Case Study : MRA Associates, Inc. and Xecodynamics Assignment Instructions
The final assignment consists of a case study involving two fictitious companies—MRA Associates, Inc., and Xecodynamics, a company MRA Associates plans to purchase. Read and analyze the scenarios described below, then write a paper of at least 15 – 20 pages (excluding title, abstract and reference pages) addressing the numbered points of the assignment listed below under Paper Part 1 and Paper Part 2. In addition to your textbook and other required readings, reference at least eight additional academic resources in your paper.
Scenario Part One:
MRA Associates, Inc. (a fictitious company) is a successful, well-respected, mid-sized engineering consulting firm, based in Denver, Colorado. The company provides consulting services and innovative solutions to address environmental challenges faced by companies, government entities, and public agencies. MRA Associates specializes in the remediation of groundwater contamination, biohazards clean-up, and industrial wastewater treatment solutions. The company has 18 offices, located in major metropolitan areas throughout the country. The company prides itself on designing and implementing breakthrough solutions, and uses cutting edge technologies to assess problems, design strategies, and implement solutions to successfully manage clients’ environmental challenges in a cost effective manner. For comparison purposes, two of the biggest competitors of MRA Associates are URS Corporation and Brown and Caldwell (actual companies).
MRA Associates is organized in a traditional fashion for environmental consulting firms, with geographic regions composed of groups of local offices, each managed as a separate profit center. Most, but not all, local offices have at least one technical specialist in each of the company’s three areas of specialization—groundwater contamination, biohazards cleanup, and industrial wastewater treatment solutions. Regions report to the home office and are accountable for profit and revenue goals. The company’s founders (who comprise most of the top management team) and the regional managers own the majority of the company’s stock. Clients with needs that cover more than one region are handled by account managers, who are instructed to work cooperatively with regional managers to integrate services across profit center boundaries, working with technical specialists from more than one local office. The home office steps in when disputes arise between profit centers and account managers. This kind of dispute can occur when the goals and profit motivations of regional managers and account managers are not aligned.
Approximately two-thirds of the 200 staff members at all levels are trained as engineers or scientists, many with advanced degrees. Few members of the management team have any formal training in management theory or practices. When compared with much larger competitors, MRA Associates believes that its competitive advantages are superior customer service and technological innovation. Consequently, the employee incentive compensation plan stresses client satisfaction and demonstrated technical excellence, as well as profit and revenue objectives. A recent survey of staff members at MRA Associates shows that the majority of employees feel committed to the company because of the high value placed on professionalism and technical excellence. Staff turnover is very low. MRA Associates has achieved several years of profitable growth and currently has strong cash reserves.
Paper Part One:
- Based on the description of MRA Associates, Inc., describe the organizational structure the company currently has in place and its phase in the organizational life cycle. What are the advantages and disadvantages of the current organizational structure? How is authority and control dispersed and managed? How is specialization and coordination handled? Under what circumstances might a matrix structure be appropriate for MRA Associates? How might a change to a matrix structure affect individual staff incentives?
- Describe the levels of technical complexity, task variability and analyzability, and task interdependence of MRA Associates, referencing, as appropriate, the theories of Joan Woodward, Charles Perrow, and James D. Thompson. Based on your analysis, describe the optimal kind of organization structure that seems to fit the characteristics of MRA Associates and explain your rationale.
- Describe the ways managers at MRA Associates can encourage innovation and creativity within the company. How would modifications to organizational design and structure at MRA Associates facilitate the innovation process?
Scenario Part Two:
During the past year, MRA Associates, Inc. has been evaluating the potential purchase of Xecodynamics (a fictitious company), a small firm based in San Diego, California that designs and manufactures components used in clean-up operations at environmentally-contaminated sites. These components—which are used widely throughout the environmental remediation industry—include electronic systems such as groundwater level monitors, remote chemical sensors, and remote electronic data storage devices. Xecodynamics has three key divisions—marketing, sales and customer education; product development and testing; and manufacturing, shipping, and customer support. The company hires independent contractors to install products at the request of its customers.
