internal and external needs thus being able to adapt to the surrounding circumstances (Skarlicki, Gilliland, & Steiner 2002). Agency theory on the other hand is widely recognized as a theory that greatly influences the outcome of an organization’s performance. It attributes all its uncertainty in their performance outcomes to state of nature, hazards and the adverse selection in the organization’s structure. This theory of performance it states and emphasizes on the importance of collaborative effort such as tem work. This theory is important because most organizations dwell so much on the importance of all employees putting extra effort in their work but ignore some of the most important factors like the art of teamwork between the employees. However, the generalization of the theory is greatly inhibited. This is because of the uncertainty and incomplete knowledge of the effort imparted and the resulting outcome. Question three According to agency theory, the principal tends to have imperfect information with which to evaluate the agent. This leads to information asymmetry. Managers seeking business for the agent may tend to overstate the skills, abilities and talents and may even overpromise when seeking new businesses. This overselling by the agents can make the companies choose the wrong agents thus called adverse selection (Miles 2012). These agents can under deliver on the promised outcomes. This is to obtain the maximum compensation for the least amount of effort. Agency theory is concerned with solving two problems that arise in agency relationship. The first is the problem of risk sharing, which can arise when the principal and the agent have different risks and preferences. The second is the agency problem. This is the potential for managers to misbehave if the interests of the company owners and the agent managers diverge. On the other hand contingencies theories as suggested by the two scholars is trying to move away from the norm. Most managers advocated for only one way of organizing their companies. Thus they viewed that for an organization to attain optimum performance, this could only be attained by a maximum level of specialization or formalizing this organizations. However, contingency theorists suggested that attaining the high level of organization is not the crucial point. The important issue is to adopt the required levels of variables (structural) that depend on some variable that is contingent. The theory has recognized two types of contingencies the size and the task of the organization (Daft, Murphy, & Willmott 2010). Size has been generalized as the number of employees and task is the required responsibilities that the employees are faced with. On the other hand task is also broken down into two contingencies: uncertainty and interdependence of the tasks. Question four Agency theory has brought it out clearly that the principals of an organization don’t want to perform necessary business activities. The principal hire an agent or agent to perform these activities on their behalf. One of the best examples is in this company. They may require the intervention of agents to distribute their products though not all times. The agents might decide to exaggerate the product fee for their own benefits. Agency theory also assumes that everyone acts according to their own best interests. Thus an agent will act to minimize his or her own self interests at the expense of the principal’s interests. This forces the principal to take action to keep the principal in line. One of the ways the principals can do this is by creating a contract where the agent is required to sign. Failure to work according to the stipulated contract can lead to it being revoked. The principal can even monitor the agent or hire another agent to monitor this specific agent. However, the costs of trying to regulate the agent’s behavior are not worth it. The principals of an organization should cut on costs and do the services themselves. This ensures that the organization earns more profit. Contingency theory on the other hand is very predictable. This is because the managers are aware of all its outcomes. It is therefore applicable in all organizations. The theory also points out that all people are not supposed to be effective in all situations. The process of specialization comes out well in this theory. This is because the management of an organization does not have to follow the organizing criteria of other organizations. They should come up with their own means as long as it puts into consideration the required points that are clear in this theory. In addition, data collected here is useful in creating leadership profiles. It is able to tell which leaders were effective in a certain task and which ones were not. It is able to keep track of all the measures undertaken that made the organization achieve its desired objectives. By so doing, the organization is able to adopt those measures and maybe improve on them. Question five This theory has consistently failed to explain the reason behind the success of leaders with certain qualities more than others. This is because attaining the high level of organization is not the most important issue. The important issue is attaining the required valuables and structuring them in a way that will ensure the organization achieves its goals and objectives. In the situation where the leader and the situation in a company conflicts, the theory fails to explain what should be done? In some situations, the preferences of the manager and those of the organization may conflict. This seems to be a problem because the organizations don’t have to follow a protocol for its organization. The managers and other stakeholders of the organization come up with means of organizing their corporation depending on the goals they want to achieve. If their preferences and those of the organization differ, then that will prove to be a problem. Moreover, not all organizations will use this theory. This is because most organizations have put in place ways of organizing their organizations. The agency theory on the other hand has some limitations. The usage of agents makes it an expensive theory to undertake. This is because agents often consider their preferences over those of the organization. They may make over-promises that they may not be in a position to fulfill. They may also overcharge the clients of the organization thus making the organization in question to be overtaken by their competitors. The theory can also reduce profits made by the organization by a significant number. This is because the managers have to keep following their agents suspecting that they are up to no