The confectionary industry has been undergoing several major changes over the past two decades. As one of the biggest players on the market, Ganong Bros. Limited has suffered from these market ups and downs. There have been years in these two decades on which the company resulted with financial loss at the end of the fiscal year. This paper will discuss a critical financial time for the company, 1995, where the need for change was overwhelming and immediate. The Board of Directors asked the president of the company to design and implement as soon as possible a ‘way out’ strategy that will ensure a comfortable future positioning in the market for Ganong Bros. Limited. There were two major reformations that the management team pointed out should be undertaken to enhance the company’s position; organizational structure and coordination.
Functionality and efficiency are two themes for organizational structuring. A functional organizational structure focuses primarily on increasing the organization’s efficiency by using specialized personnel in handling various processes. At the Ganong Bros, they needed a reorganization of their structure due to the changing conditions of the market. Since the late 1980’s the market had gone global obliging many companies to compete globally. This global competitiveness led that many firms concentrated their efforts in certain segments of the market specializing in one or two products of the confectionery industry. Ganong had failed to do so in time, and that is one of the reasons why it was becoming less competitive, and thus, gaining less profit. Overhead costs were making the company suffer financially. Ganong should move toward specialization in the market. This is why a reorganization of its structures is necessary. This structural reorganization will ensure to the company a higher efficiency in operations for routine tasks, will specialize it in certain sectors of the industry, and make it more reactive to market shocks and changes.
This organizational structuring should include all aspects of the company. It is a fact that the only person from the management team in the Board of Directors is Ganong himself. Despite having very committed and professional members, the Board of Directors cannot adjust what is going wrong in the company. The reason is that board members do not know from within the management history of the company. They are not in touch every day with the processes the company undergoes. That is very significant. Managers are on the front line every day and their voice is not represented as it should. The structural adjustment should begin by giving more voice and decision power to the managers of the company. A sort of decentralization process would greatly benefit the company.
By giving more decision and implementation autonomy to managers, you will impact their performance. First of all, the time of reaction to a problem or a situation will shorten. Managers will not have to wait until the board decides what to do even for routine problems but will act independently. Secondly, this will increase their responsibility toward the sector they are in charge of. And thirdly, this will motivate them to improve their performance. The board will continue to play an important role. It will monitor the activities of each sector and make managers accountable for errors or lack of performance. But it will be easier for the board also since they can easily identify which sector is lacking performance.
But the main responsibility of the board of directors is to ensure proper cooperation among the different sectors of the company. Managing autonomy can tend to make managers and employees care only for their sector and their performance targets. It is the board that will have to make these pieces come together to form a puzzle. Without proper coordination, the company as a whole will continue to suffer. Since Ganong Bros is a small firm compared to other industry giants, it cannot afford futile financial spending. This is the only thing that should be controlled in a centralized way. The board will assign to each sector its finances and will keenly monitor its spending. It is vital that operating costs remain as low as possible for Ganong Bros. proper coordination will automatically give a hand in this process. Each department or sector will not spend unnecessary time and money on futile duties but will benefit from the work of others. This way each sector will strictly specialize in its predefined duties and responsibilities. So they will increase their performance, especially for routine duties. But there exists the risk for a narrow specialization which will harm the company as a whole.
It will be the duty of the board of directors to monitor the situation and not let individual sectors fall into this narrowness. The board can implement a strategy to make departments interact with each other. By being in contact, they will enhance collaboration and avoid being narrow in their duties. What is important, is that Ganong needs to implement this restructuring and coordination strategy as soon as it can.