Apex Corporation
Introduction
This case is an illustration of the impact of different organizational structures. Appex Corporation was founded in May, 1986 from the merger of Appex Inc. and Lunayach Communications Consultants(LCC). The firm provided services to cellular carriers to allow them to manage their customers in their home and roam territories. Initially it was a relatively small company with 25 employees and $2 million in revenue. The firm was entrepreneurial and lacked formal structure. While the industry was growing at a rapid rate and the firm was doing exceptionally well (1600% increase in revenue), the investors were concerned about the unregulated cash outflows which were creating a huge financial constraint on the firm. So, the investors decided to bring in Mr. Shikhar Ghosh as the COO who had specialty in organizational structure.
What were the challenges Shikhar Ghosh faced when he joined Appex?
The former CEO of Appex, Brian Boyle did not focus on instituting formal procedures and structures as he believed that due to the small size of the firm it was not necessary. Initially the employees were focused, committed and there was close interaction. But as the organization and the industry grew appropriate changes were not incorporated into the firm which led to the following issues:
Challenges:
Work environment: The atmosphere of the firm was changing from entrepreneurial to chaotic. Lack of direction and an authority figure led to deviant workplace behaviour. Employees often reported late to work and their casual attitude towards work even cost them a valuable client.
Financial Constraint: They were spending cash quickly and not monitoring their expenses. In order to deal with the excess workload the firm opted to hire more employees instead of re-structuring their internal process. The firm’s actual number of employees was 103 against a forecast of 55. This tendency of the firm to not focus on the cost structure lead to a financial crisis situation.
Poor customer service: The firm was not able to handle increasing demand in the industry.