Business Studies Case Study

Topics: Marketing, Management, Electric car Pages: 9 (3124 words) Published: April 22, 2015
Peter Nicholson wishes to convert the factory in the north east to production of the electric taxi. Using data in Appendix C, Table 1, calculate payback period and the average rate of return. (8 marks)

Peter Nicholson proposes to remove two management levels from the organisational structure and to encourage greater empowerment of the workforce. Do you think that this is a good idea? Justify your view. (18 marks)

I believe that delayering the organisational structure by two management layers will encourage greater empowerment of the workforce. He would do this by flattening the organizational hierarchies whereby layers in management are removed and the existing managers’ span of control is broadened. It is believed that flattening hierarchies has numerous benefits but on the flipside, negative effects may be experienced. The rationale or thinking behind delayering or flattening is that it leads to streamlining organizations to enhance efficiency in responding to changes in the market, stay competitive (competitive advantage) and respond to customer needs faster. The implication is that besides reducing or controlling costs, flattening an organization structure’s benefits emanate from changes in governance internally whereby when decision are pushed downwards to kaizen groups, other employees are empowered (can make decisions and feel relevant), responding to customer needs becomes easy and fast , enhances accountability and boosts staff morale. A good example is signing of memos or seeking approvals to refund a customer. If the levels are many, then it could take many hours or even days to refund but when the organization is flat with few levels of management, decision to refund is made there and then. By removing 2 management levels this decreases the businesses cost by not having to pay 10 managers salaries which are very high, this would mean that in the long term the company would save a huge amount of money which in turn means that fixed costs go down which could potentially lead to a larger profit. However, making 10 managers redundant can have a large impact on the companies costs as making managers redundant can be very expensive and could have a negative effect on the company’s cash flow especially since the company isn’t doing well as a whole. This is a short term effect which can be sorted out by obtaining a loan but in the long term this would benefit the business and increase its profitability levels. Another benefit of removing 2 management levels is that the decision making process is much easier and faster the reason it empowers the workforce is because they feel that they are being listened to by higher levels and also that they are more in the loop when it comes to making decisions that will affect the whole company. However even though they know how the business run internally they shouldn’t get rid of 10 managers because they’ve had year of experience between them and know how to run the business successfully and also their expert knowledge about their competitors all they would need help with is the new technology that would bring them into the 21st century and make them even more successful.

The drawbacks of removing the two levels of management means that the managers that are still left will suffer as their workload will increase, their span of control will increase which has negative effects on the business as communication will break down leading to disgruntled employees or jobs and roles not being completed to a high enough standard. Managers may become demoralised because as well as the redundancies causing unease among that level they have also lost some of their authority among the work force due to the workforce increased empowerment This means that Peter Nicholson would like a situation whereby changes in the market are responded to faster, respond to customer needs faster, make the remaining managers more engaged and creative and...
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