CASE STUDY:

ABC Company initially supplied businesses with exceptional quality textiles. Later on they started to supply businesses with professional quality uniforms and also sports gear. They provide their customers with quality products and services on time and on budget to enhance the image and performance of their customers' companies.

As the company grew, so did its workforce. From two people in a garage, their wholesale division has grown from servicing a small localized market in Cape Town, to one that today meets the requirements of clients in many other locations throughout South Africa.
The current organisational structure is designed around the different products. Although each manager knows all the other products quite well, they each are responsible for one type of product only: Tim is in charge of the industrial uniform section, Sally overlooks the sportswear section and Heather runs the textile division. All three of them are competent with their section, but Tim for instance would have liked to be more involved in the other sections as well.

To serve its widening markets the business needs flexible and well-trained staff that can recognise the needs of their customers. The employees work in a wide range of roles in both store and non-store functions, such as:

• Customer Assistants on the shop floor either directly assisting customers or preparing orders for delivery to customers who have ordered online.
• Department Managers leading a team of Customer Assistants
• Warehouse employees who help catalogue and store clothing and textiles.
• Office-based staff working in a range of functions at Head Office, including finance, purchasing, personnel or marketing.
• Logistics staff who plan and carry out the distribution of products to stores.

Andy works in Sally's department (sportswear) and manages a small team of customer assistants who must prepare online orders for delivery. He expects them to liaise with the customers before setting up the order, to ensure maximum client satisfaction. As the team members are still new, they lack the necessary experience and are not willing to take on the responsibility of liaising with the customers themselves. Currently this all comes down to Andy, who then does not have sufficient time for his managerial duties. He intends seeking advice in this regard.

Due to the business's great success and customer demand, management have been thinking about establishing an outlet in Durban. They have the opportunity to buy an existing warehouse in Durban for R 1,5 million. The other option is to rather invest an amount of R 800 000 in a new product range.

ABC must make a decision: should they buy the existing clothing retailer or is it better to invest an amount of R 800 000 in a new product range.

They did some investigation into the probability of success and failure of each option, and possible results. With this information at hand, they decided to use a decision tree to help them with this big decision. The estimated outcomes and probabilities are as follows:
They have two options:

A: Buy an existing business for R 1.5 m. B: Invest in new product range R 800 000.

Successful option A will give 20% gain, failed option A will give 10% loss. There is a 40% chance of success and a 60% chance of failure for option A.

Successful option B will give 10% gain, 5% loss. There is a 50% chance of success and a 50% chance of failure for option B.
Questions-

Part A:

a. Draw up a decision tree to determine expected values for each option. Use the results to decide which option to choose.

b. Identify the mission of ABC and translate it into at least 3 measurable, long-term goals.
c. Draw up a table or diagram to illustrate ABC business as a system that operates in a specific environment, by identifying:

• inputs from the environment,
• processing of inputs and 5
• outputs to the environment.

Part B:

a. What type organisational structure does ABC have currently?

b. What are the disadvantages of this structure for this specific organization?

c. The organization has a vision of expanding the business and opening more branches in different areas. Suggest a new structure for the organization that would fit in better with their strategy. Motivate your choice.

Part C:

a. Use the leadership cycle model to suggest the most effective leadership style for Andy.