Mayne was one of the biggest and most dominating companies concerning health care in Australia. It had an unbalanced history with ups and downs. It specialized in different areas. They started as a delivery company, which grew into an important logistics company. Later Mayne entered different industries including the health care section. Their goal was to be the market leader in the medical industry by owning hospitals, providing drugs and services.
But due to poorly evaluated situations the company encountered several management and profitability issues.
Depending on which period we look at the company, it has its strengths and weaknesses. Directly after entering the health care section, they had very specialized workers, this was their strong point since they needed professionals with an experienced view on the job they had to do. The down side was that they did not have a lot of authority. They were forced to listen to the decision makers who were a small centralized group of managers.
Later on they even fired the specialized doctors and nurses and hired new inexperienced staff to do the job in order to keep the costs low. This of course was criticized and seen as a weak point in the history of the company.
The environment in the 20th century changed rapidly, Mayne did not have the ability to respond to those quick transformations because of the limited focused management.
All this is presented in the case and is important information in order to understand what went wrong. They changed the structures within the organization, but did they choose the right ones to make the company come perform at it’s best? And was the cause of the issues the company struggled with a structural problem? All these questions will be discussed in this case study.
Structural issues Mayne is facing
Mayne was founded as a delivery company in 1885, an organization with a simple structure, highly centralized and low in complexity since the authority laid in the hands of the two entrepreneurs Mayne and Nickless. As the company grew, it got more complex, and they installed the machine bureaucracy. They saw new opportunities and changed the strategy. They started to operate internationally and entered new industries.
This required an organizational restructuring. Based on the product lines they built divisions. In this case the divisional structure would be advisable. Complications arose as the strategic apex did not want to forfeit their control. The result was inadequate, because they had most of the characteristics of the divisional structure but lacked decentralized decision making.
A solution to the crisis was to hive of all industry lines except the medical sector. They enlarged this industry and restructured it under the new manager Peter Smedley. He had his own strategic goals for the company and to reach them he undertook radical steps.
He tried in a complex environment to build up the machine bureaucracy. The hospitals disposed of highly skilled medical specialists which did not have the authority to make any decisions. Their head office had to give permission for every action. This did not result in a positive outcome. When Smedley left the organization, they started to give the hospitals more responsibilities and this was the first step in the organization’s history to decentralization.
Success and failure of organizations structure
The organizational structure is the framework of a company. It defines areas of responsibilities and gives guidelines to management who have to lead the organization. The effectiveness of the company depends on the structure. If the structure is applied at the appropriate time and in a correct way, success is more easily obtained. In contrast, if the structure is not used in the proper way the company can not achieve its goals and so we talk about failure.
Mayne provides an eidetic example: At the beginning they used an organizational structure which matched with the...
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