Bagby Copy Company

     Discuss the tradeoffs that Bagby faces in choosing between specialized and broad task

     Bagby Copy Company manufactures 10 different copiers. The main part of these
copiers is a wiring bundle. This device is plugged into various components
during the assembly process. They can assign each major task in this process
to different employees using a broad task assignment or one individual can be
assigned the task of producing the completed bundle using a specialized task
assignment. Discussion: Some of the advantages that Bagby's managers will obtain
if they divide the total task of the manufacturing process into specific jobs or
tasks are: Exploiting comparative advantage: Specialized task assignments will
permit managers at Bagby to match people with jobs based on skills and training
so this will permit employees concentrate on their particular specialties. For
example, Bagby can hire engineers to design and develop a product and business
people to do the marketing. The principle of comparative advantage suggest that
this specialization will often produce higher output than using individuals to
perform a broad tasks. Lower cost-training expenses: With specialized task
assignment, each employee is trained to complete one basis function. With broad
task assignment, employees are trained to complete more than one function, this
can be very expensive. For instances, suppose at Bagby the designing function
requires an engineer, while in the line of production function requires a person
with a lower education. Specialized task assignment allows Bagby's managers to
hire one engineer and one person without an advanced degree. With broad task
assignment, the level of education required is usually the highest level, so it
will cost more for Bagby to hire two persons with college degree than one. Broad
task assignment is more expensive than specialized task assignment. Some of the
costs of specialized task assignments are: Forgone complementarities across
tasks: Supposing that Bagby's engineers have to design and develop a new copier
but they do not participate into the manufacturing and marketing functions, they
will not have the sufficient feedback to develop a successful product. This
feedback will be traduced in customers needs, future market opportunities or
cheaper substitutes for raw materials. As another example, if within a product
unit, only one person is in charge of assemble and check the wired bundle the
care with which person does his job will decrease. Coordination costs: The
activities of specialized employees have to be coordinated. For instance, Bagby
would have to establish the methods and procedures required to process a certain
quantity of bundles during a period of time so technicians could use the same
methods and procedures to process different kinds of bundles, this required a
high level of coordination between the different product units. Bagby's managers
will also need to coordinate procedures between functional and product basis
groups. Functional myopia: With specialized task assignment, employees tend to
concentrate on their individual functions rather than on the overall process of
providing good sales and services. For example, the performance of the
manufacturing department could be measure base on the quantity of produced units
and the performance of the marketing department could be measure based on sales,
but if the quality of the copiers decrease sales will be negatively affected and
the performance of the marketing department will be low while the performance of
the manufacturing department remains high. Reduced flexibility: Failure to
cross-train employees has costs as well as benefits. For example, if only one
person is trained to perform a particular function he or she becomes
indispensable for the organization and this is a disadvantage when bargaining
with the employee over salary and other benefits. From an incentive point of
view, it is sometimes better to have employees concentrate on a narrow set of
tasks, while in other circumstances, a broad set of tasks is preferred, it
depends on the business activity. 2. Discuss the tradeoffs (ventajas o
desventajas) between these two methods of grouping wire-harness makers into
subgroups. Facts: In either case, there are a group of employees that are
assigned individual tasks to produce a wire harness for a particular copier
(broad task assignment), so there is 10 subgroups of wire harness makers. Bagby

Copy Company has the following alternatives: 1. Place all 10 groups in one
harness department. 2. All groups can be assigned to and report to a manager
responsible for a particular copier. Discussion: If Bagby decided to place all

10 groups in one harness department this will lower the communication and
coordination costs because members will report to the same manger. Employees are
also more likely to form closer working relationships if they share the same
workspace (especially if they are evaluated and compensated on subunit
performance. They will develop rules and procedures in order to coordinating
activities among interdependent subunits. There is a tradeoff between the
benefits that come from grouping people together and the cost of coordinating
their activities with other subunits. In addition, it is also important to
consider incentive issues (some groupings make it easier to devise productive
performance-evaluation and reward systems than other groupings. Grouping Jobs by

Functions One common method of grouping jobs is by functional specialty
(engineering, design, sales and finance). This organizational arrangement places
each primary function in one major subunit (rather than multiple subunits).

Individual jobs are characterized by specialized task assignments. Rules and
procedures are established for coordinating the activities across the functions.

The major benefits from grouping jobs by function are: Helps to promote
effective coordination within functional areas. For example a department's
supervisor at Bagby can assign employees to specific projects based on current
workload and expertise. It is also generally easier for functional specialists
to share information if they are in the same department. For instance, if a
service technician develops a new better way to assemble a copier, that
employee's supervisor can help promote its use by training other technicians in
the department. This kind of grouping helps to promote functional expertise.

