Farewells at Fern Frond Education & Training

1 Farewells at Fern Frond Education & Training (FFET): Case Study External environmental factors that affected performance at Fern Frond Education & Training (FFET) Competitive intensity Competitive intensity is the severity as well as criticality emanating from other players operating in the same industry (Johnson, Martin, & Saini, 2011). Following the downturn that had hit the education sector and the reduction in numbers of foreign students, several institutions that still remained in business were forced to scramble for the few students who were available.

Government regulations Authorities often regulate businesses within their jurisdiction by formulating rules that clearly bind and control their operation (Wijen, & van Tulder, 2011). The New Zealand government was forced to get involved in the manner in which private training establishments (PTEs) were running. This was prompted by the fact that several PTEs had misappropriated student fees, leaving them stranded without money and qualifications. Stricter controls were therefore enforced in a bid to win back student confidence.

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2 International travel ban Just when the PTEs were experiencing a poor run occasioned by unethical management practices that saw a number of them shut, there was an outbreak of SARS that affected the whole of Asia. This further compounded the situation since international travels were discouraged so as to curb the spread of the disease.

Organizational culture at FFET in comparison to present day practice Weak culture A weaker organizational culture is one exhibiting little sharing of core values amongst the workforce. Managers at FFET feel that their input isn’t being considered, particularly when vital decisions need to be made. In contrast, majority of the modern organizations pursue strong culture as opposed to a weaker one in order to achieve team work spirit.

Hard culture A hard culture is one which fails to give consideration to the general welfare of the workforce. Lee Zhang has undertaken to execute measures that are aimed at reviving FFET but in the process fails to give his employees consideration. He lays them off without sitting down with his managers and analyzing the effects of this unilateral decision. Today, however, most organizations employ soft culture in order to give workers a consideration as well.

Informal culture Informal culture does not have well defined roles, rules, accountability and regulations.

At FFET, decisions are made by one individual and are forced down the hierarchy without giving dialogue a consideration. Organizations today consider formal structures because they produce more reliable results and accountability.

Decision making and problem solving process in an organization

3 Decision making in organizations needs to be an integrative activity that takes on board several contributions, from all those who will be directly affected by the decisions as well as the solutions that will be arrived at. The process requires that accurate information is gathered from all the players involved, including managers and employees and every suggestion analysed critically (Galbraith, 1974).

The information collected is then processed and analysed into forming task decisions which, if well understood by the workers, can be preplanned. However, if the task decisions are not clearly understood by the employees, more knowledge needs to be acquired during actual execution so as to change resource allocation, priorities as well as schedules (Galbraith, 1974).

The success of these tasks heavily relies on the level of information processing that takes place during information processing. Feedback from employees at this stage of decision making is very vital The benefits that result from an organization involving its workers in the whole process of decision making and problem solving includes increased flexibility on the part of employees to adapt to the new decisions made by management (Galbraith, 1974).

The organization benefits as well from employee-participation in decision making by drastically reducing the level of performance needed on a particular new tasks. In other words, the management is able to tell well in advance whether a decision is viable gauging from the responses they receive from their employees (Galbraith, 1974).

Managers also improve their ability to fore-plan by virtue of indulging their staff in the process of decision making (Galbraith, 1974). Drawbacks are able to be spotted early on as soon as the decision making process is initiated through the numerous suggestions and opinions being received from varied sources.

4 Effective decision making techniques that can be adopted by Lee There are several techniques that Mr. Lee could consider in order to revive FFET’s overall performance into a profitable organization once again; Delegation of duty There is need for Mr. Lee to carefully analyse managerial skills of each of his managers and match them with specific tasks (Mind Tools, n.d). Putting together a team charter will help Mr. Lee to clearly define roles and goals of different departments and also be able to determine the special skills that each of his workers possesses (Mind Tools, n.d).

Motivating team It is important that Mr. Lee resorts to motivating his workers who are obviously demoralized. Different people are motivated differently and therefore it is prudent that he carries out an analysis on his workers to find out those who are self motivated and those who require managerial input to be motivated (Mind Tools, n.d).

Effective communication Communication is an integral bit in the success of any management role (Mind Tools, n.d). Lee needs to give timely and effective communication to his line managers for purposes of making necessary decisions that will also involve workers at the lower end of the organizational structure.

Hierarchical levels of planning This refers to structuring and defining plans at the various levels of abstraction that exist in an organization. These levels of abstraction are basically corporate, business unit, and departmental (Strategic Management, 2010). The corporate level planning basically concerns selection of businesses which the company will compete in as well as developing and

5 coordinating that business portfolio (Strategic Management, 2010). Business unit level planning involves positioning the entity against rivals, adjusting strategy to match anticipated technological and demand changes as well as influencing competition through such actions as lobbying and vertical integration (Strategic Management, 2010).

