Bagby Copy Company Discuss the tradeoffs that Bagby faces in choosing between specialized and broad task assignment. Bagby Copy Company manufactures 10 different copiers. The main part of these copiers is a wiring bundle. This device is plugged into various components during the assembly process. They can assign each major task in this process to different employees using a broad task assignment or one individual can be assigned the task of producing the completed bundle using a specialized task assignment. Discussion: Some of the advantages that Bagby’s managers will obtain if they divide the total task of the manufacturing process into specific jobs or tasks are: Exploiting comparative advantage: Specialized task assignments will permit managers at Bagby to match people with jobs based on skills and training so this will permit employees concentrate on their particular specialties.
For example, Bagby can hire engineers to design and develop a product and business people to do the marketing. The principle of comparative advantage suggest that this specialization will often produce higher output than using individuals to perform a broad tasks. Lower cost-training expenses: With specialized task assignment, each employee is trained to complete one basis function. With broad task assignment, employees are trained to complete more than one function, this can be very expensive. For instances, suppose at Bagby the designing function requires an engineer, while in the line of production function requires a person with a lower education. Specialized task assignment allows Bagby’s managers to hire one engineer and one person without an advanced degree.
With broad task assignment, the level of education required is usually the highest level, so it will cost more for Bagby to hire two persons with college degree than one. Broad task assignment is more expensive than specialized task assignment. Some of the costs of specialized task assignments are: Forgone complementarities across tasks: Supposing that Bagby’s engineers have to design and develop a new copier but they do not participate into the manufacturing and marketing functions, they will not have the sufficient feedback to develop a successful product. This feedback will be traduced in customers needs, future market opportunities or cheaper substitutes for raw materials. As another example, if within a product unit, only one person is in charge of assemble and check the wired bundle the care with which person does his job will decrease.
Coordination costs: The activities of specialized employees have to be coordinated. For instance, Bagby would have to establish the methods and procedures required to process a certain quantity of bundles during a period of time so technicians could use the same methods and procedures to process different kinds of bundles, this required a high level of coordination between the different product units. Bagby’s managers will also need to coordinate procedures between functional and product basis groups. Functional myopia: With specialized task assignment, employees tend to concentrate on their individual functions rather than on the overall process of providing good sales and services. For example, the performance of the manufacturing department could be measure base on the quantity of produced units and the performance of the marketing department could be measure based on sales, but if the quality of the copiers decrease sales will be negatively affected and the performance of the marketing department will be low while the performance of the manufacturing department remains high. Reduced flexibility: Failure to cross-train employees has costs as well as benefits.
For example, if only one person is trained to perform a particular function he or she becomes indispensable for the organization and this is a disadvantage when bargaining with the employee over salary and other benefits. From an incentive point of view, it is sometimes better to have employees concentrate on a narrow set of tasks, while in other circumstances, a broad set of tasks is preferred, it depends on the business activity. 2. Discuss the tradeoffs (ventajas o desventajas) between these two methods of grouping wire-harness makers into subgroups. Facts: In either case, there are a group of employees that are assigned individual tasks to produce a wire harness for a particular copier (broad task assignment), so there is 10 subgroups of wire harness makers.
Bagby Copy Company has the following alternatives: 1. Place all 10 groups in one harness department. 2. All groups can be assigned to and report to a manager responsible for a particular copier. Discussion: If Bagby decided to place all 10 groups in one harness department this will lower the communication and coordination costs because members will report to the same manger.
Employees are also more likely to form closer working relationships if they share the same workspace (especially if they are evaluated and compensated on subunit performance. They will develop rules and procedures in order to coordinating activities among interdependent subunits. There is a tradeoff between the benefits that come from grouping people together and the cost of coordinating their activities with other subunits. In addition, it is also important to consider incentive issues (some groupings make it easier to devise productive performance-evaluation and reward systems than other groupings. Grouping Jobs by Functions One common method of grouping jobs is by functional specialty (engineering, design, sales and finance). This organizational arrangement places each primary function in one major subunit (rather than multiple subunits). Individual jobs are characterized by specialized task assignments.
Rules and procedures are established for coordinating the activities across the functions. The major benefits from grouping jobs by function are: Helps to promote effective coordination within functional areas. For example a department’s supervisor at Bagby can assign employees to specific projects based on current workload and expertise. It is also generally easier for functional specialists to share information if they are in the same department. For instance, if a service technician develops a new better way to assemble a copier, that employee’s supervisor can help promote its use by training other technicians in the department. This kind of grouping helps to promote functional expertise.
