Can Company of Canada

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Case 3 Continental Can Company of Canada, Ltd.
Teaching Notes
Copyright © Gareth R. Jones 1994
Synopsis
The case allows an in-depth analysis of a mechanistic structure and allows students to apply theorganizational theory concepts from Chapters 4, 5, and 6. It should be used after Chapter 6, and the TRWSystems case should follow (a two-class sequence) to illustrate the workings of an organic matrixstructure. This sequence exposes the meaning and significance of the mechanistic-organic distinction andprovides an example of contingency theory. CCC is in a stable environment, uses a mass-productiontechnology, has simple tasks, and uses a mechanistic structure, while TRW is a high-tech company,employs highly skilled people, operates an intensive technology in a dynamic, changing environment,and uses an organic structure. Students should not be asked to provide a written report on this or theTRW case. These cases should be presented by the instructor to bring out interesting and valuableimplications and protect their teaching value.Continental Can Company of Canada, Ltd. (CCC) is about a routine mass-production organization that isexperiencing conflict between the manufacturing and sales departments. Manufacturing has all the power,and managers are rewarded for reducing costs and increasing efficiency. They have no incentive to beresponsive to the needs of the sales department. Sales are declining somewhat and quality is going down.The issue is how to change the way the company operates and improve its effectiveness. Teaching Objectives

1. To use organizational theory concepts to analyze an organization.2. To show the design choices that create a mechanistic structure.3. To link organizational design to the contingency approach.4. To demonstrate a classic example of production-sales conflict.5. To show the power of a budget in shaping expectations and behavior.Use this case after United Products, Inc. or Bennett’s Machine Shop. It takes about an hour to analyze theissues and see how organizational structure operates. Pop Quiz Questions

1. What structure does the St. Laurent plant use?Answer: Functional structure2. What structure does the Continental Can Company as a whole use?Answer: Geographic structure Issues and Discussion Questions

1. What kinds of organizational design choices has CCC made about the four design challengesdiscussed in Chapter 4? 191
 
a.
 
Vertical Differentiation
There are six levels in the hierarchy, including shop floor employees, and 500 employees. This meansthat CCC has a relatively tall structure.Fox, the plant manager, has a span of control of 8 subordinates and Andrews, the assistant plant manager,has a span of control of 15 subordinates (there are three shifts). Is this too big? No, subordinates are alldoing similar, routine work, and they are all in manufacturing-related functions, so it is easy to monitor and evaluate activities.Is CCC centralized or decentralized? CCC is highly centralized: Fox and Andrews solve problems at thetop. The information gives the impression that foremen have a high level of decision-making authority,and some students will argue that this implies decentralization. The point is to look at where important or significant decisions are made

in the hierarchy, and this is always higher up in CCC. People lower inthe hierarchy handle only routine problems. CCC is tall and centralized. b.
 
Horizontal Differentiation
Inside the St. Laurent plant, is there a high or a low level of horizontal differentiation—division of labor and specialization? There are many different departments shown in Exhibit 1, but all are manufacturing oriented— 

no sales, research and development, or finance. There is a low level of horizontaldifferentiation; it is a simple organization or a low level of complexity.What kind of structure is it? A functional structure: The main function is manufacturing. CCC makes awide variety of different kinds of cans; the other functions are...
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