Departmental planning level involves itself with businesses’ processes and also the value chain. Planning at this level is directly executed by the concerned teams be it in human resources, R&D, finance, marketing or any other department that could be existing in the organization. They coordinate resources for efficient execution of unit tasks.

How planning progresses within the hierarchy At the corporate level, the progress of the planning activity involves the following; Defining all issues that touch on corporate responsibilities such as overall goals, types of businesses the corporation will get involved in as well as integration of these businesses. Plans will also be devised on where exactly within the corporation competition will be localized as well as how businesses interrelationships and activities will be effectively managed. The decision on how business units will be governed is also made at this level (Strategic Management, 2010).

At the business unit level, there is little concern about how operating units will achieve coordination with each other. Instead, the overall plans defined at the corporate level such as the manner of business interrelationship and structure of unit governance will be developed further so as to achieve vertical integration (Strategic Management, 2010).

At the departmental level, plans defined at the business unit level are further refined in order to achieve coordination of resources. Information on their availability as well as their

6 capability eventually enables the whole organization to plan well on strategies of achieving their overall goal.

The control process A strategy has to have a control mechanism so as to be able to measure its effectiveness and decide on whether it needs corrections or not. Mr. Lee needs to determine any arising issues that could be hindering employees from delivering quality to the client and address it promptly before it spills out of control (Strategic Management, 2010). To achieve this, there needs to be forums through which workers can freely air out their views to the management and any impediments to delivery noted.

Mr. Lee also needs to put structures into place that will track and quickly determine any roadblocks to team cohesiveness (Strategic Management, 2010). There needs to be regular meetings within departmental teams to assess the progress of each department. It will be easier for Mr. Lee to discover if certain teams are lacking team work and general group commitment well in advance and address the situation. Overly, it is very prudent that each team maintains a strong bond between its members for easy achievement of goals and objectives Issues undermining other individuals’ interests should also be noted and ironed out as a control measure aimed at improving profitability (Strategic Management, 2010).

Suggested methods of control for FFET Mr. Lee could consider any of the following three mechanisms for purposes of effectively controlling operations at FFET; Markets Markets help to address control issues by virtue of being able to precisely measure and reward contributions by individual workers (Ouchi, 1979). Performance of a company’s goods or

7 services in the market can help determine the right control measures that a manager needs to implement in order to implement changes.

Bureaucracies Bureaucracies are a good control mechanism in the sense that they closely evaluate objectives while at the same time they are socially accepted as a means of evaluation (Ouchi, 1979). Most employees remember the structures of their organisations and can easily tell whether their departments or indeed their own individual contributions are up to standards or whether they require improvement.

Clans Clans are a perfect mechanism for executing control due to their reliance in part on complete socialisation process. This effectively eliminates any incongruence as far as goals and individuals are concerned (Ouchi, 1979).

Appropriate structures for FFET FFET could easily function well if Mr. Lee adopts a functional structure. This will be appropriate because FFET is a big institution with distinct schools and there is need for each school to be run professionally with a qualified manager. The structure is also most preferred because it saves money owing to economies of scale (Practical Management 2009).

Source: Practical Management, 2009

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Alternatively, Mr. Lee could consider using a divisional structure in the management of FFET. This structure is appropriate in the sense that each division manages its own resources and is more flexible. It also allows for quick responses particularly when unfavourable environmental conditions set in (Practical Management, 2009).

Source: Word Press, 2009

Advantage and disadvantage of functional and divisional structures Functional structure This structure enables employees to specialise in their respective areas of expertise (Business Mate 2010). This is because workers only serve in their functional areas and there are

9 minimal chances that they would be transferred to any other different function within the organisation. This eventually results in operational efficiencies. However, its drawback is the fact that it hinders communication due to its rigid nature (Business Mate 2010).

Divisional structure This structure is perfectly suitable for the adoption at FFET due its flexible nature. This flexibility allows for prompt adjustments particularly when external environmental features become unfavourable for business (Gupta, 2009). A divisional structure will, however, not function effectively in a big and complex organisation. This is because its structures have only been formulated to function efficiently where small organisations are concerned (Business Mate, 2010).

Structural characteristics Centralisation versus decentralisation A centralised structural system is one in which all managerial decisions of an organisation are made by a single body or source. It could be the company’s chief executive officer or a board of directors. In the case of FFET, this decision making would solely be made

by Mr. Lee himself who is the majority shareholder.

On the other hand, a decentralised structural system allows managerial decisions to be made by several functions or departments based on how such a decision would positively impact on their performance. This is the best structure for the management of FFET because it would give an opportunity for each function to decide their action.

Mechanistic versus Organic A mechanistic structure is one that exhibits low task differentiation and low integration. It also favours centralisation and operates well in a stable business environment (Business Mate

10 2009). In comparison, an organic structure exhibits high differentiation as well as a decentralised decision-making system. It is most preferred in a dynamic and uncertain business environment (Business Mate 2009). This is the best structure to be adopted by Mr. Lee as his organisation is currently facing uncertainty as far as business is concerned.

