The analysis of the OAD case regarding two companies enables the students to understand the importance of management style in the overall performance of the organization. Those who will analyze the details pertaining to the case will come to realize that the management of a particular organization is dependent on leadership and management style of the top executive and how he or she deals with the different factors that affect the organization (Wasson, 2006, p.12).
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In this particular case it is important to focus not only on the management style of the two leaders but also on the different factors that contributed to the outcome of the bidding war. It is of great importance to learn from the lessons that can be gleaned from this study, especially when it comes to developing strategies to ensure the sustainability of the company.
It can be argued that ACME was at the right place at the right time and they benefited from high demand of electronic products. But in an instant the circumstances can change so quickly and it may not favor them the second time around.
Both Acme and Omega came from the same parent company. When the parent company was bought by a Cleveland manufacturer the buyer had no interest in the electronics division of the said company. Thus, this division was subsequently divided into two smaller companies based on the location of their respective manufacturing facilities. Thus, the facility located in Waterford, Pennsylvania became the Acme Electronics Company while the facility located in Erie became the core component of the Omega Electronics Company.
The two investors retained the core personnel that were working at the time when they bought their respective businesses. But Acme promoted its general manager to President while Omega hired an outsider, to fill in the position of president of the company.
In the former it was the promotion of someone who has known the electronics business for a very long time especially when it comes to the projects that both Acme and Omega are competing against. On the other hand Omega hired someone from a research laboratory. This professional background would play a major role in the development of Jim Rawl’s leadership philosophy that he utilized in dealing with the problems he encountered at Omega.
The different approaches to hiring the top leader of the company can help explain why Acme surpassed Omega in all aspects of the business. Acme is more profitable than Omega. Acme can hire more people than its rival. This means that it is able to secure more contracts and expected to work on more projects as compared to Omega. However, both companies will be tested when they come across a project that forced them to build from scratch.
Linkage to OAD
This case relates to the issue of organizational structure (Daft, 2007, p. 99). It highlights the pros and cons of two types of organizational structures: the organic versus the mechanistic structure of corporate governance. It is important to tackle this issue and based on the details of the case there are certain ramifications if a leader chooses organic over mechanistic form of management.
In this particular case the author made a clear argument that there is no method that can be used to deal with any specific issue or problem that would crop up in the course of a business cycle. However, there are principles that can be observed based on how Rawls and Tyler dealt with the situation. In the end management styles and leadership principles are overly dependent on the context of the issues that the leader has to deal with.
Compare and contrast the management styles of Acme and Omega.
Omega utilized an organic management style. This is based on the philosophical beliefs of the CEO Jim Rawls. It requires a certain leadership philosophy to develop a management strategy that relies more on networking and maintaining close relationships with co-workers.
It is easy to understand why many leaders prefer this management style as opposed to the more formal method utilized in big corporations. In most cases, organic management styles are common in small firms. Due to the size of the company the CEO can afford to use a more personal approach. A more technical term is the utilization of a flat structure as opposed to the hierarchical structure found in most firms (Baligh, 2006, p.15).
The second reason why an organic style is chosen over a mechanistic form of management has something to do with the history of the firm. In the case of Omega, the company was an offshoot from a bigger firm. Jim Rawls was an outsider and therefore he has not mastered the form and function of an electronics company.
His former job required him to oversee an electronic research laboratory. Although a research firm focused on developing cutting-edge technology for the electronics market has many things in common with an electronic manufacturing firm it can also be argued that these two are worlds apart.
The laboratory background of Jim Rawls also explains why he utilized a flat structure and insisted that he did not believe in the importance of organizational charts. In the laboratory there is a greater need for collaboration because engineers and scientists are dealing with theoretical problems and issues that they have never encountered beforehand. Thus, they need to build professional working relationships that entail sharing of information.
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John Tyler on the other hand believes in creating an organization that is managed like the military. Precision and speed is of utmost importance in a manufacturing facility. An electronics laboratory can afford to make mistakes and can afford to have slight delays in their projected goals.
This is based on the fact that the laboratory does not have a clear deadline when it comes to the delivery date of their products. People working in the laboratory do not have to worry about the cost of the experiment because they are paid to produce experimental results. But there is nothing experimental with a manufacturing firm. The sub-contractors like Acme and Omega are expected to deliver on time and with lowered costs.
How do the differences between the companies’ management styles explain the way they coordinated the production of the prototypes?
These two types of management styles were heavily contrasted when Acme and Omega were faced with a new challenge. In the past they had to manufacture printed electronic circuits. But at the decade of the 1960s came to a close, printed electronic circuits was about to be taken over by integrated circuits.