Most of Xecodynamics’ sales efforts are focused on companies like MRA Associates who recommend Xecodynamics’ products to their clients for purchase on specific projects. Manufacturing occurs in a single location at the San Diego facility. Most manufacturing staff have a high school level education, have learned their tasks on the job, and are hourly, non-unionized employees. Xecodynamics is owned by three people, an engineer who developed the original products and two venture capital investors who are not technically trained. The company had expanded rapidly in the seven years since it was started, but has been struggling recently due to a shortage in investment capital plus the emergence of new competitors. Xecodynamics welcomes a potential purchase by MRA Associates because of the influx of both cash and management expertise that Xecodynamics leadership believes will help the firm better respond to the market need for well-designed components. The company hopes that some of its internal leadership struggles over the vision and future direction of the company will be mitigated by merging with MRA Associates, a much older and more stable company.
MRA Associates believes that acquiring Xecodynamics will give the firm a distinct advantage in the highly-competitive environmental remediation industry because the acquisition will enhance the image of MRA Associates as a technological innovator. Xecodynamics covets MRA Associates’ client list as high value potential customers. MRA Associates believes that the addition of products will provide a new profit stream and a platform for the technical experts at MRA Associates to create innovative new products which can be manufactured in-house. The current venture capital owners of Xecodynamics believe they can make major changes in the profitability of MRA Associates, once they join the management team.
Paper Part Two:
- Describe the organizational structure of Xecodynamics. What are the advantages and disadvantages of the current organizational structure? If Xecodynamics remains a standalone company, what indicators will signal to the leadership team that a change in organizational structure is necessary for the firm to continue to grow and prosper?
- If MRA Associates purchases Xecodynamics, what kinds of challenges will the management team face in restructuring the organization to accommodate Xecodynamics staff and operations? What kinds of resistance to change are likely to be encountered as Xecodynamics is incorporated into MRA Associates? What cultural implications can be expected as a result of the merger of the two companies?
- MRA Associates believes that at least part of the manufacturing currently taking place at Xecodynamic’s facility in San Diego, California could be outsourced to Mexico to take advantage of the lower wages and costs of doing business across the border. How would a move to outsource core manufacturing processes to Mexico change the culture of the organization? What are the ethical considerations that would come into play in making an outsourcing decision?
- If MRA Associates purchases Xecodynamics, the management dynamics of the firm will change as the current owners and managers of Xecodynamics, all of whom are interested in sharing power and control in the merged company, are incorporated into the firm. How will structural and cultural changes in the merged company affect the relative power of both the existing managers in MRA Associates and the new managers who come from Xecodynamics? How might this power sharing change affect employees?
Case Study: MRA Associates, Inc. and Xecodynamics – Sample Answer
The purpose of this paper is to elaborate on the findings in the case study involving two companies, which are MRA Associates, Inc. and Xecodynamics and compare their organizational structure, organizational culture and organizational performances, the advantages and disadvantages of the structures in place and specific changes initiated at the companies. It is detailed in two parts.
MRA Associates organizational structure.
MRA Associates uses divisional type of organizational structure, since it works in a wide geographical area and consists of divisions that are self-regulated. It has geographical regions comprising of clusters of local offices where each one of them is managed as a distinct profit center which proves that it has divisional structure. The managers in the diverse regions work under the home office, and remain accountable to the goals and objectives of the company. It has 200 members of staff, in which two thirds are trained as scientists or engineers and some with advanced degrees. It has the employee incentive compensation plan that emphasizes on customer satisfaction and proved employee technical distinction, and profits and returns goals. The company is in phase five on the organizational life cycle, which emphasizes on growth through partnership (Patel, 2013). At this phase, the company tries to overcome obstacles by furnishing managers with skills for resolving disagreements within the company and promoting teamwork.