Departmentalisation forms Functional departmentalisation This is the grouping of workers and their respective tasks into units that are separate from each other. This strategy is appropriate for Fryer’s furniture due to its big size that spans across 16 stores. It will thus help in reduction of cost by checking duplication.

Product departmentalisation It is the organisation of workers into units that are separate with the aim of accomplishing separate works. This strategy is not appropriate for Fryer’s furniture since it will be difficult for the stores which are geographically sparse to coordinate different product departments.

Customer departmentalisation This strategy focuses on working separately in order to satisfy tastes of different customers. Since Fryer’s furniture has varying customers in terms of preference and geographic location, this form will be appropriate as it will focus on satisfying individual customer needs rather than general production.

Geographic departmentalisation This is the arrangement of staff and tasks into units that will specifically serve different areas or locations. Fryer’s furniture will benefit from this form of departmentalisation since they serve different locations.

Matrix departmentalisation

11 It is a hybrid system that integrates more than one form of departmentalisation. This system is best suitable for Fryer’s furniture as it will enable them carry out large and complex tasks.

Formalisation and its significance in reducing differences in service levels Formalisation will define clearly roles and tasks of each individual worker at Fryer’s furniture. Every employee will be able to understand what is required of him or her and therefore incidences of managers passing back their responsibilities to workers will not arise.

Wide span of control The concern over wide span of control at each department means there are no specific objectives and goals set for each Fryer’s furniture store. Each of the managers seems to work according to their own-set individual objectives. When John conducted a visit to each of the stores, he realised that each store was doing its own things.

Team building Team building refers to a bonding session where members of staff from the entire organization or its sections meet and learn a few things about each other. Each of the stores can develop as a team through organizing and attending such sessions as seminars, parties, and meetings.

Group roles It is important for John to know about group roles as it will help him to know the criteria with which he can group his employees according to their weaknesses and capabilities. This will help him achieve growth for his entire workforce.

Views on conflict

12 The three views on conflict are traditional, human relations and interactionist view.

According to traditional view, conflict is considered dysfunctional, destructive as well as irrational. In an organizational context, this conflict will result in lack of trust and poor communication. Human relations view considers conflict as being natural both in groups and organizations. In a team, members are expected to tolerate each other and live with. Interactionist view considers that lack of conflict makes people to be static as well as non-responsive. In a team, this conflict is considered viable and creative.

Principles of delegation Several principles of delegation exist. They include principle of result excepted which suggests that managers should define goals and results expected of workers before delegating powers to them. This enables the subordinates to work with clear mind set.

Principle of parity of authority and responsibility on its part requires that managers should always endeavour to balance authority on the one hand and responsibility on the other. A manager delegating duty to a subordinate worker needs to provide the worker with independence as well to enable effective work performance.

Maslow’s motivational theory This theory focuses on the human psychological needs. According to Maslow, human needs can be arranged into five different layers. If a worker satisfies a lower level need, he develops the need to satisfy the next need that is higher in the hierarchy of needs. This particular theory can help John achieve desired changes in his organisation by virtue of targeting to always satisfy his workers’ physiological needs. He should also offer incentives to his employees so as to help them move up the hierarchy. However, he should also realise that different workers are motivated differently.

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14 References Business Mate, (2009). Mechanistic vs. organic organizational structure (Contigency theory). Retrieved 23rd December 2011 from www.businessmate.org/Article.php?ArtikelId=44 Business Mate, (2010). What is a functional organizational structure? Retrieved 23rd December 2011 from www.businessmate.org/Article.php?ArtikelId=184 Galbraith, J. R. (1974). Organization Design: An information processing view. European Institute for Advanced Studies, 4(3), 28.

Gupta, A. (2009). Functional vs. divisional structure. Retrieved 23rd December 2011 from http://www.practical-management.com/Organization-Development/Functional-Vs-Divisional Structure.html Johnson, J. L., Martin, K. D. & Saini, A. (2011). Strategic culture and environmental dimensions as determinants of anomie in publicly-traded and privately-held firms. Business Ethics Quarterly, 21(3), 473-502.

Mind Tools, (n.d). Team management skills: The core skills needed to manage your team. Retrieved 23rd December 2011 from www.mindtools.com/pages/article/newTMM_92.htm Ouchi, W. G., (1979). Management science a conceptual framework for the design of organisational control mechanisms. A Journal of the Institute for Operations Research and the Management Sciences, 25(9), 833-848.

Strategic Management, (2010). Hierarchical levels of strategy. Retrieved 23rd December 2011 from www.quickmba.com/strategy/levels/ Wijen, F. & van Tulder, R. (2011). Integrating environmental and international strategies in a world of regulatory turbulence. California Management Review, 53(4).