Appex Corp. Harvard Case Solution & Analysis

Appex Corporation

Solution No.1

Facts Identification

Appex Corporation started their operations as a small company with twenty-five employees; their revenues were $52 million at that time. Appex Corporation’s approach was to focus on technology and promote entrepreneurial skills in the organization. The major trouble that they were facing was that they were unable to strengthen the cash flows and revenues. Appex Corporation was located in Waltham and it was founded in May 1986 as a result from the merger of Lunayach Communication Consultants (LCC) and Appex Inc. MA offered Management Information Systems (MIS) and inter-carrier network services to cellular telephone firms.

LCC offered services in the deals and engineering to the cellular radio networks for cellular companies. Appex Inc. was established in May 1984 by Brian E. Boyle, which depended mainly on MIS for the cellular industry and credit scoring systems for financial service companies. According to the Business Week, Appex Inc. was rated as the leading and fastest growing high technology company in the United States in 1990. Total revenues for the year 1987, 1988, 1989 and 1990 were $1.0 million, $2.3 million, $6.8 million and $16.6 million respectively. In the year 1990, Electronic Data Systems (EDS) acquired Appex Inc., which was $6 billion information systems management company. EDS was owned by General Motors and Appex Inc. had to follow some EDS’s requirements such as financial planning, resource allocation systems and administrative processes.

Solution No.2

Shikhar Ghosh’s thinking and judgment was absolutely right regarding the cost and structure, which were practiced in the organization. According to Ghosh, Appex Corporation needed to revise the strategies for the best sake of the organization. They were unable to control the cost structure as well as organizing structures for the organization. They needed to implement a suitable hierarchy based structure for the organization so as to avoid management failure. There were various failures in areas such as financial planning, MIS Management, long term planning, system of accountability, structure etc.

Solution No.3

Pros and Cons of Organizational Structure

Ghosh implemented various structures in the Appex Corporation to effectively manage the departments and functions. Circular Structure was one of the innovative structures implemented by Ghosh. The purpose of circular structure is to promote the senior level executives. One of the advantages of this structure is that it allows the CEO free access over a staff, which means that this structure provides assistance to the CEO in order to assign the tasks and project to the staff.  Functional Structure implementation by Ghosh facilitated teams in the organization, which helped to organize the positive relationship among different teams such as sales and marketing, operation, finance, human resource, administrative, technology, software development and service team. Divisional Structure also had various advantages like it enhanced accountability; budgeting and planning can be done efficiently.

All of these structures have various drawbacks. Circular structure did not favor the company due to several problems. One of the major problems was that employees could not participate in decision making process. They were completely unaware about the structure, particularly new employees. The new employees were not able to understand the company’s culture.  Functional structure also possessed some issues like it was unable to identify the number of functional teams. For example, how to develop marketing and sales team, should they be separated or considered as a single team? Similarly, the case occurs in finance and accounting. Another problem of the functional structure was the source of authority; Ghosh also realized that it was very difficult to determine managerial competence. In divisional structure, there were also certain problems. One of the problems was regarding resource allocation. Employees thought that management is violating the rules and regulation in terms of financial resources. Another problem was that the flow of communication across different divisions was affected negatively......................

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1990 Business Week named Appex Corporation is the fastest growing technology companies in the United States. Appex provided management information systems and intercarrier network services to cellular phone companies. During its rapid growth, the company has gone through a number of structural changes. First, almost did not have any structure and management system. The atmosphere at Appex eventually became chaotic. As the new CEO, Shikhar Ghosh realized that Appex needed some structure and bureaucracy. After the control has been established, he reasoned, he could break the structure. Most of the structural changes he implemented its own advantages and disadvantages in terms of corporate culture and productivity. In 1991 Appex was acquired by EDS. Appex task now was to develop its own structure in the context of its role as a division of a large, bureaucratic organization. "Hide
by Nitin Nohria, Julie Gladstone Source: HBS Premier Case Collection 18 pages. Publication Date: February 14, 1991. Prod. #: 491082-PDF-ENG

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