Ex.Chap6
EXPERIENTIAL EXERCISE
Purpose: Organization design refers to the overall set of elements used to configure an
organization. The purpose of this exercise is to give you insights into how managers must make
decisions within the context of creating an organization design.
Introduction: Whenever a new enterprise is started, the owner must make decisions about how to
structure the organization. For example, he or she must decide what functions are required, how
those functions will be broken down into individual jobs, how those jobs will be grouped back
together into logical departments, and how authority and responsibility will be allocated across
positions.
Instructions: Assume that you have decided to open a handmade chocolate business in your local
community. Your products will be traditional bars and novelty-shaped chocolates, truffles, other
chocolate products such as ice cream, and gift baskets and boxes featuring chocolates. You have
hired a talented chef and believe that her expertise, coupled with your unique designs and highquality ingredients, will make your products very popular. You have also inherited enough money to
get your business up and running and to cover about one year of living expenses (in other words,
you do not need to pay yourself a salary).
You intend to buy food items, including chocolate, cocoa, white chocolate, nuts, and fruit, from
suppliers who deliver to your area. Your chef will then turn those ingredients into luscious products
that will then be attractively packaged. Local grocery store owners and restaurant chefs have seen
samples of your products and indicated a keen interest in selling them. You know, however, that you
will still need to service accounts and keep your customers happy. At the present time, you are trying
to determine how many people you need to get your business going and how to group them most
effectively into an organization. You realize that you can start out quite small and then expand as
sales warrant. However, you also worry that if you are continually adding people and rearranging
your organization, confusion and inefficiency may result. Under each of the following scenarios,
decide how best to design your organization. Sketch a basic organization chart to show your
thoughts.
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Scenario 1. You will design and sell the products yourself, as well as oversee
production. You will start with a workforce of five people.
Scenario 2. You intend to devote all of your time to sales to increase revenues, leaving
all other functions to others. You will start with a workforce of nine people.
Scenario 3. You do not intend to handle any one function yourself but will instead
oversee the entire operation and will start with a workforce of 15 people.
1. 1. Work alone to create your organization chart. Then work in you group to compare
your various organization charts, focusing on similarities and differences. Your group
create the organization chart for each scenario.
2. 2. Working in the same group, assume that five years have passed and that your
business has been a big success. You have a large factory for making your
chocolates and are shipping them to 15 states. You employ almost 500 people. Create
an organization design that you think fits this organization best.