FREE ESSAY ON CASE: BAGBY COPY COMPANY

CASE: BAGBY COPY COMPANY

CASE: BAGBY COPY COMPANY
1. Discuss the tradeoffs that Bagby faces in choosing between specialized and broad task
assignment.
Facts:
? Bagby Copy Company manufactures 10 different copiers. The main part of these copiers is
a wiring bundle. This device is plugged into various components during the assembly
process.
? They can assign each major task in this process to different employees using a broad
task assignment or one individual can be assigned the task of producing the completed
bundle using a specialized task assignment.
Discussion:
Some of the advantages that Bagby's managers will obtain if they divide the total task of
the manufacturing process into specific jobs or tasks are:
Exploiting comparative advantage: Specialized task assignments will permit managers at
Bagby to match people with jobs based on skills and training so this will permit
employees concentrate on their particular specialties. For example, Bagby can hire
engineers to design and develop a product and business people to do the marketing. The
principle of comparative advantage suggest that this specialization will often produce
higher output than using individuals to perform a broad tasks.
Lower cost-training expenses: With specialized task assignment, each employee is trained
to complete one basis function. With broad task assignment, employees are trained to
complete more than one function, this can be very expensive. For instances, suppose at
Bagby the designing function requires an engineer, while in the line of production
function requires a person with a lower education. Specialized task assignment allows
Bagby's managers to hire one engineer and one person without an advanced degree. With
broad task assignment, the level of education required is usually the highest level, so
it will cost more for Bagby to hire two persons with college degree than one. Broad task
assignment is more expensive than specialized task assignment.
Some of the costs of specialized task assignments are:
Forgone complementarities across tasks: Supposing that Bagby's engineers have to design
and develop a new copier but they do not participate into the manufacturing and marketing
functions, they will not have the sufficient feedback to develop a successful product.
This feedback will be traduced in customers needs, future market opportunities or cheaper
substitutes for raw materials. As another example, if within a product unit, only one
person is in charge of assemble and check the wired bundle the care with which person
does his job will decrease.
Coordination costs: The activities of specialized employees have to be coordinated. For
instance, Bagby would have to establish the methods and procedures required to process a
certain quantity of bundles during a period of time so technicians could use the same
methods and procedures to process different kinds of bundles, this required a high level
of coordination between the different product units. Bagby's managers will also need to
coordinate procedures between functional and product basis groups.
Functional myopia: With specialized task assignment, employees tend to concentrate on
their individual functions rather than on the overall process of providing good sales and
services. For example, the performance of the manufacturing department could be measure
base on the quantity of produced units and the performance of the marketing department
could be measure based on sales, but if the quality of the copiers decrease sales will be
negatively affected and the performance of the marketing department will be low while the
performance of the manufacturing department remains high.
Reduced flexibility: Failure to cross-train employees has costs as well as benefits. For
example, if only one person is trained to perform a particular function he or she becomes
indispensable for the organization and this is a disadvantage when bargaining with the
employee over salary and other benefits. 
From an incentive point of view, it is sometimes better to have employees concentrate on
a narrow set of tasks, while in other circumstances, a broad set of tasks is preferred,
it depends on the business activity.
2. Discuss the tradeoffs (ventajas o desventajas) between these two methods of grouping
wire-harness makers into subgroups. 
Facts:
In either case, there are a group of employees that are assigned individual tasks to
produce a wire harness for a particular copier (broad task assignment), so there is 10
subgroups of wire harness makers. Bagby Copy Company has the following alternatives:
1. Place all 10 groups in one harness department.
2. All groups can be assigned to and report to a manager responsible for a particular
copier.
Discussion:
If Bagby decided to place all 10 groups in one harness department this will lower the
communication and coordination costs because members will report to the same manger.
Employees are also more likely to form closer working relationships if they share the
same workspace (especially if they are evaluated and compensated on subunit performance.
They will develop rules and procedures in order to coordinating activities among
interdependent subunits.
There is a tradeoff between the benefits that come from grouping people together and the
cost of coordinating their activities with other subunits. In addition, it is also
important to consider incentive issues (some groupings make it easier to devise
productive performance-evaluation and reward systems than other groupings.
Grouping Jobs by Functions
One common method of grouping jobs is by functional specialty (engineering, design, sales
and finance). This organizational arrangement places each primary function in one major
subunit (rather than multiple subunits). Individual jobs are characterized by specialized
task assignments. Rules and procedures are established for coordinating the activities
across the functions.
The major benefits from grouping jobs by function are:
Helps to promote effective coordination within functional areas. For example a
department's supervisor at Bagby can assign employees to specific projects based on
current workload and expertise. It is also generally easier for functional specialists to
share information if they are in the same department. For instance, if a service
technician develops a new better way to assemble a copier, that employee's supervisor can
help promote its use by training other technicians in the department.
This kind of grouping helps to promote functional expertise. Individuals focus on