Individuals focus on developing specific functional skills and are directly supervised by knowledgeable individuals who can help with this development. There is a well-defined promotion path for employees, so they will tend to work their way up within a functional department. Having a well-defined promotion path can reduce employee uncertainty about career paths and thus can make it less expensive to attract and retain qualified employees. The disadvantages are: The opportunity cost of using senior management’s valuable time coordinating functions and making operating decisions. This time might better be spent on activities such as planning.
There can be significant, time-consuming coordination problems across departments. Information can be lost in transfers between departments. Employees sometimes concentrate on their function specialties rather than in the process of satisfying consumers. For instance the sales departments might focus on achieving departments goals, even if it imposes costs on other departments in the organization. Grouping Jobs by Product or Geography Organizations, which group jobs into collections of business units, based on product or geographic area. Operating decisions such as products Benefits of Product Subunits are: Decision rights for operations are assigned to individuals lower in the organizations, where in man cases the relevant specific knowledge is located.
Managers of business units are compensated based on the performance of their units, this provides incentives to use this specific knowledge more productively. Decentralizing decision rights to business-unit managers also frees senior management to concentrate on other, more strategic issues. A product focus promotes coordination among the functions that must be completed to produce and market a particular product or to serve a given geographic area. Problems with Product Subunits are: Business-unit managers tend to focus on the performance of their own units. For example, there is likely 3. Discuss the tradeoffs Bagby faces in choosing among the country, product, and matrix forms of organizing its international operations.
Facts: Bagby operates in 5 European countries. En each country there is a manager responsible for the manufacturing and marketing of al 10 copiers. The company is considering 2 alternatives: Organize its foreign operations around products, so there would be 10 international product managers with decision rights for managing the manufacturing and sale of a particular copier throughout Europe. Create a matrix organization, organized around product and country. Discussion: With the first alternative, Bagby will have 50 managers, too many people to take decisions.
This will also requires a lot of coordination and a special reward system to evaluate the performance of all this units. This will be to expensive. On the other hand senior management will decentralize operational rights and have more time to work in strategic issues. With the design of a matrix organization, Bagby will attempt to maximize the strengths and minimize the weakness of functional and product bases. In practical terms, the matrix design combines functional and product departmental bases because it is seen as a balance compromise between functional and product organization, between departmentalization by function and by product. Matrix organizations achieve the desired balance by superimposing a horizontal structure of authority, influence, and communication on the vertical structure. Copiers Functions Manufacturing Marketing Copier A Copier B Copier C Copier D Copier E Copier F Copier G Copier H Copier I Copier J In this chart personnel assigned in each cell belong not only to the functional department but also to a particular product (different kind of copiers).
For example, Manufacturing and Marketing Departments are assigned to work on one or more products (from A to J). As a consequence, personnel must report to two managers: one in their functional department and one in the product unit. The existence of a dual authority system is a distinguishing characteristic of matrix organization. The potential conflict between allegiance to one’s functional manager and one’s product manager must be recognized and dealt with in matrix organizations. Matrix structures are found in organizations that: Require responses to rapid change in two or more environments, such as technology and markets.
(This is the case of Bagby). Face uncertainties that generate high information processing requirements. Must deal with financial and human resources constraints. Managers confronting these circumstances must obtain certain advantages of the matrix structure. Matrix structure facilitates the utilization of highly specialized staff and equipment. Each product unit can share the specialized resource with other units, rather than duplicating it to provide independent coverage for each. This is a particular advantage when products don’t require the specialist’s full-time efforts.
For example, a copier may require only half an electrical technician’s time. Rather than having several underutilized electrical technicians assigned to each kind of copier, Bagby can keep fewer of them fully utilized by shifting them from product to product. Such flexibility speeds response to competitive conditions, technological break-through and other environmental changes. Also, these interactions encourage cross-knowledge and exchange of ideas such as when an engineer must discuss the pros and cons of a copier design with a marketing expert. Each specialist must be able to listen, understand to response to other’s view. At the same time, specialists maintain ongoing contact with members of their own discipline because they are also members of a functional department.
A fully developed matrix organization has product management departments along with the usual functional departments. Every employee has an assignment in a functional department and one or more product group. In summary, to keep an organization responsive to changes in its task and general environments, as the organizations grows and becomes more complex, managers must increase coordination among functions and product units by using complex integrating mechanisms. Managers must decide on the best way to organize their structures to create an organizational architecture that allows them to make the best of organizational resources. Bibliography 1. James L Gibson, John M.
Ivancevich and James H. Donnelly Jr., Organizations, Behavior Structure Processes.