The Benefits and Disadvantages of the organizational culture
One of the benefits of this structure is that necessities can be met promptly and in detail. The other advantage is that since it uses deputized power, performance can be openly gauged with each division. To add on that is the fact that the structure is more resourceful when managing work in diverse divisions, hence improving tractability to feedbacks in case there are changes in market demands. The structure emphasizes on professionalism and technical excellence, a value that creates a level of satisfaction and commitments by the company to the employees, hence reducing cases of staff turnover (Lipmanowicz & McCandless, 2014). The other one is that it will be easy for the company to make changes in case there is need of downsizing or restructuring, by simply adding or removing a division in its systems. The disadvantage is that since employees are working in different divisions, communication is hindered which limits sharing of information and ideas. It is also costly to manage because of its scope and range, facilitating the need of more knowledgeable managers for each division. The other disadvantage is that it can promote unhealthy internal competitions and conflicts in the different divisions, which might affect the company’s productivity because of reduced cooperation between the divisions. This structure emphasizes more on divisional goals rather than overall organizational goals, which might result in replication of responsibilities.
How Dispersal of Authority and Control Occurs
Authority and control is dispersed and managed through various offices in the company. The company comprises of groups of local offices, in which each is managed separately, where authority is instilled in employees and their reason to make more profit (Kotter, 2012). The different regions will then report to the home office and the managers of each region are held accountable for the company’s profit and returns goal line. When difference of opinion arise between account managers and centers of profit, the home office has step in to aid in solving the problems.
How specialization and coordination is handled
Specialization and coordination is handled in a very professional way, it is seen that the company specialty entails the remediation of groundwater contamination, cleanup of biohazards, and industrial water, as well treatment solutions for waste water. In order for it to achieve its goals, it has divided its offices in different localities; with at least one technical specialist present in every one of the three specialization areas (Creasey & Hiatt, 2012). There is also good coordination between the staff and the customers. Customers with requests covering more than one region obtain help from account managers who are under directives to join forces with regional managers in order to integrate services across profit center margins and coordinate with technical specialists in various localities.
Appropriateness of matrix structure
Matrix structure might be suitable for MRA Associates since it allows for specialization which increases an employee’s knowledge and skills, and allows room for persons to be selected according to job requirements. It also groups employees by both divisional and functional method; therefore the structure maximizes the strong points and minimizes the faults in both structures, producing a more efficient structure (Creasey & Hiatt, 2012). It also allows team members to share information hence promoting the level of interaction, sharing of knowledge; experiences and skills. A variation to matrix structure might influence individual staff incentive in that, with the use of employee performance matrix, supervisors will be able to determine incentives that are fair and support company goals. These will also mean that employees’ incentives will be gauged by their performances.
Technical complexity, variability and analyzability of task, and interdependence of task
The technical complexity levels, those of variability and analyzability of task, and interdependence of task of MRA Associates vary in regard to specialization at stake. Most local offices, at least, have one technical expert in each one of the three sections of the company’s specialization, that entail ground water contamination, clean up of biohazards, and provision of solution for industrial wastewater (Obel & Burton, 2011). Therefore the level of technical complexity is not high since most of guiding and monitoring roles are done regionally, hence making operations easier. However customers with needs covering more than one region are handled in a different way which complicates the process. Tasks are categorized and analyzed in terms of specialization and division, while task interdependence is seen from the fact that each region works separately and the region managers are accountable to company goals and objectives.
Considering the management of MRA Associates, there is no definite way to manage since managers are different and have different ways of managing as well, so different regions in the company have different ways of managing. Joan Woodward theory states that there is no correlation between an organizational structure and organizational performance; instead, organizational performance can be gauged with the type of technology in the company. This explains why MRA Associates continued to grow despite of variations in its structure. For a company to be successful there must be congruence between the type of technology used and organizational structure in place (Northouse, 2015). The theory of Charles Perrow states that the type of technology in a company determines the efficiencies of the organizational structure. According to Perrow, task variability is the total number of exceptions an employee comes across in a normal workday, while task variability is the level in which a search action is necessary to solve the existing difficulty. This theory argues that technology users need less search effort when managing exceptions on condition that they use existing analytical methods and not trusting on speculation and intuition. This was applied in MRA Associates, hence proving its continual growth and profitability.
