Management and organizational structure

Management Theory

Organizational structure: Sara Lee Corporation

Sara Lee Corporation

Sara Lee is a world-renowned corporation. It is famous for its trusted, tested products, including Ball Park hot dogs, Hillshire Farm meats, Jimmy Dean sausages Sanex, Senseo and of course Sara Lee desserts (About Sara Lee, 2010, Sara Lee). The Sara Lee Corporation is international in its scope, and its output encompasses many types of products, although it focuses upon home-related items such as foods and skin cleansers.

Traditional centralized structure: Three problems and proposed solution

In a traditional, hierarchical firm structure (which characterizes Sara Lee at present), individuals are in charge of certain, specific products and functions: for example, the Sara Lee brand's operations in a particular region of the United States are always under the centralized control of top management. The advantage of a traditional structure is quality control: with a trusted brand like Sara Lee, there are high customer expectations which must be met to ensure repeat purchases. Customers must believe that Sara Lee and its signature products maintain the quality and flavor profile their mothers enjoyed.

However, Sara Lee as an entity has changed over the years. Given that it is more international in focus, communication problems could result between different divisions regarding regional tastes. For example, an individual in charge of UK operations might realize that British consumers are not as enamored with peanut butter or vanilla-flavored items, but the centralized command of the company back in the U.S. might be more convinced, based upon strong sales of such items in the past in the U.S., by his or her data 'on hand,' rather than the impressions of someone lower on the organizational hierarchy.

Centralized structures can also be alienating. If workers do not feel that their input is valued by company leaders, they may begin to simply do the minimum to 'get by' in the company, rather than make an investment of time, energy, and loyalty. The company can lose critical input from lower levels of the company that could improve organizational efficiency.

Centralized structures can also lack flexibility. If there are sudden changes, such as a sharp drop or rise in demand, having to seek approval from a centralized authority can make the organization less responsive. For example, a certain amount of autonomy for regional managers may be required to adjust product orders because of sudden heat waves or snow storms, or to allocate more money in operating costs because of a rise in fuel costs.

Even a centralized structure requires a close, responsive and participatory relationship between the central command and regional and international lower-level managers. A centralized structure must also do careful market research to ensure its flexibility to shifts in market conditions, so its standard operating procedures do not become outdated.

Most centralized structures either break down their divisions into functional organizations segmented by key functions such as "production, marketing, and finance" while "companies that employ a product or divisional structure, by contrast, break the organization down into semiautonomous units and profit centers based on activities, or 'projects,' such as products, customers, or geography" (Malonis 2000). Sara Lee currently breaks down most of its divisions by region and by brands, first geographically and then functionally.

Matrix structure: Three problems and proposed solution

A matrix structure of a firm makes use of "dual-reporting relationships instead of a more traditional linear management structure…In its simplest form, a matrix configuration may be known as a cross-functional work team, which brings together individuals who report to different parts of the company in order to complete a particular project or task. The term 'matrix' is derived from the representative diagram of a matrix management system, which resembles a rectangular array or grid of functions and product/project groups" (Malonis 2000). In a matrix structure, different facets of the marketing team internationally might meet together to discuss ways to brand Sara Lee worldwide. Or, when launching Sanex into a new country, the regional marketing, advertising, and IT team might meet to create a new website for the region that was uniquely responsive to local, cultural needs. The management within a matrix structure is more fluid, and the relationship of authority figures to subordinates is more diffuse.

Matrix structures are often associated with 'creative' firms, such as advertising agencies, where different ad teams have a great deal of autonomy in their decision-making. However, Sara Lee's image and the image of its other, signature products such as Hillshire Farms and Jimmy Dean sausage all have a core theme of wholesomeness and traditional 'Americana' that is used even when selling the products internationally. It is uncertain whether creative autonomy on a wide scale would benefit the firm.

Matrix structures can also be unwieldy. Sara Lee is a large corporation, and on a logistical level it might not be feasible to have so much permeability between different departments and different aspects of the organization. Also, the skills called for in advertising food might be very different than those called upon to budget the costs of labor and ingredients and relations within created matrixes might be more adversarial than productive.

Matrix structures are usually recommended for companies that operate in swiftly-changing environments: a company with as resolutely an 'untrendy' image as Sara Lee might not benefit from adopting such a structure. Also, "they are typically expensive to maintain, partly because of more complex reporting requirements. In addition, many workers become disturbed by the lack of a chain of command and a seeming inability to perceive who is in charge" (Malonis 2000). For a matrix structure to benefit Sara Lee, some centralized authority within each autonomous matrix or work team would be required, and that individual would have to be well-schooled and oriented in the company's overall philosophy.