Principles of organizational theory
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Smith Inc has been making small quantities of stuffed bears for many years. The bears are customized and very high quality and premium priced. Currently, the bears are produced in one factory in Wisconsin and sold in only three locations in the U.S.: Madison and Milwaukee Wisconsin, and Chicago, Illinois. Production is 10,000 bears per year, and prices range from $75 - $200 per bears. The demand for these bears has increased significantly in the U.S. In addition, as the U.S. dollar falls, there is now demand for the bears in Great Britain and France. Smith Inc Galore just hired a new young marketing manager who is eager to expand and has been talking about the potential of a much larger market, particularly if the company adds a line of non-customized bears that would still be relatively high quality, but could be sold for around $25. The marketing manager has been talking about the potential in the Asian market as well. The company will have to invest in production equipment to meet any increased demand.
Answer the following questions about Smith Inc. Be sure to state clearly any assumptions you make about the organization as part of the description of factors to consider and state the reasons for including each factor. Use organizational structure language and theory in your response. Demonstrate mastery of organizational theory and design concepts in this specific situation. Apply the principles of organizational theory in the analysis.
-In deciding whether or not to produce larger quantities, what factors should this organization consider?
-What additional factors should be considered if the company decides to expand to Great Britain, France, and possibly Asia?
-What are your specific recommendations for Smith Inc. What should the company do?
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In deciding whether or not to produce larger quantities, the organization should consider the additional capital expenditure it has to make for investing in production equipment. The firm should consider the Return on Investment on the additional production equipment. The current outlook of the new manager is extremely aggressive and Smith Inc management should take a balanced view at the marketing proposals of the manager. The marketing manager is assuming there is no competition. The company should consider the strategies of competitors that are making stuffed bears in other parts of the USA. Possible reaction of these competitors to lower priced stuffed bears must be considered. A ...
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