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Loretta Williams was hired by Sunflower Inc., a large distribution company of alcohol and snack products, as the director of Pricing and Purchasing. She identified the problems with Sunflower and made a plan to counter them. The plans were:
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To standardize the pricing and purchasing decision in the short-run.
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In the long run, she believed that the regions need to communicate amongst themselves.
These solutions and their application were flawed and created problems.
Problems and Solution
Sunflower Inc. being an FMCG company had to remain flexible and responsive to the ever changing market conditions. Williams decision was shifting the companys management style towards a mechanistic structure too quickly. This would centralize the decision making process which would bring problems.
From the background we find that Sunflowers size the large with a base of 5000 employees. Its structure is regionally distributed and decentralized decision making process. Moreover, Sunflower was in a Collectivity life cycle stage. This is so because the case suggests that the structure of the company was mostly informal with some procedures (e.g. market control) were in place. There were two main products alcohol and snack food, each having variances due to regional preferences. The company was aiming for growth in a highly competitive market and the regions had their own profit targets which they strived, autonomously, to meet. It already had a charismatic leadership in place with a management.
As the company moved towards Formalization stage, proper delegation of control along with internal systems and processes was required. But what Williams did was she tried to bring the whole control to the centre with limited power given to the regions. But these regions were already enjoyed autonomy. So what was required was to find a control mechanism without direct supervision from the top management. Though formalization was necessary, but not at the cost of decentralization of the company. Research showed as companies grew larger in size, they allowed greater degree of decentralization to take away additional burden from the top management and keep the system responsive and flexible to changing market indicators. Jack Welch, president of General Electrics, suggested that to achieve standardization in a decentralized organization one has to adopt a model of big company or small company hybrid .
The other problems with Williams decision were:
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She wanted to implement the plan too quickly. Without proper execution a plan cannot be a success.
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Moving a decentralized organization to a centralized process very quickly creates problems of acceptance among employees.
Sunflower needs to adopt a strategy by which the company can remain flexible and responsive along with an increased process orientation. If, as determined by Williams, the situation was a crisis situation, then it was important to implement an incident command system, so that the company could employ the efficiency and control of bureaucracy as well as be responsive to the changing demands. Moreover, it should have added a few more support functions to the structure and retained the market control policy. This is because support functions would help make the procedures more streamlined and process oriented. Further, market control will help the company be aware of the companys responsiveness and performance vis-à-vis market realities.
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