This paper examines an organizational design scenario in which a sole surviving brother inherits three companies—Delux Machine Tool, Sale-Buy Insurance Company, and MicroAge Software—and faces financial and legal constraints that prevent him from selling them. The paper argues that the most effective course of action is a formal organizational redesign that integrates the three firms into a conglomerate structure. It explores how shared vision, cross-company collaboration, and unified capital allocation can improve operational efficiency and profitability, with Delux Machine Tool serving as the parent organization.
The current situation was created by two past events: the brothers naming each other as beneficiaries in their wills, and the subsequent deaths of two brothers, leaving the third as the sole owner of all three organizations — Delux Machine Tool, Sale-Buy Insurance Company, and MicroAge Software. The central complication is that the surviving brother is legally required to pay three years' worth of profits from the two acquired companies to the families of his siblings. Because of this obligation, he cannot sell the two companies in the near future. The question, therefore, is what course of action the new owner should implement across all three companies.
Given the imposed constraints, as well as the need to reduce expenditure and increase profits, the most favorable course of action would be to implement an organizational redesign. As defined by Autry (1996), "Organization Design is a formal, guided process for integrating the people, information and technology of an organization. It is used to match the form of the organization as closely as possible to the purpose(s) the organization seeks to achieve. Through the design process, organizations act to improve the probability that the collective efforts of members will be successful. Typically, design is approached as an internal change under the guidance of an external facilitator. Managers and members work together to define the needs of the organization then create systems to meet those needs most effectively. The facilitator assures that a systematic process is followed and encourages creative thinking."
In the context of the three companies discussed here, the process of organizational design would help better integrate their features, operations, and personnel — despite their operating in different industries. Once this integration is achieved, organizational profits would significantly increase and costs would decrease, as a direct result of improved operational efficiency.
In more specific terms, the three companies should become united under the same vision, mission, values, and goals. This is feasible in general terms because the types of services and products offered could be combined to form complementary offerings. For instance, Sale-Buy Insurance Company could offer car insurance to final buyers — which would, however, require collaboration with Delux Machine Tool's business partners. Similarly, the programmers at MicroAge Software could collaborate with the Research and Development team at Delux Machine Tools to create more innovative products and technologies.
This kind of cross-company collaboration would allow the three firms to leverage each other's strengths, reduce duplicated effort, and develop offerings that none of them could produce independently.
"Conglomerate model enables combined profits and capital redistribution"
"Delux leads; other two companies serve as subalterns"
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