When it comes to organizational complexity, Perrow contributed that controlling complex systems is difficult and might be disastrous, it also requires thorough scrutiny to identify a problem. According to James Thompson theory, technology is seen as an aspect that appreciates activities in a complex organization, categorizing organizations according to its technologies and surroundings (Northouse, 2015). The other aspect contributed by Thompson is that uncertainty determines an organizational structure and that companies will embrace structures that reduce the uncertainty. The other point is that organizations with complex structures will not use minor models; therefore it will have to be broken down into smaller units for easy analysis and monitoring.
Optimal organizational structure
The ideal organizational structure that can suit the features of MRA Associates is matrix structure; this is elaborated from the fact that the company has both functional and divisional structures in place, one of the characteristics of matrix structures (Miner, 2015). Employees are grouped in terms of their functionality in the company and also the presence of divisions, it is seen that approximately two thirds of the 200 employees in the company are trained either as scientists or as engineers, and also the presence of local offices in different regions, with each region having a technical specialists, this illustrates the need of matrix structure.
Innovation and creativity
MRA Associates’ managers can inspire innovation as well as creativity in the company using various strategies. First, by encouraging and promoting intrapreneurship, many employees will be motivated to come up with new ideas which will eventually benefit both the employee and the company. The second idea is by encouraging employees to further their studies and advance their careers especially in areas needing improvements in the company. This can be enhanced through the provision of free college fees by the company and allocation of enough time for research and analysis of the issues (Laloux & Wilber, 2014). The managers can also create a portal that can be accessed by all the stakeholders in the company, this is the place where anyone is allowed to post any new idea that can be used to add value to its performance and productivity, the ideas can be accessed regularly promoting innovation. The firm could also resolve in rewarding the best innovative employees on a regular basis hence encouraging the rest to follow the challenge, which will result to positive competition and increased innovation in the long run.
The other option is courting long time employees who have more experience about the company’s products and services, and assigning them responsibilities of innovation of a specific product irrespective of their academic qualifications. The other option is by embracing analytics and confirming to employees that each idea from everyone has the possibility of improving the company, therefore everyone has a sole responsibility of coming with ideas (Kotter, 2012). The manager has to keep on acknowledging their ideas to avoid discouraging the members from future contribution, since innovation is a continual process. Upon ensuring that it has a strong organizational structure, the managers can take advantage of the good academic settings of its employees, since most of them have advanced degrees, it has a high potential of getting better innovative ideas.
Modifications to organizational design and structure
Alterations to organizational design as well as structure at MRA Associates will enable the innovation process in that it will stress on the importance of novelty. Standard measures will also be made that encourage and promote innovation. For example, the introduction of training facilities and services in the structure will definitely improve an employee’s ways of thinking and creativity. The relationship between organizational structure and design in itself if well-structured will promote innovation (Obel & Burton, 2011). Since organizational design is a method of incorporating individuals, information and know-how, and structure as the official lines of expertise and the responsibilities of each employee, then if the factors are modified with the main aim of improving innovation, the idea will work efficiently. If the structure and design is modified after considering the organizations environment, existing structures and performances’, this will definitely empower the advancement of new ideas and products because of the rapidly changing environmental conditions, improving the rate of innovation.
The organizational structure of Xecodynamics
Xecodynamics uses the functional type of organizational structure, whereby the chain of command is based on the roles of each employee, grouping together employees working in the same specialization. It is set in such a manner that each unit of the organization is grouped in accordance to the roles it has in the company. Xecodynamics belongs to three people, one being an engineer who formed the idea of the original products, as well as the two investors who lack technical training (Lipmanowicz & McCandless, 2014). It has three key divisions that are structured according to the roles they offer to the company. The first division is sales, customer education and marketing, the second is development of product as well as and testing, and finally, the third one entails manufacturing, shipping as well as customer support. It prefers hiring self-governing service providers whenever they need to fix products following clients’ request. Majority of employees involved in the manufacturing process have high school education only but have gained experience while handling their job.
