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The Mushroom Factory

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INTRODUCTION The following case analysis entitled The Mushroom Factory focuses on the issues concerning the Accessories Department of the Esco Company, a Midwest manufacturer, during a period of rapid change. The case analysis will critically discuss the events which took place during this time; it will examine the structure of the organization highlighting the core issue which then led to the existing satellite issues. Recommendations will made with reference to these Core and Satellite issues in order to correct these problems the company is currently facing.

Company Overview Top management of the parent company, in conjunction with the Esco top management embarked on a plan to increase profitability of the Esco Division. This plan involved moving the manufacturing operations to the south to increase their profit margin, this move presented attractive tax structures and incentives such as free water and bargain prices on land. In addition, labour was plentiful and unions had not yet taken strong hold. The company knew there would be resistance so they made the decision to take slow treasured steps in implementing the plan, allowing each reshuffling to settle down before starting a new one. This profitability plan can be viewed as Management by Objectives (MBO), its function was to change from the current Product Base structure to the Functional Orientation; the implementation of this plan started with: The Accessories Department which was originally structured on a product basis having complete control and responsibility over its products from their inception was Changed in 1972 when two groups were formed: Product Engineering and Manufacturing Engineering.
Product Engineering: Was responsible for product inception, product prototypes and product start up, also customer service and relations.
Manufacturing Engineering: Handled the

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