Based on your observations, what organizational form will you choose for holden evan?

Date: 4 May 2021

SIMULATION TITLE: Organizational Structure

SIMULATION DESCRIPTION: Holden Evan, Inc. is a global powerhouse in branded

consumer packaged goods. The company has a divisional structure with three distinct SBUs:

Beauty, Health, and Home and Family. Last year the company's Health SBU generated

negative press for its disastrous entry into China when sales flopped. The same year, each of

Holden Evan's SBUs was caught off guard by dramatic increases in the costs of several

manufacturing inputs. The CEO tasks you, the newly-hired SVP of Worldwide Operations,

with making a thorough study as to what caused the disasters last year, and with providing

thoughtful recommendations.

You earned 100 percent.

Background

Holden Evan, Inc. is a global powerhouse in branded consumer packaged goods. The

company is organized into three distinct Strategic Business Units (SBUs): Beauty, Health,

and Home and Family. Holden Evan's corporate strategy is built around its leading market

brands. Products of all SBUs are marketed to consumers and sold (with few exceptions) to

the same retailers in all markets. The company's growth is driven by ongoing marketing and

brand management. Each of the SBUs has limited autonomy and is responsible for its own

marketing, expansion of product lines, and performance. The parent company is the ultimate

overseer and handles legal and financial functions.

Background

Last year the company's Health SBU generated negative press for its disastrous entry into

China. For years, the SBU had performed its own research and analysis of the Chinese

market from its U.S. headquarters. When the SBU finally introduced its products into China,

4. The marketing team will be responsible for managing each brand on an ongoing basis. How is

this organizational structure the best choice for brand management?

OPTION 1. Entering new markets is what marketers prefer to do; this structure will force the team

to take on the unpleasant task of brand management.

OPTION 2. This structure is the only one that allows for employees to work on brands, rather than

projects.

[OPTION 3.] A consolidated marketing group will allow individual brand managers to use the

resources of the entire marketing organization rather than just the resources of their SBU.

5. The company's next big push is introducing the products of the Health SBU into India. How will

the matrix structure avoid the problems encountered in China last year?

OPTION 1. The matrix organization will eliminate all competition between functional groups,

because they will now work together.

[OPTION 2.] The matrix organization will allow employees from different specialties to work

together as a group, share information, and respond quickly to problems.

OPTION 3. Functional specialists will benefit from having a single reporting relationship with the

project manager.

6. Marketing employees will need to manage the company's brands in the India market on an

ongoing basis. How will the matrix organization facilitate this?

OPTION 1. There will be no ongoing brand management once the company has switched to the

matrix organization, since all projects must have a beginning and an end.

[OPTION 2.] New project teams will be created periodically to manage the brands.

OPTION 3. Since the matrix team does not directly provide for brand management, you will

need to modify the structure somewhat.

7. What action will you take to more effectively manage commodity costs?

OPTION 1. Consolidate your three SBU procurement teams into one. This will reduce costs by

eliminating duplicate positions and capitalizing on the company's purchasing power. The cost

savings will provide the means for you to develop an in-house commodity price hedging team.

OPTION 2. Historically, Holden Evan's three procurement teams have done a good job of

keeping commodity costs down. You should keep these teams in place and engage a large

financial firm to sell your teams hedging against future commodity price spikes.

[OPTION 3.] Consolidate your three SBU procurement teams into one. Enter into agreements with

suppliers of energy, raw grains, and chemicals, to utilize their hedging expertise to protect

Holden Evan against price spikes and earn fees based on the savings they generate for your

company.

What organizational form will you choose for Holden Evan?

Is the principle that no subordinate in an organization should report to more than one manager?

Which structure removes vertical and horizontal boundaries?