Part B
It is logical that a decentralized structure (SBU’s) will have such problems. SBU’s will definitely face such problems as they are autonomous and there is an atmosphere of competition between them. Voltamp Electrical Corporation can decide on its own about the use of new magnet in the divisions instead of leaving it on their discretion. As the conflict has been aroused between the units now, Voltamp Electrical Corporation should try to resolve it by entering into negotiations. The new magnet technology should be given to both the SBU’s to make it a more healthy competition.
Internal competition is good in order to boost up the productivity in the overall company that will drive better results in the growth and productivity of the company. It will also provide the company with an opportunity to increase its reputation by product innovation within the company with continuous rise in the profit. As in accordance with this case, each section charters were developed with the intention of precluding competition between the sections on the sale of general product lines to customers outside the company. These sections were not intended to reduce rivalry in areas such as product development, production, sales etc. The vice president of each department realized that this sort of opposition among the sections can be a valuable asset for the company and can serve as a liability for the decentralization policy.
Internal competition is a good thing if it leads to better performance and optimal use of resources instead of causing conflicts and leading to poor performance. In the given case, it seems not to be a healthy one as it is disturbing the affairs of the company as a whole.
Question 3
Part A
Yes, Carter and Grant should resolve their differences by themselves because the section managers of magnetic material section and Audio product section would be able learn to understand accountability appropriate with the authority, which had been settled as the company had implemented a decentralized restructure policy throughout the company. It will lead them to better decisions and results for overall Voltamp Electrical Corporation as well as for their individual sections.
The problem exists between the magnetic material section and Audio product section so they should overcome their issues by themselves without the involvement of other operating sections within the company as it will affect the overall efficiency of the company. The managers of magnetic material section and Audio product section in this case tried to solve their problem from their point of view; as this was best for their respective individual section instead of focusing on the point of view of the Voltamp Electrical Corporation as a whole that played an important part resolving the unsolved conflict.
Secondly, objective of the Voltamp Electrical Corporation’s decentralization policy was that each section within the company should effort to fight for their own problems and need to resolve these problems by themselves. In addition to this, another reason that Carter and Grant should resolve their differences by themselves in order to work towards the profitability and growth of the Voltamp Electrical Corporation as a whole rather than focusing on their interest only towards their individual sections and oppose each other.
Part B
Mr. Grant, the manger of the magnetic material section has made the best overall argument in the case because according to the charter defined by the Voltamp Electrical Corporation after the decentralization of the company. The section of Audio Products can only sell audio products outside the company instead of selling any other product .In addition to this, Audio Products section can only manufacture TGW and sell it internally into the company to the operating sections that used magnets as component parts of their products.
In addition to manufacturing, the Magnetic Materials section could also license manufacturing process for TGW to competing companies in the market and the royalty payment would compensate Voltamp Electrical Corporation and perhaps Audio products directly for the developmental cost of the TGW. Magnetic Materials Section of the company had the ability to exploit all the commercial possibilities of the new material and it is only the section in the whole company that had the authority to sell magnets to customers outside the company....................................
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