economics 120

/in /by

Bagby Copy Company is a worldwide producer of copy machines. It manufactures 10 different copiers, ranging from low-end desktop copiers that sell for a few hundred dollars to high-volume document machines that retail for over $200,000. Each copier machine requires a wiring bundle. Each bundle contains several hundred wires and connectors that provide circuits connecting the paper-flow units, scanner, and photoreceptor to the internal computer logic. The wire harness is plugged into various components during the assembly process. It is possible to assign each major task in this process to different employees. For example, a given employee might focus on one of the many connectors or on testing the completed wire harness. Alternatively, one individual might be assigned the task of producing and testing a completed harness.

In either case, there is a group of employees that is assigned individual tasks to produce a wire harness for a particular copier. In total, there are 10 subgroups of wire harness makers. One alternative is to place all 10 groups in one wire harness department. Another alternative is each of these 10 subgroups can be assigned to and report to a manager for a particular copier. Bagby operates in five European countries. Currently, it has separate sub units in each country, where a country manager handles the manufacturing and marketing of all 10 copiers. The company is considering two alternative. One would be to organize it foreign operations around products. In this case, there would be 10 international product managers with decision rights for managing the manufacturing and sale of a particular copier throughout Europe. The company also is considering a matrix organization, organized around product and country.

  • What are the trade-offs that Bagby faces in choosing between specialized and broad task assignment?
  • What are the trade-offs between these two methods of grouping wire harness makers into subgroups?
  • What are the trade-offs does Bagby face in choosing among the country, product, and matrix forms of organizing its international operations?

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