The aim of this essay is to answer the questions which the case of Symphony seeds given. In the first part will analysis the environment and likely organization structure of Symphony Seed Sales (SSS) and Symphony Research Institute (SRI). According to the hypothesis which Mintzberg (1983) suggested, “effective structuring requires a consistency among the design parameters and contingency factors”. There are five variables included in the contingency factors which are respectively age, size, technical system power and environment (Mintzberg, 1983). When discuss the environment, the factors which outsider the organization will always be considered. The dimensions of environments are focused on stability, complexity, market diversity, hostility and richness (Mintzberg, 1983). When the dimensions of environments change, they will affect the level of uncertainty increase or decrease. In this case, SRI distributed is relatively stable, complex and rich environment. SSS measured stable, simple and rich. The full details will explain in next section. When organized a company, the normal question is which organization level specified the decision making. There are two organization structures which are centralisation and decentralization. Centralization is that the decision making on the top of the organization and they will not consider what the employees thinks. The advantages of centralization are “easier co-ordination and management control”, “providing a consistent strategy across the organization”, “improved economies of scale” and “improved decision making which might be slower and a result of compromise because of diffused authority” (Mullins, 2010). Mintzberg (1983) explained that “to the extent that the power is dispersed among many people, we shall call the structure decentralized”. The advantages of decentralization are “allows the organization to respond quickly to local conditions” (Mintzberg, 1983), support services are more likely to be effective, the flexibility of making decision, and stimulus the motivation (Mullins, 2010). In fact, there is no organization treated as a completely centralized or decentralized, it “rather as two ends of a continuum” (Mintzberg, 1983).
Another two basic types of orgnisation structure are mechanisms and organic structure which was identified by Burns and Stalker (Mullins, 2010). Mechanism structure is a more “rigjd structure” and more likely stable. This system is similar of bureaucracy (Mullins, 2010), thus the decision making is centralized, and the integrating get simple and work is standardized. Organic structure is a more flexibility system. It appears when there are new problems and unforeseen circumstances (Muillns, 2010). This means people under organic system can adapt the changing conditions very quickly, and they can make decision by themselves. Therefore, it is decentralization and information flows freely, integrating is complex and relies on mutual adjustment. The second part of the essay will discuss the role and purpose of the Land Development Corporation (LDC) and why SSS and SRI cannot be a unified orgnisation. The last part will discuss the problem of evaluating the performance of the two Symphoney Companies from Conglom’s perspective and comment on the problem of inter-company trading. The details of the questions will be explained in the following part.
Firstly, analyze the environment and structure of SSS. As mentioned in the beginning of the essay, environment is one of the contingency factors and the others are age, size, technical system and power. The case indicates that “in the early 1990s some disinvestment took place…” This illustrate that SSS has been operated well before that period time. This could be the variable of “age” of SSS. Next one is consider about the size. There are ‘30 plus fulltime salesman and large back-up staff”, personally think it is a medium size division. The technical system is focus on “the knowledge base of the organization”. It should be considered simple in SSS, because it just “produces mass quantities of seed” and trading. There is external control to the SSS. From the content of the case known that Symphony Seeds is a wholly owned subsidiary of LDC, a LDC is a wholly owned subsidiary of Conglom Holdings, and SSS just a arm of the SS ltd. Decisions are made by the board of LDC. Mintzberg (1983) suggested that “the greater the external control of the organization, the more centralized and formalized its structure”. SSS has stable and simple environment. In this environment could contribute to centralize, bureaucratic structures, and “the classic organization type relies on standardization of skills”(Minzberg,1983). From the end of the case, it highlighted that “Symphony is a mature company…in the 4-10-year picture”, this means the dynamism is stable. SSS purchases seed from SRI which develops new seeds and initial basic seed. Thus SSS has the available resources to support. Therefore, it is rich. SSS is a simple structure.
Minzberg (1983) explained that simple is affected largely by direct supervision, the important decision tend to be centralized. Secondly, analyze the environment and structure of SRI. It is the same aged as the SSS that they are both arms of the SS Ltd, and “in the early 1990s some disinvestment took place…”(from case) .Next one is consider about the size. It should the large size because it said that “it is the largest UK seed breeder”. SRI is a division which do research and development, this need higher knowledge to do. Thus it is complex. There is external control to the SRI. From the content of the case known that Symphony Seeds is a wholly owned subsidiary of LDC, a LDC is a wholly owned subsidiary of Conglom Holdings, and SRI just a arm of the SS ltd. Decisions are made by the board of LDC. SRI has stable and complex environment, it cause a decentralized and bureaucratic structures, and “reliant for coordination on the standardization of skills” (Minzberg, 1983). From the end of the case, it highlighted that “Symphony is a mature company…in the 4-10-year picture”, this means the dynamism is stable. SRI develops new seeds and initial basic seed, therefore, it is rich and complex. When the decision making is decentralized, staff specialists and operated well. It also should be a organic structure.
In this part, it will discuss the role of LDC and why SSS and SRI cannot be a unified organization. LDC is a wholly owned subsidiary of Conglom Holdings plc, which manages the agricultural interests through LDC. SS is a wholly owned subsidiary of LDC. After Conglom Holdings bought the SS, the previous culture and management style was initially maintained. Conglom Holdings Ltd acts as a banker, and holds the ultimate controlling shareholder in SS. For SRI and SSS, LDC as the active buffer between the different styles of management and different perspectives. SSS buy seed from SRI, and SRI has 95% of income royalties from SSS. They also have an inter-company trading, and exists the problem of transfer pricing. Moreover, they have different environment with different structure, management culture. So they are fundamentally operating different business.
Finally, discuss the problem of evaluating the performance of the two Symphony Companies from Conglom’s perspective and comment on the problem of
inter-company trading. As discussed in question two, SSS buy seeds from the SRI, and exits with the problems of transfer pricing. Because this is the inter-company trading, they should have part of financial statement is the same, and the high royalties paid (95%) by SSS should promote their cooperation.
Laurie J. Mullins, Management and Organisational Behaviour, 9th edition (2010). Prentice Hall Henry Minzberg, Structure in fives: Designing effective organization, (1983).Prentice Hall