The company I selected for this assignment in describing organizational structure is the company I work for Ready Pac Foods. In the past 10 years our company has been restructure many times due to changes in the CEO and Presidents role. The organization structure of Ready Pac has change from a functional structure, divisional structure to a matrix structure. These change occurred due to servicing customer on a national scale and opening of new manufacturing plants. In this paper I describe the benefits and setbacks we have faced from these structures changes. I will also compare our design to our competitors and how our changes have allowed us to continue to be competitive in our industry. Ready Pac Foods will be celebrating their 45th anniversary this year. In the beginning the company organization structure began as a functional structure. This design worked well due to the size of the company.
In the website smallbusiness.com explains, “An advantage of a functional organizational structure is that it offers a high level of specialization. Each unit operates as a type of self-contained mini-company, charged with carrying out its specific role. Employees typically start their careers in an entry-level position within the function and develop specialized knowledge as they move up within the hierarchy.” (www.smallbusiness.com). Ready Pac grew from a small produce packing house into the 4th largest produce manufacture in the United States of retail and foodservice of fresh cut goods. In the launch of Ready Pac Foods the functional structure was a good fit. The company employed less than 100 workers in Pasadena, and the functional structure was broken up in three sections Owner, Operations and Accounting. In 1978, with the opening of our New Jersey plant and the expansion of foodservice and retail produce segments the company employed more than 2,000 workers.
During this time the company changed from functional organizational to a divisional structure. Below expertminds.com provides advantages of organizational divisional structure: Quicker decision making e.g. autonomous divisions do not have the long-winded process of a long chain of command when making competitive decisions. They can respond quicker and more flexibly to changes within the business environment without consulting a centralized Board. Greater focus and specialization of activities as well as resources for market and product performance. This enables better customer focus e.g. closer to the local culture of different countries or customer groups, or more effective core competences developed. Independent divisions enable more isolation of a company’s revenues and costs, therefore better ‘ring fencing’ of financial results to evaluate performance by a holding company or group.
More empowerment to operational and tactical level e.g. greater motivation to divisional managers. Good training ground for ‘grooming’ future strategic managers. Frees up senior management time (the ‘strategic level’). Head office or holding Company has more time for put into strategic planning instead of day-to-day tactical and Operational involvement in business matters. (www.expertminds.com) The benefits of this change allowed Ready Pac to become one of the biggest players in the fresh cut industry. Because of the company size this model was a great fit since each plant operated independently. The only setback were that lines of communication were not clear and servicing customers on national scale became a challenge.
In August 14, 2008 our Dennis Gertmenian Owner and CEO announced his retirement. The newly appointed President Michael Solomon reported that due to growth of the company would be restructured in order to stream line communications. The company would now adapt the matrix structure. Below is a sample matrix from www.vertex42.com on how the company would be structured.
This structure is now being used at Ready Pac due to the newly add Jackson and 2nd New Jersey manufacturing facilities. Strategicfuture.com explains the advantages of matrix structure, “Often, the objective is to add new locations that are functioning as intact horizontal matrix teams. Sometimes the objective is to be able to scale up and add new projects. These organizations want to be able to expand their operations without having to do a new restructuring every time that they increase the number of locations, number of projects, or other indices of growth.” (www.strategicfuture.com). The advantages to this structure is our ability to modify our organization in such a fast pace industry.
One of our competitors Taylor Farms uses a divisional structure for their company. They have 11 manufacturing plants across the United States. Each manufacturing plant operates independently with its own President who reports directly to the Board. Example below from www.zarate-consult.de illustrates how they operate.
At Ready Pac we could not operate in this manner. The matrix structure we use to operate allows us to be a cross functional organization. This can be most seen when we service national accounts such as Wal-Mart with new items. We need to have our Marketing Team, Sales Team and Operations team all in sync to ensure a successful launch of items.
In the past when we operated in the divisional structure we faced many obstacles. Lines of communication were always an issue. The saying, “The left hand doesn’t know what the right hand is doing” was a common statement made by our Executive Team. When our President Michael Solomon addressed all 4 plants about the new matrix structure of the organization. There was much hesitation, but after a few month into the change it became very noticeable why this change was needed. Our company has never been afraid to change. The open minds of our leaders and our employees have allowed us to continue grow and be front-runners in our industry. Our success has been in changing our organizational structure in the last 45 years. Change has always been welcoming at Ready Pac and it will continue to be our strength.