developing specific functional skills and are directly supervised by knowledgeable
individuals who can help with this development.
There is a well-defined promotion path for employees, so they will tend to work their way
up within a functional department. Having a well-defined promotion path can reduce
employee uncertainty about career paths and thus can make it less expensive to attract
and retain qualified employees.
The disadvantages are:
The opportunity cost of using senior management's valuable time coordinating functions
and making operating decisions. This time might better be spent on activities such as
planning.
There can be significant, time-consuming coordination problems across departments.
Information can be lost in transfers between departments.
Employees sometimes concentrate on their function specialties rather than in the process
of satisfying consumers. For instance the sales departments might focus on achieving
departments goals, even if it imposes costs on other departments in the organization.
Grouping Jobs by Product or Geography
Organizations, which group jobs into collections of business units, based on product or
geographic area. Operating decisions such as products 
Benefits of Product Subunits are:
Decision rights for operations are assigned to individuals lower in the organizations,
where in man cases the relevant specific knowledge is located. Managers of business units
are compensated based on the performance of their units, this provides incentives to use
this specific knowledge more productively. Decentralizing decision rights to
business-unit managers also frees senior management to concentrate on other, more
strategic issues.
A product focus promotes coordination among the functions that must be completed to
produce and market a particular product or to serve a given geographic area.
Problems with Product Subunits are:
Business-unit managers tend to focus on the performance of their own units. For example,
there is likely 
3. Discuss the tradeoffs Bagby faces in choosing among the country, product, and matrix
forms of organizing its international operations. 
Facts:
Bagby operates in 5 European countries. En each country there is a manager responsible
for the manufacturing and marketing of al 10 copiers.
The company is considering 2 alternatives:
? Organize its foreign operations around products, so there would be 10 international
product managers with decision rights for managing the manufacturing and sale of a
particular copier throughout Europe.
? Create a matrix organization, organized around product and country.
Discussion:
With the first alternative, Bagby will have 50 managers, too many people to take
decisions. This will also requires a lot of coordination and a special reward system to
evaluate the performance of all this units. This will be to expensive. On the other hand
senior management will decentralize operational rights and have more time to work in
strategic issues.
With the design of a matrix organization, Bagby will attempt to maximize the strengths
and minimize the weakness of functional and product bases. In practical terms, the matrix
design combines functional and product departmental bases because it is seen as a balance
compromise between functional and product organization, between departmentalization by
function and by product.
Matrix organizations achieve the desired balance by superimposing a horizontal structure
of authority, influence, and communication on the vertical structure.
Copiers Functions
Manufacturing Marketing
Copier A 
Copier B 
Copier C 
Copier D 
Copier E 
Copier F 
Copier G 
Copier H 
Copier I 
Copier J 
In this chart personnel assigned in each cell belong not only to the functional
department but also to a particular product (different kind of copiers). For example,
Manufacturing and Marketing Departments are assigned to work on one or more products
(from A to J). As a consequence, personnel must report to two managers: one in their
functional department and one in the product unit. The existence of a dual authority
system is a distinguishing characteristic of matrix organization. The potential conflict
between allegiance to one's functional manager and one's product manager must be
recognized and dealt with in matrix organizations.
Matrix structures are found in organizations that:
? Require responses to rapid change in two or more environments, such as technology and
markets. (This is the case of Bagby).
? Face uncertainties that generate high information processing requirements.
? Must deal with financial and human resources constraints.
Managers confronting these circumstances must obtain certain advantages of the matrix
structure.
Matrix structure facilitates the utilization of highly specialized staff and equipment.
Each product unit can share the specialized resource with other units, rather than
duplicating it to provide independent coverage for each. This is a particular advantage
when products don't require the specialist's full-time efforts. For example, a copier may
require only half an electrical technician's time. Rather than having several
underutilized electrical technicians assigned to each kind of copier, Bagby can keep
fewer of them fully utilized by shifting them from product to product.
Such flexibility speeds response to competitive conditions, technological break-through
and other environmental changes. Also, these interactions encourage cross-knowledge and
exchange of ideas such as when an engineer must discuss the pros and cons of a copier
design with a marketing expert. Each specialist must be able to listen, understand to
response to other's view. At the same time, specialists maintain ongoing contact with
members of their own discipline because they are also members of a functional department.

A fully developed matrix organization has product management departments along with the
usual functional departments. Every employee has an assignment in a functional department
and one or more product group.
In summary, to keep an organization responsive to changes in its task and general
environments, as the organizations grows and becomes more complex, managers must increase
coordination among functions and product units by using complex integrating mechanisms.
Managers must decide on the best way to organize their structures to create an
organizational architecture that allows them to make the best of organizational
resources.
Bibliography
REFERENCES
1. James L Gibson, John M. Ivancevich and James H. Donnelly Jr., Organizations, Behavior
Structure Processes