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Case Analysis: Delux Tool Case

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Case Analysis:
Delux Tool Case

Delux Tool Case Study
Mr. I.M. Tycoon is now the owner of three diverse and unique companies; Delux Machine Tools, Safe Buy Insurance Company, and MicroAge Software. They all have been operating under different leadership styles and control measures and need to function as one corporation.
After careful review and analysis of this case, and from an organization design perspective, I would say that the first thing that Mr. I.M. Tycoon should do is develop a thorough organizational structure. A company can have a great mission/product, great people, and great leadership and still not perform well because of poor organizational design. All three companies have a different approach to organizational structure and I think at this point, standards must be developed and instituted. A standard is the level of expected performance for a given goal. A standard can be set for any activity—financial activities, operating activities, legal compliance, and so on (Brasfield, 2013).
Based on the current organizational charts of all three companies, I think that there needs to be some standardization for the organization’s structure. My recommendation for restructuring is to rename the company (Tycoon Enterprises or similar) to serve as an umbrella of all three companies. Then, define each company as a separate division within the company. Each division has a different mission and will continue to operate differently. Each division will be broken down into the appropriate branches (activities) underneath, based on their individual missions, however with standard titles and functions. I’ve included a proposed Organizational Chart as an attachment. With the implementation of a well-defined structure, Mr. Tycoon would be able to set performance standards, measure them, compare them against the standards, and then take action to correct any problems (Brasfield, 2013).
Mr. Tycoon should also consider establishing a Bureaucratic control strategy for achieving organizational control that will include all three companies. A Bureaucratic control system uses formal rules, standards, hierarchy, and legitimate authority. This type of control system is best where tasks are certain and workers are independent (Brasfield, 2013). Mr. Tycoon’s company Delux Tool already appears to use a bureaucratic control system, so it shouldn’t be too difficult to initiate effective control systems across the board. Effective control systems maximize potential benefits and minimize dysfunctional behaviors.
With so much change within the organization, there is a certainty of risks that should be identified due to Mr. Tycoon’s unfamiliarity of both the Insurance Division and the MicroAge Division. Simons’ Levers of Control can be put in place to adequately manage those risk using three control systems; diagnostic control, boundary controls and belief controls. An example of Simons’ Levers of control as stated in the article by Norman Sheehan, "Risk Based Strategy: Integrating Strategy Maps, Management Controls and Risk, Part 3", managers can reduce risk using diagnostic controls to communicate expectations, monitor progress and then reward employees for providing good service, decreasing waste and keeping the premises clean; managers can use boundary controls to decrease risk by clearly delineating which behaviors are to be avoided; and belief controls mitigate risk as they help to recruit and retain the best employees, which in turn, are less likely to commit service errors. There is a lot of work that will have to be done, however, I think that Tycoon Enterprises has a promising future of continued growth and will be a controlled-based success story that future business students will study and use as an example of a great organizational design.

References:
Brasfield, J. (2013). Management 5000. McGraw-Hill.
Sheehan, Norman (2011). Risk Based Strategy: Integrating Strategy Maps, Management Controls and Risk, Part 3", AICPA Business Brief.

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