good. The managers may hire other agents to follow them, undertake insurance or come up with a contract. This ends up cutting on costs. Instead the managers could conduct the same activities the agents are doing thus save on costs. In addition, in situations where the manager delegates information to the agents, problems may arise when the managers fail to provide efficient and complete information. The agents in return relays distorted information to the clients. This cannot end up well for the organization. For n organization to attain its set goals and objectives, it has to pass the rightful information to the clients. The theory also has limitations in that the desires of the principal and the desires of the agents may conflict. The principal may however be unable to clarify or verify what the appointed agent is doing. This may be due to the difficulty of the situation or due to lack of funds. In addition, the principal and the appointed agent may take different actions to solve a situation. This may be due to their conflicting attitudes towards risks. Taking different actions to solve a situation would further draw the organization apart. This is not advisable considering that this is a business with very stiff competition. Question six Other stakeholders might have different explanations for the theories. For agency theory, other stakeholders might view the management and other principals of the organisation as not being qualified to take the organisation to the next level. This is because of their involvement of the agents to carry out transactions with any third party.this conflicts with what managers and principals of other organisation undertake. Agency theory allows agents to make major decisions of the organisation. Normally, this is the duty of the organisation’s principals. The stakeholders also lack confidence in the organisation. This is because of the notion that if the organisation is unable to undertake simple tasks to an extent of applying the professionalism of the agents, then the principals are not fit to drive the organisation. This may even scare away potential investors. Nobody wants to invest in an organisation that is doomed to fail. This is one big limitation for any organization. Contingency theory on the other hand says a lot about the organisation. Most organizations have a planned protocol of how to organize their businesses. Saying that organization of a certain business or corporation is important is against the belief of most organizations. Though, the internal and external factors of a business should dictate how an organization is organized, it is always better to have a plan. Thus, other organizations think that the organization using this theory is not organized enough. Question seven To solve this differences, the skills to solve problems is needed. Any organisation should be in a position to solve any problem that comes their way. This would be very crucial especially in agency theory. Whenever the principlas’ goals and those of the agents conflict, the peincipal should always be in a position to solve the problems that arise. The leader or manager should have the knowledge on how to take risks. Every organisation should be wiling to take risks. The leader should be in a position to know what to do whenever the risks go beyond what was expected. This is very crucial when the managers and the agents conflicts on their attitude towards risks. The manager should know what to do incase such instances appear. The manager should also be in a position to solve problems. Problem solving skills is one crucial quality that is very important for the any manager. This should reduce cases of agents making any decisions for the organisation. This is because some of the decisions the agents make are just for their own benefit. Some of them even go ahead to make decisions on overpromising the clients. As a result, the organization can loose a lot of its clientelle due to failure to fulfill these promises. Some of these promise the agent makes even without consulting the managers first. A good manager should also be capable of being social. He should should be in a position to have a good relationship with the employees. This enables him or her to create a good working relationship with their employees. As a result, employees feel that the managers have confidence in them that providing satisafctory services to clients. The manager should also be in a position of motivating the employees either with rewards or incentives. As a result, they are able to bag more profit and deal efficiently wth their competition. The managers should have the knowledge of good palnning. He should be an excellent planner. Despite any challenges arising, the manager will not have any problem because he had planned earlier in advance. The notion that there is no better way of organizing a corporation should not be a stepping stone. They should put preventive measures into place. The managers also should be versatile. This means that he should be in a position to perform most of his employees work in addition to his own duties. This knowledge will ensure that the manaer do not have to employ the services of an agent to do some activites for the company. This is because he is capable of conducting those activities himself. This saves on costs and ensures that the funds that would have ben used to hire an agent are used in other areas of the organisation that are more important. The manager should also be result oriented. They should always be working towards a certain goal that should come out at the end of every financial year. The manager should also be affirmative. This means that every decision they make about the company, they should be in a position to stand by those decisions. Incase of external or internal forces presenting themselves, the managers should use their risk taking skills to handle it. In conclusion, therefore, managers play a very crucial role in any organisation. No matter the kind of organisation theory frame that they undertake, they should always put their knowledge and capabilities into practice. This is because despite the challenges the organisation is facing, nothing lacks a solution. Every problem has a solution if approached in the right manner and the rightful measures. References Daft, R. L., Murphy, J., & Willmott, H. 2010. Organization theory and design. Andover: South Western Cengage Learning. Miles, J. A. 2012. Management and Organization Theory : a Jossey-Bass Reader. Hoboken: John Wiley and Sons. Skarlicki, D., Gilliland, S., & Steiner, D. 2002. Emerging perspectives on managing organizational justice. Greenwich, Conn: Informative Age Publishers. Read More