Individuals focus on developing specific function.. skills and are directly
supervised by knowledgeable individuals who can help with this development.

There is a well-defined promotion path for employees, so they will tend to work
their way up within a functional department. Having a well-defined promotion
path can reduce employee uncertainty about career paths and thus can make it
less expensive to attract and retain qualified employees. The disadvantages are:

The opportunity cost of using senior management's valuable time coordinating
functions and making operating decisions. This time might better be spent on
activities such as planning. There can be significant, time-consuming
coordination problems across departments. Information can be lost in transfers
between departments. Employees sometimes concentrate on their function
specialties rather than in the process of satisfying consumers. For instance the
sales departments might focus on achieving departments goals, even if it imposes
costs on other departments in the organization. Grouping Jobs by Product or

Geography Organizations, which group jobs into collections of business units,
based on product or geographic area. Operating decisions such as products

Benefits of Product Subunits are: Decision rights for operations are assigned to
individuals lower in the organizations, where in man cases the relevant specific
knowledge is located. Managers of business units are compensated based on the
performance of their units, this provides incentives to use this specific
knowledge more productively. Decentralizing decision rights to business-unit
managers also frees senior management to concentrate on other, more strategic
issues. A product focus promotes coordination among the functions that must be
completed to produce and market a particular product or to serve a given
geographic area. Problems with Product Subunits are: Business-unit managers tend
to focus on the performance of their own units. For example, there is likely 3.

Discuss the tradeoffs Bagby faces in choosing among the country, product, and
matrix forms of organizing its international operations. Facts: Bagby operates
in 5 European countries. En each country there is a manager responsible for the
manufacturing and marketing of al 10 copiers. The company is considering 2
alternatives: Organize its foreign operations around products, so there would
be 10 international product managers with decision rights for managing the
manufacturing and sale of a particular copier throughout Europe. Create a
matrix organization, organized around product and country. Discussion: With the
first alternative, Bagby will have 50 managers, too many people to take
decisions. This will also requires a lot of coordination and a special reward
system to evaluate the performance of all this units. This will be to expensive.

On the other hand senior management will decentralize operational rights and
have more time to work in strategic issues. With the design of a matrix
organization, Bagby will attempt to maximize the strengths and minimize the
weakness of functional and product bases. In practical terms, the matrix design
combines functional and product departmental bases because it is seen as a
balance compromise between functional and product organization, between
departmentalization by function and by product. Matrix organizations achieve the
desired balance by superimposing a horizontal structure of authority, influence,
and communication on the vertical structure. Copiers Functions Manufacturing

Marketing Copier A Copier B Copier C Copier D Copier E Copier F Copier G Copier

H Copier I Copier J In this chart personnel assigned in each cell belong not
only to the functional department but also to a particular product (different
kind of copiers). For example, Manufacturing and Marketing Departments are
assigned to work on one or more products (from A to J). As a consequence,
personnel must report to two managers: one in their functional department and
one in the product unit. The existence of a dual authority system is a
distinguishing characteristic of matrix organization. The potential conflict
between allegiance to one's functional manager and one's product manager must be
recognized and dealt with in matrix organizations. Matrix structures are found
in organizations that: Require responses to rapid change in two or more
environments, such as technology and markets. (This is the case of Bagby).

Face uncertainties that generate high information processing requirements.

Must deal with financial and human resources constraints. Managers confronting
these circumstances must obtain certain advantages of the matrix structure.

Matrix structure facilitates the utilization of highly specialized staff and
equipment. Each product unit can share the specialized resource with other
units, rather than duplicating it to provide independent coverage for each. This
is a particular advantage when products don't require the specialist's full-time
efforts. For example, a copier may require only half an electrical technician's
time. Rather than having several underutilized electrical technicians assigned
to each kind of copier, Bagby can keep fewer of them fully utilized by shifting
them from product to product. Such flexibility speeds response to competitive
conditions, technological break-through and other environmental changes. Also,
these interactions encourage cross-knowledge and exchange of ideas such as when
an engineer must discuss the pros and cons of a copier design with a marketing
expert. Each specialist must be able to listen, understand to response to
other's view. At the same time, specialists maintain ongoing contact with
members of their own discipline because they are also members of a functional
department. A fully developed matrix organization has product management
departments along with the usual functional departments. Every employee has an
assignment in a functional department and one or more product group. In summary,
to keep an organization responsive to changes in its task and general
environments, as the organizations grows and becomes more complex, managers must
increase coordination among functions and product units by using complex
integrating mechanisms. Managers must decide on the best way to organize their
structures to create an organizational architecture that allows them to make the
best of organizational resources.


1. James L Gibson, John M. Ivancevich and James H. Donnelly Jr.,

Organizations, Behavior Structure Processes