CASE SUMMARY

SUBMITTED BY: -

NANDANA TYAGI (2019PGP273)

SECTION G

APPEX CORPORATION

EXECUTIVE SUMMARY

The apex corporation, intercarrier network services provider to cellular telephone companies,

was in a rapid growth phase and the investors of the start up insisted to bring an experienced

manager with specialty in organizational structure, Shikar Ghosh. The company needed serious

changes in its system as it was not able to cope up with the pace of the changing environment.

Before Ghosh had started his tenure at Appex, the company’s work culture was majorly

entrepreneurial and to revitalise it, Ghosh introduced numerous organizational changes over a

short span of time, which succeeded and faltered at times, but ultimately grew with the

aspirations of the employees who adapted to changes introduced by him and grew with the

growing company.

PROBLEM STATEMENT

With the growing industry and the growing company, how could Appex indulge with the

changes in the environment and implement in its organizational structure.

SITUATION ANALYSIS

The Industry: The cellular telephone industry started in 1982 when the Federal

Communications Commission established guidelines. From the mid 80’s to the 90’s, the

telecom industry’s growth was very fleeting.

Appex Corporation: The company provided management systems and intercarrier network

services to the cell phone companies across. It was founded in 1986 with the merger of Appex,

Inc. and Lunayach Communications Consultants (LCC), which specialised in the design and

engineering of cellular radio networks. The two main services offered were- Intercarrier

Services (ICS) and Cellular Management Information Systems (IS).

Shikhar Ghosh was called in 1988 to head Appex. He had a prior work experience as a

consultant in Boston Consulting Group and was appointed as Chief Operating Officer in

Appex. He had a specialty in organizational structure.

History: Brian Boyle, the first CEO of Appex, did not believe in formal procedures and thought

them unnecessary as there were only a few business procedures. The company structure was

very informal and flexible. The employees were very focused in their work, hardworking and

committed. Appex was very efficient in responsiveness and got things done very quickly. As

the work was mainly project based, as their number increased, they hired more and more people

to do the job.

EVALUATION OF DIFFERENT ORGANIZATIONAL STRUCTURES

This first structure can be described as Entrepreneurial. The characteristics of this system

includes the technology driven and loosely structured system where the personnel had a

tremendous amount of autonomy. The system lacked structure and control.

 The going ahead without any financial planning led to rapid loss of money.

 The customer service was poor as no one was directly concerned with the task

 Appex began missing the installation deadlines and lost on schedules

 The new product development lost its spark and was ignored due to disrupted flow of

information.

 The people did not have a clear job description as everyone did everything
  Only “Firefighting” prevailed with no long-term planning

 Appex could not handle the increased demand.

INNOVATIVE STRUCTURES: Appex had to address these problems by creating a system

of accountability and division of labour. Shikhar brought out two new structures: -

The failures of these can be explained as: -

Circular structure

 It was a totally new structure for the employees which they were unaware about.

 The new recruits were expecting a more traditional organizational chart.

 The performance evaluation criteria were not clear.

Horizontal structure

 The response to the structure lacked enthusiasm.

 There was no hierarchical organization.

Ghosh’s first aim was to achieve control, which could not be achieved by these two structures.

HIERARCHIAL, FUNCTIONAL STRUCTURES

In this structure, the functions were organized as teams. The advantages include: -

 The focus of the company shifted onto completing the tasks.

 Ghosh was involved in every decision-making process.

The initial problems associated with the structure were: -

 The tendency of the teams to develop sub functions within their teams

 High polarization within the teams

 The politics in the organization came into light

  Some personalities’ roles were more prioritised and were given importane.

 There lacked the managerial expertise in the personnel and had only their functional

knowledge.

 Employees were unable to adapt to the new structure and culture.

Then he introduced Functional Structure based on Product Teams, where the product teams

co-existed with the functional teams. Each team consisted of a product team manager and

representatives from their individual functional areas. The pros of this system included: -

 The system did not specify the authority who was responsible to make the decisions.

 The scope of the authority of the product teams was defined and bounded.

 The problems arose from resource allocation where, each product team wanted the best

minds on their team.

The overall troubles associated with the Functional structure were: -

 Extreme bureaucracy in the system

 More products meant more employees and thus higher costs for training new people.

 The focus shifted from the customer centric focus.

 The employees became less concerned with achieving company specific financial

goals.

 Appex moved from an organization where everybody was doing everything to one with

a lot of process and where things were not getting done.

DIVISIONAL STRUCTURE

This structure divided the organization into two broad divisions: ICS and IS with additional

departments: Operations, Finance and Human Resource. The advantage was that it improved
the accountability, budgeting, planning with increased focus on meeting the financial targets

and also infused cooperation within the organization.

The cons of the divisional structure were: -

 Resource allocation was a mess

 The divisions lacked proper communication internally.

 The divisions began to act as small companies in themselves.

EDS Acquisition

Electronic Data Systems (EDS) acquired Appex and as a division od EDS, Appex had to follow

EDS’s requirements. The challenge that the company faced was to work out its own divisional

structure and the contextual changes as a division of a larger, bureaucratic organization.

CONCLUSION

For recommending a structure, I would recommend the divisional structure owing to the sheer

size of the company and the consistent growth in the market. The changes implemented by

Ghosh were complemented throughout the journey as the company and the market grew. The

efficiencies for time of projects and resources allocated would level off – time efficiency would

go down slightly. All in all we conclude that Ghosh was quite successful in implementing the

many structures that he implemented in Appex and the employees for their adaptability to the

changes.