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Restructuring at Prairie Farm Equipment (Scenario)

question 15

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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?

Definitions:

Standard Costs

Predetermined or estimated costs used for planning and control purposes in budgeting and cost management.

Stockholders

The owners of a corporation.

Standard Costs

Predetermined costs for materials, labor, and overhead that are used as benchmarks to evaluate actual production costs.

Technology

The application of scientific knowledge for practical purposes, especially in industry and in our daily lives to solve problems or create useful products.