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Question:

A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of X limited has declined. The company had followed a very centralised business model with Directors and divisional heads making even minor decisions. Before 1991 this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform. What organisation structure changes should the company bring about in order to retain its market share? How will the changes suggested by you help the firm? Keep in mind that the sector in which the company is FMCG.

Answer:

The organisation structure changes should the company brings to retain its market share are:

  1. The company should increase delegation and decentralisation of authority to allow decision-making at all levels.
  2. Since, the company is dealing in FMCG (Fast Moving Consumer Goods Sector), the lower level staff should be given more power to clinch deals like giving them authority to give customers more discounts on bulk orders, etc. This is done because the FMCG sector characterises dynamic customer preferences and frequent change in taste which can be judged easily by people at action points.
  3. Development of a good communication system from lower levels to top level, to help top management take strategic decisions on changing situations.
  4. Suggestion systems should be initiated and good suggestions should be rewarded.
  5. Maximum participation in decision-making should be ensured to motivate staff and achieve good results for the company.

Benefits that the company would derive from these changes are:

  1. Developing initiative among subordinates.
  2. Development of managerial talent for future.
  3. Quick decision-making.
  4. Relief to the top management.
  5. Better control, since each department or individual can be held accountable for his/her results, it would facilitate better control.


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