Andrew Scott MacVicar
April 25, 2014
The President of Delux Tool Company has become the owner of two other companies (Insurance and Tech) that were owned by his late brother and sister. Under the terms of the will, I.M. must provide from the companies a cash payment to the families of Harold and Jane equal to the average monthly profit from their respective companies over the past three years, and the companies cannot be sold.
II. ANALYSIS Safebuy Insurance is currently in a divisional setting. Delux Tool and the Computer Company are in Functional Org. structures. Safebuy Ins. has a geographic consideration based on field offices, but the Computer company is less structured facilitating the need to share information in the fast-paced and rapidly changing tech demographic (Brassfield, 2013) . Due to differences in each business in type, structure and product, the two new companies will have to be evaluated and organized into the most effective structure to enable integration and management under a corporate structure. Each business in this instance operates differently and has different products, markets and goals. Several Organizational structures exist that can be used in this case, including Functional, Divisional, Network, and Matrix. Functional Structures are applicable to small and large businesses. With the rate of change and variety of products represented in this instance however, a functional structure could impede the flexibility and responsiveness needed as the Corporation grows (Brassfield, 2013). A Divisional Structure enables each company to operate separate yet achieve total enterprise goals. Divisional structure also facilitates formulation of like functions across a corporate spectrum for standardization (Marketing, HR etc.).
The Divisional Structure is most effective in corporations with products that don’t interrelate well, [as in this case] (Gupta). I.M. Tycoon should organize the new corporation as a Divisional Org., with each company as a separate division, and a division dedicated to marketing and finance; each company has similar needs in those areas, and control (fiscal) would be central enabling Leadership to evaluate all three companies concurrently. Companies [often] form divisions based on the types of products or services, geographic location or demographic market sectors (Keefer). In a divisional organization, each segment of the business is smaller and capable of responding to customer needs as an independent entity (Schreiner). This will enable I.M. Tycoon to rely on the current management of the Insurance and Computer companies to continue operating…