Case Study-

Due to the recent deaths of his brother and sister, I.M. Tycoon is now the owner of two companies, Safe Buy Insurance Co and MicroAge, in addition to his own company, Delux Machine Tool. He has asked for a strategic plan to maximize operating savings in order to fulfill the terms of both siblings’ will; that their families will receive cash payments equal to the average monthly profit from their respective companies over the next three years. The assumption is that restructuring the companies to be both effective and efficient is the best solution.

Currently the three companies are operating under different organizational structures. Delux Machine Tool falls under the functional organization category. Delux Machine Tool is comprised of four departments each organized around specialized activities, ie production, sales, finance, and research and development.

The Safebuy Insurance Company is organized in the divisional model. Safebuy has 15 agencies in different geographic areas. Each agency is structured the same as the home office is. They act as separate businesses, including keeping its original name, and paying a percent of its profit to the head office at the end of the year.

MicroAge Software is organized in the simple structure or product organization. In the simple structure and product organization all functions that contribute to a given product are organized under one manager (Bateman, Snell 2013).

I recommend I.M. Tycoon restructure Safebuy and MicroAge finance department to fall directly under him, appoint a Chief Operating Officer (COO) who reports directly to him and the company manager’s report to the COO, and implement some additional controls on all the companies to ensure that his goal in maximizing operating savings is met.

Safebuy is at a disadvantage because of the duplication of activities over many geographical areas are expensive. In addition many agencies are not producing much profit. In order to meet the specific needs of the...