Case Study 2.4: Widgets ’R Us Widgets ’R Us (WRU) is a medium-sized firm special

Question

Case Study 2.4: Widgets ’R Us

Widgets ’R Us (WRU) is a medium-sized firm specializing in the design and manufacturing of quality widgets. The market for widgets has been stable. Historically, WRU has had a functional organization design with four departments: accounting, sales, production, and engineering. This design has served the company well, and it has been able to compete by being the low-priced company in the industry.

In the past three years, the demand for widgets has exploded. New widgets are constantly being developed to feed the public’s seemingly insatiable demand. The average life cycle of a newly released widget is 12–15 months. Unfortunately, WRU is finding itself unable to compete successfully in this new, dynamic market. The CEO has noted a number of problems. Products are slow to market. Many new innovations have passed right by WRU because the company was slow to pick up signs from the marketplace that they were coming. Internal communication is very poor. Lots of information gets kicked “upstairs,” and no one seems to know what happens to it. Department heads constantly blame other department heads for the problems.

Answer the following questions:

You have been called in as a consultant to analyze the operations at WRU. Based on the readings, what would you advise Widgets ‘R Us to do in order to sustain the competitive advantage in the widget market?

What structural design changes might be undertaken to improve the operations at the company?

Explanation / Answer

(1)

Considering the present market trend and the demand pattern of the industry, it is absolutely essential for the company to change its strategic planning process. Presently it is a low-priced offering strategy (which presumably is depending on a cost leadership stance) which is not working as the product life cycles for the widgets are getting shorter and the customers are expecting new products earlier than expected. This requires a lot of focus in the engineering section and moreover, the engineering project managers must respond very rapidly.

The company should focus more on an innovation strategy rather than efficiency or cost management to sustain the competition. To do so, the senior management must be involved most pragmatically in every project from the idea generation stage to product launch to ensure the products can be innovated and launched in the market as rapidly as possible. Differentiation in product attributes and Responsiveness will be the key to success for this company. Furthermore, the pricing strategy should also change. Th products must be launched with gross differentiation at a premium price because that will be the only key to earn the profit.

(2)

To have the above-mentioned strategy implemented, the company needs to depart from its present functional organizational design. The structure must be flat enough to ensure a high level of communication flow between departments and so that the top management can work with a broader span of control. Since a faster introduction of products is required in the market, there should be a strong coupling between engineering, production, and marketing/ sales. This is only possible with a flat structure with reduced hierarchy. Furthermore, for a significantly differentiated widget to be innovated, there should be a strong focus on innovation and thus on talent creation. Best talents can be created or retained only when the structure supports autonomy, mastery, and clears the purpose of working at every level. This is possible only with an organic and flat structure.

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