Appex Corporation Case Solution

2. Discussion

3. Culture-based comparison between Appex Corporation’s hierarchical and divisional organizational structure

3.1. Hierarchical, functional structure

Initially, the hierarchical organizational structure at Appex Corporation was aimed to build a formal bureaucratic culture with a strong chain of command, a narrow span of control, and centralized decision-making. But, Ghosh added flexibility into the traditional hierarchical structure and designed organizational chart in both vertical and horizontal way (Nohria and Gladstone, 1991). The political behaviours emerged in the company’s culture after a certain time of developing hierarchical, functional structure as people showed substantial interest towards high power distance culture and adopted egoistic attitude. After functional team heads created sub-functions within their teams, a chaotic environment was created and polarization occurred in functional teams, which further increased organizational politics and hampered overall working relationships between functional departments (Robbins and Judge, 2019). 

Due to the addition of more layers into the hierarchical, functional structure, communication gaps widened between upper-level management and lower-level employees. There was a lack of accountability, unclear reporting and communication lines, unclear job responsibilities, and limited upper management teamwork. Unlike results-driven and customer-oriented culture, organizational members had adopted a ‘who cares’ and ‘it’s good enough’ attitude and they had put limited effort into their work. Subordinates had not valued the managerial capabilities of newly hired functional managers. The normative culture was developed where people were more concerned with internal processes and conflicts instead of fulfilling organizational financial targets and customers’ needs. Issues related to resource allocation were also raised in functional product teams, which depicted a lack of check and balances system and financial, operational, and capacity planning. Organizational policies were not well-defined and were unclear to the company’s personnel, as a result of which firefighting was continued among functional members of product teams (Alvesson, 2012). 

3.2. Divisional structure

As opposed to a hierarchical functional structure, the organizational culture had become pragmatic, customer-centric, and results-driven in divisional structure. Divisional members had done proper financial forecasting, strategic business planning, budgeting, and capacity planning. There was a system of accountability and well-defined areas of responsibility. Unlike functional structure, company policies and procedures were well-defined and clear to divisional members due to which concerned personnel was able to handle daily operations without the involvement of senior management. This led upper management to indulge in strategic long-term business decisions. The divisional structure had given some autonomy and power to employees, which raised their motivation level. The people-oriented and team-oriented culture was developed and incentives and reward schemes were designed to cultivate teamwork among divisional employees. Unlike rigid hierarchical culture, the culture had become less formal in divisional organizational structure (Bragg, 2017).