As a consequence both Acme and Omega had to find new markets to be able to utilize the full power of their manufacturing facilities. In 1966 a photocopier manufacturer asked both companies to submit 100 prototypes of an internal memory unit that is built into the copier. This project requires the use of integrated circuits.
Both companies where treading into uncharted territories and in order to deal with the new challenge Jim Rawls and John Tyler knew they had to start from scratch. How they complied with the requirements provided a glimpse into the inner-workings of a mechanistic and organic management styles.
It is interesting to find out that Omega edged out Acme in the production of 100 prototypes. Omega passed the test with excellent results. Acme on the other hand failed miserably and their reputation was close to tatters. The explanation can be seen in how effective the organic management style can be when faced with a new problem.
The secret of Acme is in its efficiency. But efficiency as demonstrated in this study is borne out of routine. In other words, Acme was able to surpass Omega for many years because John Tyler, the head of the said firm had a clear understanding of the industry. The same thing cannot be said of Jim Rawls who was relatively inexperienced when it comes to this particular industry.
Although, Acme had an excellent track record it soon became evident that new projects, with new requirements require an organic management approach in the initial phase. John Tyler used a more mechanistic method in dealing with the problems of a tight schedule and unreliable suppliers.
John Tyler was in unfamiliar territory for probably the first time in his life as the head of an electronics company. They had to deal with other companies that they know little about. This unfamiliarity is the reason why they did not know that the main supplier of a memory chip shuts down during the holidays.
Jim Rawls on the other hand succeeded because the lack of formal structure enabled his engineers and other employees to share ideas. The purchaser may have problems with their suppliers but an engineer who is not part of the procurement departments happens to know of an alternative component that they can use.
John Tyler and his management style prevented his people to share ideas that are crucial when it comes to developing prototypes. Jim Rawls understood this perfectly because in his previous job he was familiar with the requirements of developing a prototype.
If Omega was so much more effective than Acme, why didn’t it win the final contract?
Omega came on top and defeated Acme in the said bidding war. However, the final contract was awarded to Acme. Part of the reason was that Acme already built a reputation when it comes to efficiency. It can be argued that Omega also demonstrated its ability to become efficient especially in the way they handled the delivery of the 100 prototypes with zero error. Nevertheless, there is one particular factor that worked in favor of Acme. The industry experienced high demand. Therefore, the client cannot afford to simply rely on one company.
The electronics boom of the 1960s enabled these two companies to continually share a significant portion of the market. In the long run this was beneficial to Acme because they were able to correct their mistakes. The mechanistic approach enabled them not only to become efficient but also cost-efficient.
What changes would you recommend to Acme and Omega?
Based on the case, it would be best if the leaders realize the importance of using both organic and mechanistic approach (Wesson 25). In the event that a prototype is needed, the organic management style is well-suited for this project since it would be the first time that the company has to deal with the specific requirements of such an assignment.
On the other hand when the firm has already made the necessary adjustments then it would be best to utilize a mechanistic approach. This is important because both Acme and Omega will encounter significant changes in the future and both must learn to adapt to changing needs of the industry (Landy & Conte, 2010, p.296).
Do you think Acme and Omega should merge to better compete in the future?
It is not advisable for these two companies to merge. The differences in leadership philosophy are too significant to be bridged. John Tyler will never be able to work under Jim Rawls. He seems to believe that he knows more about this industry as compared to his competitor. On the other hand a merger will enable both companies to reach a high-level of efficiency.
A merger enables both companies to create a competitive advantage over other firms. These two groups can secure a significant portion of the electronics manufacturing market in their respective region. But for this to succeed, Acme has to absorb Omega in order to prevent conflicts in leadership styles.
This case study demonstrates the need to be flexible especially when an organization is faced with a new challenge. Due to the need to build a prototype, Acme was forced to tread into unfamiliar territory. As a result they were unable to setup a process that would have enabled them to work more efficiently.
Omega on the other hand used the organic approach to solve a problem, a technique familiar to Jim Rawls because he used to work in an electronics laboratory. But in the long run the weakness of this approach was made evident. It is important that both leaders appreciate the strengths and weakness of both management styles in order to develop a sustainable business model.
Baligh, H. (2006). Organization Structures: Theory and Design, Analysis and Prescription. New York: Springer.
Daft, R. (2007). Organization Theory and Design. OH: South-Western Cengage.
Landy, F., & Conte, J. (2010). Work in the 21st Century: An Introduction to Industrial and Organizational Psychology. New York: McGraw-Hill.
Wasson, C. (2006). System Analysis, Design and Development: Concepts, Principles, and Practices. New Jersey: John Wiley & Sons.