In the modern constant changes business environment, company needs to change constantly to remain competitive in the market. If not, the company will be facing survival risk. There are no mercy and exception for Cox’s Container Company (‘CCC’). CCC faced increasing competitions over the past 5 years and profits are in declining trends due to reduce in margins. Harold Cox was clueless on how to rectify the problems. He has delegated the task to Erica Wilson to review CCC’s operations and oversee organization changes. Under her control and management, new central administration department was formed to implement budgeting system and company-wide information system. First time in the history of CCC, Wilson recruited external appointees to hold managerial post in the new central administration department. However, no one seemed very keen on the new system and encountered strong resistance from Abdul Aziz, manager of production department who incharged 2/3 of CCC’s total staffs. After so many years since CCC was established, Harold Cox had done not much changes to CCC’s structure and culture. CCC still practicing simple structure with flat hierarchy and decision-making is highly centralized in the hand of the Cox family. This allows Cox to run the operations flexibly, direct communication to avoid message being misinterpreted and wrongly manipulated, wide span of control as all managers reporting to him and expedites the decision-making process without going through layers of people. However, simple structure is more suitable for start-up or small firms for flexibility, control early growth and developments whereas centralization discourage innovation and no creativity. As CCC grows larger in size, it also more difficult for Cox to control and coordinate them effectively. According to General Sir Iain Hamilton once said ‘No one brain cans effectively control more than 6 or 7 other brains’. Moreover, when information and data are overloaded, he may not has sufficient times to handle and analyze to make full use out of it.
Culture and authority of CCC is power culture and traditional authority. With Harold, there are addition of charismatic authority found on his supports to ethnic minorities. Power culture (Handy, 1993) depends on a central power source, few rules, informal system and decision are based on a balance of power rather than logic whereas traditional authority are the ability and right to rule is being passed down, i.e. CCC being passed down to Cox family member. Similarity of those are being very dependent to a single person and capability of that person are very much to determine the direction and successfulness of the company. In the history, many of the family businesses that stagnated and were eventually annexed in Britain after the Second World War were power cultures that had die in the centre. Hence, CCC might has going concern issues if successor of Harold is not as good as him and not supportive towards ethnic minorities.
Besides retirement of Harold, majority of staffs in production department have worked for CCC for more than 10 years will have similar timing of retirement. This might be a risk of CCC facing shortage of production staffs in the future and affect productivity. Internal promotions have advantages of saving in times and costs of induction program for new staffs, boost morale and motivate staffs to perform. But, all senior positions in the production department have been filled through promotion of shop floor employees with no proper evaluation on competency and professionalism will affect company performance. It is not only no new ideas being introduced, it might be challenges for them to adapt to new technologies and working practices, i.e. new system implemented by Erica. Most importantly, senior manager are the person that make decision on behalf of the company and the effect that decision outcomes have on the lives of all organization members (Henry Mintzberg, 1989...
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