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Problem Statement Appex Corporation Appex was a highly successful information service provider in the fast-paced cellular phone industry It sustained impressive revenue growth of 1600 over three years between 1986 and 1989 while increasing employee count by 600 In order to absorb these new employees efficiently Appex restructured several times see Appendix 1 for the chronology of restructuring events Each restructuring however created new problems for the company as it sought to successfully integrate the new personnel and run the organization efficiently and productively However it should be noted that Appex was relatively successful while implementing rapid organizational changes In August 1990 Appex implemented a divisional structure in response to problems created by the previous functional structure In actuality this structure was a mix between a functional and divisional structure establishing an ICS and IS divisions historical product-based categories while maintaining separate divisions for Operations and Finance and HR While this had the effect of improving company focus on cost schedule and responsibility it was not without its limitations In particular the structure created two practically independent divisions While communication within the divisions was unimpeded communication between the divisions was minimal Ghosh Appexs CEO speculated that lack of communication was reducing the number of new product ideas In addition there were resource contention issues requiring management to purchase additional resources for each division Finally as the divisions grew they became less transparent to and less accountable to senior management Spaghetti Organization For Octicon the spaghetti experiment resulted in a number of product innovations increased growth and revenue While innovation is a concern for Appex growth and revenue increases have already been achieved under the previous organizational structures The disadvantages seen in Octicon included coordination problems difficulties in knowledge sharing as well as influence activities with a relatively flat structure subordinates may influence management to make decisions for personal reasons instead of organization economies As argued by Foss these problems can be seen as a direct
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