The Benefits and disadvantages of the structure
One of the benefits of a structure such as this one is that it enables employees to focus since they are aware that they are working towards a common goal. The other advantage is that it is suitable for small companies in the sense that each department can depend on the knowledge and skills of its employees to support and improve itself (Patel, 2013). However, it also has disadvantages; one of them is that there is poor communication and harmonization between the various departments in the company since the structure encourages all departments to work independently.
Indicators for change
If Xecodynamics continues remaining separate, specific pointers will signal the management that changes to the organizational structure is essential for the steadiness of the firm. The first indicator is their level of competency compared to the emerging competitors. If they the company is more competitive in the market, there is no need for making changes, but if it is losing its marketability, then changes have to be initiated. The second indicator is the level of productivity, the products from the manufacturing plant have to be of the highest quality, right quantify to satisfy market demands and ensure that they are readily available, but if all these are not met within the required time frame, the company is heading to a failure, which can be avoided by making early changes (Obel & Burton, 2011). The other indicator is competency of its employees, it seen that most of the staff in the manufacturing department have high school level education, if the competing companies have more qualified employees, then it should be ready for tough competition when it comes to productivity, a factor which might call for changes in the organizational structure.
The other one is the rate of innovation in the company, if it is low then that is a situation that needs to be addressed by instituting changes. The other indicator is employee relations with the management team. It is seen that the manufacturing employees schooled up to high school and do not belong to any union, this means that they are not well represented as employees of the company (Kotter, 2012). This shows that there is poor employee relations in that organizational structure, needing changes for future growth and expansion of the company. A happy and motivated employee will work harder and improve the company’s overall productivity, compared to a demotivated employee who is forced to work in harsh working conditions.
Challenges faced in restructuring the organization
If MRA Associates goes ahead to purchase Xecodynamics, there are various challenges that the management team will face in regarding restructuring the organization to enable accommodation of Xecodynamics staff as well as operations. The first challenge is the design of the structure; the management team has to know the type or restructuring appropriate for the opportunity the company was facing. It will be challenging in the sense that most of the employees in Xecodynamics were not trained and experienced compared to employees in MRA Associates, but they all had to work as a team , hence requiring a very standard organizational structure that is efficient and impartial (Obel & Burton, 2011). The second challenge is execution of the restructuring process; the team has to come up with measures of managing the whole process and ways of eliminating the barriers that might hinder the restricting of the organization. This will also need the consideration of policies used in Xecodynamics and trying to incorporate into the ones present in MRA Associates in order to ensure that the process adds value to all the stakeholders involved. The third challenge is marketing, the team has to come with ways of explaining the whole process to potential financiers the importance of the restructuring.
Resistance to change
Different kinds of change resistances are likely to be experienced as Xecodynamics is integrated into MRA Associates. This occurs when the change process is not well interpreted to the employees, or there are discrepancies with how it is managed. There will be resistance from a section of employees because of their parochial self-interests, mostly due to threats to core skills and experiences which some of the employees from Xecodynamics had, and the fact that in case of any downsizing in future, they might be one of the victims (Laloux & Wilber, 2014). Other people with low tolerance to changes and disinterest might influence those who had accepted the changes leading to massive resistances; this can be in form of strikes, job boycotts or discontinuing production. Their will be introduction of new rules because the whole organizational structure had to be restructured, this rules might cause resistance to those who disagree with them.
Different cultural effects can be anticipated due to the merger between Xecodynamics and MRA Associates. The first one is the leadership styles, which will be beneficial to the Xecodynamics employees who had poor leadership styles, and will benefit from the one in MRA Associates that encouraged employee development and growth (Patel, 2013). The other aspect that might be affected by culture is the way people work and relate with each other. MRA Associates employees were used to good organizational culture that promoted integration and decision sharing, while Xecodynamics employees were used to working in specific departments that restricted sharing of information. If the cultural expectations of both companies are varying, then the working procedures may be disrupted with each company’s staffs becoming irritated by their coworkers’ lack of understanding on how work should be handled. The other social aspect is beliefs regarding personal achievement, other people believe in team work in order to achieve company and personal goals while others believe in individual efforts and performances. Therefore, if such people are integrated together, it might lead to individual hatred of one another and lack of support while working, leading to low productivity and negates the whole process of merging the two companies.
