APPEX CORPORATION

Analysis

Prepared by: Group 1

Neha Singh – MBAEx 37/13
Kumari Nivedita– MBAEx 27/13
Mahesh Yadav – MBAEx 28/13
Manmeet Pahuja – MBAEx 30/13
Manish Bujranpally – MBAEx 29/13
 APPEX CORPORATION

What do you think of Shikhar Sharma’s views of organization structure? Please

discuss each stage with specific references to Greiner’s model of Organization
Growth [p.326-331] and the characteristics of different organizational structures.

During May 1988, Shikhar Ghosh joined as COO and shortly afterwards as CEO to reform Appex
Corporation’s business environment.

The primary problem that Shikhar Ghosh faced on arriving at Appex Corporation was the chaotic condition
of the company’s current organizational structure. From the case, it is evident that as the company grew,
there was need for a change in organizational structure. Shikhar Ghosh constantly tried new ideas by
implementing different organizational structures. A series of problems and limitations that followed each
structural change in the organization prompted him to implement new structures to address the issues at
each level. We will now describe each stage of the Appex’s structural changes executed by Ghosh.

Firstly, Appex Corporation started out with a close-knit group of employees that could easily adjust to
changes and solve problems rapidly. This is similar to Stage 1 of Greiner’s model that talks about growth
through creativity. Innovation and entrepreneurship went hand in hand. Key executives made decisions and
everyone else was involved in developing and selling products. However, as Appex Corporation grew and
new employees were hired, the fragile business structure began to crumble. Employees focused on solving
day-to-day problems. They were unable to address the increasing number of customer complaints. There
were significant failures in product development. Information Flow had become increasingly difficult.

Secondly, Shikhar Ghosh realized that there was a Crisis of Leadership and decided to hire experienced
managers to lead different functional teams. Here, this is similar to Stage 2 of Greiner’s model that talks
about Growth through Direction.

New managers now led teams and provided them with proper direction. When it came to division of
labour, people with functional skills focused on products and the newly hired managers performed the
managerial tasks. This phase was a stepping-stone for role assignment based on expertise.

Nevertheless, this stage brought certain problems with it that Shikhar Ghosh had to handle. The new
managers did not know much about the product and the product team. There was a credibility crisis. This
also resulted in setting of standards by individuals rather than adhering to the organizational policy. Shikhar
Ghosh also found it difficult to measure managerial competency. This ultimately led to a Crisis of
Autonomy.

Thirdly, after a suggestion from Paul Gudonis, Senior Vice-President of Sales and Marketing, Shikhar Ghosh
reorganized the structure by setting up different product teams for each of Appex’s products. This resulted
in a Product division structure.

This structure was in alignment with the product philosophy. Dedicated managers managed each product.
They were responsible for planning and execution of business plans along with integration of functions. The
product teams could work in synchronization with the functional teams. Product updates were provided
regularly to functional teams.

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However, this again created several new problems. There was no clear indication of who had the authority
and no one knew who could take decisions in such teams. There were teething problems between the
product managers and the operations team. The product teams also generated more resource allocation
problems. This ultimately resulted in Crisis of Control.

Fourthly, to solve this crisis of control, Shikhar Ghosh tried to find a right balance between centralized
control (top of the organization) and de-centralized control (functional and divisional level). Therefore, he
decided to introduce the Business Teams, which acted as intermediaries between the product teams and
the corporate management team. They had the authority to make decisions, including resource allocation
decisions, regarding the products. This phase is similar to Greiner’s stage 4 – Growth through Coordination.

Soon Shikhar Ghosh realized that now the organization had many people planning, counting and greasing
the wheel. There were more product groups, meetings and layers of management. This resulted in
diminishing of customer focus. The organization plunged into a Crisis of Red Tape making organization
overly bureaucratic. Now Shikhar Ghosh had a challenge to avoid failure and falling into the chasm.

Finally, Shikhar Ghosh decided to implement a divisional structure thereby heading towards stage 5 of
Greiner’s model – Growth through Collaboration. In order to push the organization up the growth curve, he
established two broad divisions – Intercarrier Services (ICS) and Cellular Management Information System
(IS). A third division - Operations, created to service the two businesses. This new structure improved
accountability, budgeting and planning.

This also resulted in Shikhar Ghosh spending more time on planning its strategic direction.
Divisional structure generated its own problems and challenges. The problem of resource allocation still
existed and divisions did not want to share resources. There was little communication flow across divisions
and hence, it generated less cross-pollinated ideas.

In conclusion, we think that Shikhar Ghosh’s eagerness to try out new ideas brought with it its own benefits
as well as problems. We were able to correlate this case with Greiner’s Model of Organization Growth in
which he tried to solve the crisis at different stages, thereby preventing the organization from falling into a
cha

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