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What would you have done if you were in Shikhars place?

Were all the changes in structure

necessary? How would you address the challenges Shikhar is facing at the end of the case?

Appex corporation has spent the last 3 years developing and trying out new organizational
structures as it changes from a small organization of only 25 employees to a large one of 180
employees in 1990. The key problem facing Shikhar Ghosh upon arriving at Appex is the chaotic
condition of the companys current structure. What was once a tight knit group of employees is now
a group of people with no clear cut job responsibilities or work ethic. In Shikars place we would
have carried out the below mentioned changes:

Changes in the approach: As the number of employees increase, a structure can be modified but
changing the structure too often is too radical in nature, involves investments and could cause
confusion amongst employees. Thus we would have assessed the situation better and if it looked
promising than have done a pilot run with for testing its acceptance by the employees. When
moving to traditional hierarchical models Shikhar again tried to keep the structure flat but didnt
incorporate expectations of investors or the employees in terms of need of authority. He was
prompt to address every new issue faced and react to the concerns raised by different senior
executives. But we think that he could take their view-points before implementing out a new

Not implement the circular structure: There were a lot of drawbacks of the circular structure. The
structure was implemented to accommodate the increasing manpower. However the new recruits
could not relate to this structure. They could not relate this to an organisation chart. They were
unsure of how their performance was evaluated. Secondly the structure was geared towards
responsiveness instead of planning. Thus this structure lacked to offer control and accountability
which was much needed at the initial stages and we would not have rolled out such a structure in
the first place.

Provide trainings to employees in functional structure set-up: In Shikhars place, we would have
implemented the functional structure in the first place instead of the circular structure to address
the problems of accountability and control. After the problems begin to surface in the functional
structure such as subunit orientation, organisation politics in resource allocation and personalities
becoming powerful, we would try to tackle them by providing managerial trainings to the functional
leaders rather than hire new managers as carried out by Shikhar.

Implement a matrix structure in the later stages to address the problems of divisional structure:
The divisional structure has presented some advantages to Appex, for instance this structure
improved accountability, budgeting, and planning. The problems of own resource allocation and not
sharing their resources with other divisions, less communication across divisions and each division
acting like a small company with its own business procedures needs to be addressed. So we would
suggest Matrix structure for Appex Corp. Since there always seemed to be differences between the
product teams and the functional teams, a matrix structure would be the best resolution for
simultaneously grouping the employees on the basis of function and product while maintaining the
vertical and horizontal integrations between the two. It would help Appex to balance centralization
and decentralization of control and authority by means of a mix of functional and divisional

The matrix structure will give a product centric view of business operations as well as a functional
view thus encouraging the flow of information, idea sharing and focus towards new product
development and customer oriented strategy planning.

Advantages of Matrix Structure:

1. Cross functional teams will reduce the functional barriers and overcome the problem of subunit
orientation which is evident in almost all structures of Appex.

2. It would open up communication between functional specialists and provides an opportunity for
different functions to learn from each other and develop skills. This was needed for Appex as the
new ideas had stopped coming from the divisions because of the barriers.

While creating the matrix structure, a parallel plan for the performance monitoring and reward
system should be designed to provide incentives to both the functional and product members. All
these changes should be well communicated with the employees along with the benefits plan.

Post EDS Acquisition:

Towards the end of the case Electronic Data Systems (EDS) acquired Appex in Oct. 1990. The
challenge before Shikhar Ghosh was to align Appex's structure based on EDS's requirements. Since
Ghosh had followed an organizational isomorphism, i.e. regular periodic changes in the structure of
Appex Corporation to suit the need of a growing entrepreneurial organization, but post acquisition,
Appex has to realign its structure. This is so because it is no longer an independent company but is
rather a division of a huge hierarchical bureaucratic organization.

Shikar has to look into every divisions operation once again to ensure that Appex as a whole
continues its growth rate and does not just remain a subsidiary but becomes an integral part of EDS.
So the challenges faced by Appex can be addressed by:

Clarity of Direction and Delegation : Appex employees may clearly understand what is line of
hierarchy and what are their roles and responsibilities under the new takeover.

Coordination and Synergy Achievement: Appex needs time to reshuffle its vision and structure
slowly and steadily in a way that it can adapt the best practices of EDS but yet retain its core

Representation of EDS in divisions of Appex: Executive senior management of EDS should become
a part of the divisional teams of Appex so that they can understand the working of Appex and
accordingly mold Appex towards the practices of EDS. This could be achieved by pooling in the
executives from EDS senior management with relevant skills and integrating them at the top level of
the vertical functions in the Appex's Matrix structure. Appex could be integrated with the existing
support functions of EDS for its resource allocation and financial planning.

Morale Boosting by Increased Compensation: As so far, Appex employees have enjoyed

independence in decision making (to certain extent). Hence in order to sustain innovation and
product development capability of the employees of Appex, Ghosh must negotiate with EDS to
increase compensation for Appex employees and organize regular interactive meetings to build a
strong communication pathway between EDS and Appex.