Changes in organizational culture due to outsourcing
A move to outsource core manufacturing processes of Xecodynamics facility in San Diego to Mexico would bring changes to the organization culture in many ways. Outsourcing is seen as the allocation of responsibilities to a third party in to order to attain the desired benefits including increased productivities, reduced costs and access to cheap labor workforce. In this case, offshore outsourcing was considered since Mexico it is a low cost country (Lipmanowicz & McCandless, 2014). Offshore outsourcing initiative by the company will create a picture that the company does not care about the welfare of local employees who were working in the manufacturing sector, since it will definitely raise questions of whether they will be retrenched or laid off due to the transfer of the sector.
The employees will find it challenging to continue contributing towards the success of the company if they know very well that it will eventually lead to job loss or reallocations to new roles, in the event that the outsourcing takes place.
Individuals affected by the outsourcing may have to accept changes within the organization, and may feel uncomfortable in their new roles after spending years perfecting their skills and experiences in their former roles (Miner, 2015). Without proper training and career counseling in the transition process, many employees will lose their level of efficiencies and competencies leading to reduced company productivity and negating the purpose of outsourcing. The local customers will also be affected, without appropriate communication on the major reasons for outsourcing and having close attention on their feedbacks, they might have a negative impression of a company with selfish interests which is not encouraged in any business activity.
Ethical considerations when making outsourcing decision
When making an outsourcing decision, many ethical considerations come into play. The first one is the quality of service to be provided by the third party company. It should be considered that despite of outsourcing being seen as a way of reducing costs quality must not be compromised. The second aspect is working environment; the company must ensure that the outsourcing provider is able to employ the required working environmental conditions for its employees including good human resource policies (Obel & Burton, 2011). The third aspect is security worries; there should be agreements of confidentiality between the outsourcing provider and the company to avoid cases of losing critical company data and intellectual property thefts. The other ethical aspect is cultural differences between the two companies; these can create serious misunderstandings especially when the differences are so huge. The other factor to consider is that, the company must not pay substandard wages, and it has to follow all the regulatory compliances required by the respective states. Finally, it is recommended that one treats the outsourcing provider as a partner by making a positive and productive partnership that is transparent.
Structural and cultural changes in the merged company
The structural as well as cultural changes in the combined company will influence the relative powers of both the present managers in MRA Associates as well as the new managers from Xecodynamics in many ways. Organizational structure entails how jobs and responsibilities are divided, grouped and coordinated. It entails work specialization, departmentalization, and chain of command, and span of control. Considering the two companies, it is evident that the managerial team from Xecodynamics will be disadvantaged because most of the managerial team in MRA Associates are well trained and experienced, and might challenge the competencies of Xecodynamics managers. Organizational culture entails the dogmas, principles and norms, and symbols signifying the exclusive charisma of an organization and provides the frameworks for activities in it (Miner, 2015). Both companies have different organizational structures, for example MRA Associates value innovation and risk taking, paying attention to the detailed information and people and team orientation, while the Xecodynamics managers lack none of this characteristics. It is evident that there will be conflicts when trying to integrate the new values to the Xecodynamics managers who might want to follow its own beliefs. Since power is seen as the ability to influence others, the wrangles for power between the managers will affect their productivity in the company, which might result to ineffectiveness.
Effects of power sharing to employees
The power sharing change affects employees in many ways, the first one is that a good organizational structure should have chain of command and principle of one boss, such that an employee will have to receive orders and be accountable to one boss at a time to avoid conflicts of interests and duplication of responsibilities, but lack of will result in confusions and low productivity (Obel & Burton, 2011). It might lead to employee disorientations and division of loyalty, especially when employees from Xecodynamics decide to remain being loyal to its managers ignoring the presence of other managers from MRA Associates. Unity of command provides a disciplined, stable and orderly existence in an organization, therefore lack of it will create a poor relationship between the mangers and the subordinates, which might reduce the level of productivity. Order Unique Answer Now