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QUESTION 1

Encik Ramlee is the owner and manager of Batik Creative Design. He designs and sells his
custom-made batik to his high-end loyal patrons. Encik Ramlee runs the business using the
simple organizational structure with a small number of staff. Encik Ramlee makes all major
decisions on a daily basis. Batik Creative Design is run on informal relationships, few rules,
limited task specializations and unsophisticated business information system. The frequent and
informal communication between Encik Ramlee and his staff facilitates coordination of the work
to be executed although at times there are problems of miscommunication.
His staff is unaware that Encik Ramlee does not trust them. Encik Ramlee believes that he
must be in control of his business so that the business will be able to sustain for a long time.
Encik Ramlee is so paranoid that he would not even consider ideas and comments from the
staff on his batik designs and also on matters pertaining to running the business. Encik Ramlee
feels that he knows best. He believes that with his years of experience in the batik industry, his
designs are more artistic compared to contemporary designs of younger designers in the
industry.
The youngest son of Encik Ramlee, Adam, joined the business after graduating with a degree in
business management. Encik Ramlee is counting on Adam to take over his legacy in batik
designing and to expand the business. After being with the business for six months, Adam
notices that there is a lot of room for the business to improve its operations in order to support
its chosen strategies. Adam realizes that inefficiency and ineffectiveness arise from the
business organizational structure and control. He knows that it would be difficult for the
business to exploit its competitive advantages without effective and properly designed
organizational controls. Therefore, Adam needs to convince his father to change the simple
organizational structure currently in use in the business to the functional organizational
structure. Adam is convinced that the functional structure would be able to support the focuseddifferentiation business-level strategy of the business better. According to Adam, a
development-oriented culture will emerge from this structure, where the staff will be able to
interact frequently to exchange ideas and find ways to further distinct products and to develop
new, highly differentiated products for the focused group. Adam also wants to use both strategic
controls and financial controls to support the implementation of the businesss strategies.
Required:
c. Discuss three (3) advantages of the functional organizational structure to help Adam
convince his father to change the simple organizational structure currently in use in the
business to the functional organizational structure.
Functional organizational structure will help Batik Creative Design (BCD) in ensuring the
efficient use of managerial and technical talent. This kind of structure will pooled functional
area expertise in a single department instead of being spread across a variety of areas. For
example, Adam can pool all staffs that have expertise in batik design in design department.
Thus, this would help the staffs to communicate among themselves and cooperate in
creating new designs that will attract their customer. It would also help them to focus in their
task and will results in even better design to be created compared to simple organizational
structure. Therefore, with new contemporary design that the design department will be able
to create will help BCD to boost their revenue as the demand from customer increases.

(10 marks)