Organizational structure

The overall arrangement of functional elements and alignments utilized in managing a facility as a whole is known as an organization's design or organization structure. The company's design lays out the proper guidelines for distributing the company's resources, assigning duties to personnel, training them on policies, rules, and expected levels of performance, as well as gathering and disseminating data that is essential for making choices and resolving issues. It's crucial to remember that not all businesses will benefit from the same organizational structure. The best option will depend on the circumstances a particular organization is experiencing. Organizational design decisions are influenced by a number of factors, including strategy, environment, size, technology, and the culture of the countries within which the company operates (Rozhanskaia, 2015).

Given the need to expand internationally, Rocky Mountain Chocolate Factory (RMCF) best expansion strategy is via the Major Lease Agreement (MLA). Given the potential in the Japanese market which is characterized by a vast population and among the best performing economies, the major lessees can adapt and produce similar products as the head factory. RMCF needs to establish an international division to monitor and facilitate its transnational operations. This paper will focus on selecting the appropriate organizational design for RMCF in controlling its multinational operations.

Applicable International Organization Design

With the selection of MLA as the appropriate international expansion strategy, RMCF involvement will be limited and indirect unlike running a foreign branch under the control of the head office. Franchising by utilizing the MLA approach gives the franchisee the ability to act autonomously in the production, branding, and marketing of the product. Given the focus on Japan, the same franchising strategy can be applied to the projected Indian market once the option is deemed reliable.

Franchising via MLA requires that the head office establishes an International division. The primary purpose of this department will be monitoring of the activities undertaken by the international operators. The international segment will serve the purpose of allocating adequate resources while also creating special events and programs directed at improving the operations of the foreign operators. Moreover, it will segregate the activities of the major lessees from those of the domestic entities.

For the success of the company, the Global Area Approach of organizational design is better suited. Given the diverse characteristics of the consumers targeted regarding their environment, culture, beliefs as well as preferences, the area approach allows the primary lessee to tailor make the product into what is desirable to the consumers. Since the Japanese market is different from the American market, this approach will give the necessary freedom to the franchisee to tailor make the chocolates and brand them appropriately to attract the interest of the consumers within the country. Unlike receiving the products from the head office for sale, the principal lessee can get the necessary information from the customers and direct his attention into producing a product meeting their expectations.

Given the unfavorable financing market in the domestic country which limits the ability of local franchisers to engage in production, the Japanese market is more favorable as the major lessee can easily finance the production process, and the only requirement is the importation of the raw products from the head office. Thus, the global area design is suitable as it helps reduce the costs the costs incurred in transporting the product from the home country to the international market. Moreover, the principal lessee acts as a local partner who better understands the domestic market. Thus the franchisee can utilize the knowledge and information about the customers and reduce the likelihood of the product failure in the Japanese market.

Advantages and Disadvantages of the Global Area Approach

To RMCF, the global area design is advantageous in its expansion policy since it has no legal restrictions within the Japanese market. Also, the model is hugely beneficial to the new market because the company has limited products in the offing as well as it allows for the production of quality chocolates. This design is sufficient to RMCF market-driven international expansion as it enables the principal lessee to apply expertise to the native market thus tailoring the chocolate taste accordingly. However, despite the advantages, the firm has to be cautious enough to prevent the production of a substandard product which might chase away the potential customers. Moreover, it gives the franchisee the freedom to develop into a competitor (Mathews, 2015).

Control Techniques

Establishing control is an essential aspect in monitoring the performance of the franchises. It involves regulating and monitoring the activities of the major lessee and ensuring that the desired outcome regarding quality production and sales is realized. Control is necessary to limit actions which are injurious to the attainment of the firm’s objectives. For RMCF to achieve the desired international success, the company needs to establish operational, strategic, as well as organizational control over the major lessee.

The appropriate control mechanisms would involve establishing production and sales procedures that the primary lessee is expected to follow. Failure to serve within the set procedures would result in cancellation of the franchising contract. Similarly, using the accounting systems as a control measure will be beneficial as it will help RMCF in monitoring the financial performance of the lessee and thus watch the performance. Moreover, with financial analysis of the franchisee, the RMCF as the franchiser will demand the fair amount of royalties while also adjusting the licensing fee accordingly thus boosting their overall revenue.

Organizational Design, Control, and Corporate’s Strategy

With the global area approach as the best alternative to growing and expanding the market for RMCF, adequate control mechanisms need to be put in place. The major lease method of expanding internationally provides an opportunity for significantly increasing the revenues of the firm. However, with the efforts directed in implementing the corporate’s strategy, the appropriate organization design poses some challenges regarding establishing control over the lessee. Since the major Lessee acts autonomously in the production, branding, marketing, and distribution, RMCF needs to constitute a franchise Board of Directors whose purpose is primarily to ensure that the franchisee operates within the major license agreement and acts in the best interest of the source of production materials and the head company. Moreover, the board will serve as the link establishing coordination between the franchisor and the franchisee in the MLA.

Conclusion

From the findings, RMCF needs to expand its market to generate more sales revenue to complement the saturated American market. With India as a potential destination, the company should focus its attention on the Japanese market first then move out to the Indian territory. The major lease agreement as established in Japan are appropriate, but efforts need to be made to reap the benefit of the potential clients. By utilizing the global area approach, the company will significantly reduce its expenditure associated with production and exportation of the chocolates to the Japan. However, there needs to be a board of directors for the Major Lessee to ensure that the operations in the Japanese market are in tandem with the objective of the head company.



References

Connor, G., McFadden, M., & McLean, I. (2012). Organisational Design. Retrieved October 9, 2017, from https://www2.cipd.co.uk/NR/rdonlyres/8C5DA6D7-99B5-41F2-859A-E2DF80539C5C/0/978184398132_sc.pdf

Mathews, R. (2015). International organization design and control. Retrieved from http://slideplayer.com/slide/7700426/

Mull, R. H., Takano, K., & Owings, S. (2014). Rocky Mountain Chocolate Factory International. Journal of Case Studies, 27-32.

Rozhanskaia, E. (2015, November 28). Organization Design . Retrieved from https://www.slideshare.net/rfelena/4-organization-design