Restructuring at Prairie Farm Equipment (Scenario)
Jim Johnson is the CEO of Prairie Farm Equipment Corp, a major Canadian manufacturer. Prairie has been in business for more than 110 years and has been very profitable. Today, the company has a tall structure with formalized communication channels and rigid hierarchical relationships. All major decisions are made by Mr. Johnson. This arrangement has worked well until recently, when the company began to encounter some major global competition. Foreign companies have begun to export new, lower-priced products into the Canadian market. At the same time, foreign markets appear to be opening their doors to more Canadian products. A few days ago, one of the vice-presidents presented some exciting news about a major market opportunity overseas. Several managers were now working on an international expansion proposal to be presented at the next board meeting. As the company's strategy was beginning to change, Mr. Johnson realized that its structure would also need to change. But change how? The company was very large and used routine technology to produce its products. What should he do?
-Which of the following contingency factors is having the biggest impact on the need for structural changes at Prairie?
A)size
B)technology
C)environmental uncertainty
D)culture

Question

Quizplus · Accepted Answer

Environmental uncertainty is the primary factor driving the need for structural changes at Prairie Farm Equipment Corp. The introduction of global competition and the emergence of new market opportunities overseas are external factors that increase environmental uncertainty, necessitating a more flexible and responsive organizational structure.