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Burke-Litwin describes structure as the arrangement of the functions, people responsibilities, authorities, communication and interactions in a way that supports the organization's mission, goals and strategy.
National Presto Industries organizational structure type is product departmentalization. The business segments are aligned directly by the main products which are grouped in categories of Small Appliance and Housewares, Absorbent and Defense product lines (NPK:Seekingalpha, 2011).
The first business segment is the Housewares and Small Appliance department which has complete control over the assembly, manufacture, and distribution of this product line. The products are sold to retail establishments who then sell them to consumers. There are also distributors that sell the products which are mainly sold during peak holiday seasons (NPK:Seekingalpha, 2011).
The second product line of Defense products are through sales contract with the U.S. government for ammunition. There are a number of additional contracts with private industry for ammunition cartridges under defense contracts. This segment has undergone a number of recent restructuring changes due to acquisitions with at least two manufacturers namely AMTEC Corporation and later Spectra Technology (NPK:Seekingalpha, 2011). In this effort it was to expand its production of assembly of tactical munitions for weaponry.
The last segment belongs to the Absorbent Product line which also acquired a couple of companies to gain material goods for producing new pet products used in the area of toilet training for a short time. They also produce adult products for dealing with incontinence issues (NPK:Seekingalpha, 2011).
Unique or core competencies
During the 20th century the company was mainly involved in growing its product lines by marketing new products and getting patents for any new developments in technology that was proprietary in nature. This was to establish its core competencies for research and design of new technology and protect the company against the competition (ReferenceBusiness, 2011). The organizational structure was challenged by the Securities and Exchange Commission to transfer its company designation to that of an investment company due to the large number of patents held beyond the 40% required according to a law established in 1940 (ReferenceBusiness, 2011).
Within the Housewares line this is must evident as there have been several lawsuits against National Presto's patents from competitors seeking a piece of the pie. However National Presto has a unique ability to develop original product specifications that cannot be copied by the competition and successfully defend their core product designs. This keen aptitute of developing new innovative products has kept the company ahead of the competition and allowed protection of intellectual properties to become a keen core competency. The new technologies adopted by National Presto has been under attack but the patents have allowed the company to withstand repeated threats from outside companies.
Another core competency area is within the Defense business segment. Since the relationship with the government requires longer term contracts, National Presto can solidfy its business relationship for 3 to 5 years at a time (ReferenceBusiness, 2011). For example National Presto recently acquired a five-year long contract with the Army to provide ammunition for the entire 40mm munitions system that has been extended or renewed for an additional five-year term (ReferenceBusiness, 2011) . However the government does have the ability to end the contract at their discretion. Having to depend on the Department of Defense can be a potential threat as well due to the fact that all of its defense resource are tired up in a single contract. Losing that contract could be devastating for the Defense segment at National Presto. Another problem is that the contracts are based on long-term price fixes, which could become more of a loss if the cost of materials increases due to inflation or changes in the costs of raw materials or other variables (ReferenceBusiness, 2011).
The company maintained a rather paternalistic style of management that has been passed down to succeeding leaders who have worked at the organization rather than hiring its top executives from outside the company for many years. It is also described as conservative as the CEO hired in 1994 was a long time employee, Maryjo Cohen. She had been employed with National Presto from the mid 1970s (ReferenceBusiness, 2011). The company previously had been run by her father Melvin Cohen who started at the firm in 1944 and also worked with the company for a number of years before taking the top position. However, in recent years ther is evidence of a communicative/matrix structure with a participative managmement style that evolved to combine resources from various departments to collaborate skillsets to develop new innovations (ReferenceBusiness, 2011).
Systems and Policies
National Presto has experienced an increase in revenues in recent years as shown by the following table. Looking at the past years there appears to growth from 2008 to 2009, however there is a slight drop in revenues 2009 to 2010 though there is some growth in just about every segment. Taking a close look the Defense segment is showing some growth however it has slowed somewhat. Looking at the housewares segment it has dropped in comparison year over year (ReferenceBusiness, 2011) . While the absorbent segment has experienced some growth while the cost of raw materials has slowed the effect of the growth due to increasing costs. Recently there was a fire that caused some additional expenses which hampered revenues in 2011 as well.
Table 2-Year to Year Trends National Presto (NPK:Seekingalpha, 2011).
Earnings per Share (Normalized -- one-time items removed)
The company decided to invest into new product lines of Defense and Absorbent segments has been a wise move as it supplements the overall revenue growth. When one segment takes a hit another is able to reposition itself for increased revenue. The earning growth is steady and rising (ReferenceBusiness, 2011). The defense segment also provides a fairly predictable return on investment with its fixed revenues and solid growth as investors find it a stable market.
Work unit climate
The work unit climate or organizational culture at National Presto within each business segment is centered around innovation and technological R & D. The employees are highly skilled and competent at combining their knowledge to design and build new products or enhance existing products for over three decades.
The business advertises creatively and markets to inventors outside the company. There is an invitation to submit any ideas for new product to the company website. The R & D. department offers an agreement to any ideas they accept for development (.
The main motivation within this organization is to be at the head of the industry. The company has successfully stayed in the top 200 companies for many years. The motivation is pride in the company and in the contributions of each employee to the organization. There are contests within the business segments with the goal of coming up with the best idea for a new product. Recently one of the best products developed was the Pizzazz Pizza Oven which is a countertop oven meant to replace the conventional version. It cooks twice as fast as a conventional over browning the pizza right before your eyes while it turns slowly over a burner. A burner also heats from above the unit to brown the pizza safely and quickly. See Figure 1 (.
At National Presto it is very important that employees are recognized for their conributions in inventing new products and innovations.
The discussion by Hackman & Oldham (1980)on job restructuring points out the importance of having the right skills for the job description and recognizes individual strengths (Leadersphere, 2008). This is definitely a key factor at National Presto where people are rewarded for their ability…[continue]
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