My goal in this paper is to analyze Sunflower Incorporated with respect to organizational size and structure, bureaucracy, and control and make recommendations for improvement in communications along with recommendations regarding the potential use of information technology for strategic advantage. Sunflower Inc. is a large distribution company that purchases and distributes snack foods and liquor to retail stores throughout the United States and Canada.
The organization has one head office and twenty-two regions. Each region is encouraged to be autonomous to accommodate local tastes and practices. Competition is very intense in the industry and Sunflower Inc. is unable to respond to market shifts. The organization is characterized as a bureaucracy in the formalization stage of the organizational life cycle. According to the textbook, the formalization stage involves the installation and use of rules, procedures, and control systems.
During the current stage of the organization’s life cycle and to improve its technology, increasing profits, and standardizing business tasks, a standardized financial reporting system is implemented that compared sales, costs, and profits across company regions. Each region was a profit center and the system showed that profits varied extensively. Top management decided that standardization was necessary and initiated its pricing and purchasing practices to be formalized. The company faced the challenge of how to restructure to survive the competition and how to do this while functioning as both a large and small company.
Joe Steelman, president of Sunflower, Inc. , hired Loretta Williams to be the director of pricing and purchase. She reported to Peter Langly, vice president of finance. Loretta Williams decided to use bureaucratic control by using new procedures. She sent out e-mails to the financial and purchasing executives in each region notifying them of the new procedures. The problem with William’s approach is that she disregarded recommendations that Peter Langly had given to her. Langly suggested that, although the e-mails were a good idea, they may not be sufficient.
The regions were accustomed to decentralized decision making and Langly suggested that Williams should visit the regions and discuss purchasing and pricing policies with the executives. He also suggested that it may be beneficial to wait to implement the procedures until after the annual company meeting when Williams could meet the regional directors personally. Williams did not observe Langly’s recommendations and thus failed to establish legitimate authority which is a requirement of the bureaucratic control strategy.
William’s failed to establish relationships with regional top managers and found it difficult to implement her new procedures. With a standardized financial reporting system implemented that compared sales, costs, and profits across company regions, a market control system may have allowed managers to compare prices as well as profits and use this type of control’s requirement of exchanged relationship to evaluate and maximize opportunities in the market as well as keep up with competition.
Top managers were connected to headquarters by an intranet. This form of networking links people and departments within a company to share information and cooperate on projects. This medium would be appropriate for all employees to have access to in order to improve internal communications. This would also be appropriate for communicating new procedures on pricing and purchasing to employees. E-mail and blogs are important web tools to accommodate collaboration among co-workers and to announce new employees.
Williams could take Langly’s suggestions of visiting the regions and establishing relationships with the executives to establish legitimate authority by getting to know the organization’s employees and to become more familiar with the business structure. This would help facilitate changes that are necessary to face problems and establish goals to remedy the problems. Sunflower Inc. already has an intranet in place but can utilize external applications of IT to strengthen external coordination with customers, suppliers, and partners and add strategic value.
A basic approach is to extend the corporate intranet to include customers, suppliers, and partners by the use of an extranet. An extranet is an external communications system that uses the Internet and is shared by organizations by making certain data available to the other organizations that are sharing the extranet. Extranets play a crucial role in the concept of integrated enterprise by allowing organizations to coordinate within the internal and the external environment. The use of an intranet and an extranet would ensure that all regions are using the same quality of products and stablishing a high quality brand that will help in the competitive marketplace. The use of information linkages, horizontal relationships, and customer relationship management are ways to implement change by the use of information technology to afford strategic advantage. Also, a market control system allows managers to compare prices and profits and enables evaluation of the efficiency of each region and this involves implementing a detailed analysis of the company’s ability to maximize its market opportunities
