Reference no: EM133090691

Problems at Health Products A few weeks after arriving at Health Products, a company specializing in the sales and distribution of cutting edge technological diagnostic equipment, the new CEO began hearing complaints about the company's sales team. At a retreat with 25 corporate customers, several of them told the CEO they didn't know whom to call at Health Products because of the company's confusing management layers. The CEO also heard the same complaints inside the organization. The company's head of the Medical Laboratory Division told the CEO that "it once took her three months to get approval to hire 10 sales specialists." Another executive said that "his team of 70 sales people typically spent 33 percent to 36 percent of their time with customers. The rest of the time was spent negotiating internal Health Products' bureaucracy." Even the sales representatives said that they didn't get to spend time with customers because they were "often burdened with administrative tasks." Getting a price quote or a sample product to a customer became a time-consuming ordeal. In addition, sales representatives were not empowered to make decisions regarding discounts for customers and were not clear as to when they should deal with customer's complaints or refer these to the Customer Service Department. As most of them had been with the company in excess of 10 years they resented the micromanagement culture. It didn't take the new CEO long to realize that there was a "fundamental problem" that he had to address. Delving into Health Product's sales structure, the CEO found 11 layers of management between him and customers and the company's sales structure was highly inefficient. This meant that Health Products was slower than its competitors to cut a deal and lost many bids. The final issue uncovered by the new CEO was that of the 7,000 people working in corporate sales, less than 60 percent of them directly sold to customers. The rest were support staff or in management. It was a situation that the new CEO knew had to be changed if the organization was going to again become an industry leader.

(a) As the new CEO, what decisions would you take to address the company's structural problems and why?

(b) Would a more mechanistic or a more organic organisational structure be appropriate for Health Products? Why?

(c) What role do you think organisational structure plays in an organization's efficiency and effectiveness? Explain.

(d) Using Hofstede's Multifocus Model on Organisational Culture, provide a profile of the culture that exists at Health Products.

(e) Suggest strategies that Health Products could implement to encourage a stronger customer-responsive culture.