Free «Organizational Expansion: The Case of Big Spaceship» Essay
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The primary issue in the case of Big Spaceship is the expansion, specifically, whether it is time to extend their activities. For a company like Big Spaceship that has so far thrived by operating with its distinct culture, as most small businesses do, eventually, expansion becomes inevitable if the organization is to sustain a certain level of growth. In this case, it will respond to its environment as per the open systems approach. What becomes of concern is whether the company, in particular, Big Spaceship, is already in its preferred state of operation, and what the further development will do for the business regarding sustainability, growth, relevance and maintaining its distinct culture. A successful expansion can only happen with proper leadership, suitable company culture, efficient company strategies, and accurate analysis of the internal and external environments.
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The Analysis of the Case
For a company like Big Spaceship, growth is inevitable and necessary if it is to survive in its core market. The business is currently in a position that allows it to be selective with its clients; however, if this particular option dries up and no ‘suitable’ customers are available, the company will simply have to take on more ‘traditional’ ones to survive or find itself unable to be sustainable. Expansion can allow the business to work with most types of clients and, thus, prepare itself for more contingencies.
It should be stated that development comes with several advantages. First, there will be the opportunity to develop its talent pool increasing the number of staff that will give the company the ability to handle more diverse orders and, therefore, make more money. This action will also open up promotion opportunities for employees in the company. Obviously, a small business does not offer many possibilities of managerial growth for its personnel. Thus, a higher number of workers will open up administrative positions that will need to be filled. The expansion should also bring in more revenue which can be used to open up more branches of the business in different geographical locations and get more clients; although, Michael Lebowitz, the founder and CEO of Big Spaceship, has noted that proximity to talent rather than clients is what is important.
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The Possibility of Limited Expansion
As the mentioned expansion is inevitable, the only course of action, in this case, would be to limit it to a certain extent. Lebowitz has underlined that a good example of such a restriction is the fact that a lot of businesses are operating with a number of staff members varying between 45-75 people. Such groups of employees are seen as easy to manage while still being highly productive and maintaining the organizational culture. Exceeding this amount could have effects such as leaning towards a more corporate structure and, as Lebowitz puts it, reaching a point where people do not know each other’s names. However, there is an opinion that the 45-75 rule is not appropriate for organizational growth and that the limit should not necessarily be predefined.
The advantages of limited expansion include not having a large payroll bill, maintaining office culture, having easier management tasks and allowing for good internal communication while keeping a sustainable level of productivity. For this to work while still providing value to everyone involved and keeping the organization highly competitive, the company would need to consider a few things such as sticking to high-end clients, and looking at orders based on revenue value rather that volume of work. An example of this could be picking a single high-value client to work with instead of a lot of low-value clients to make up for revenue growth. Another approach would be to diversify the core business offerings and bring in other products such as proposing PR and media buying.
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Will organizational growth influence company strategy negatively or positively? At present, Big Spaceship employs the team model for carrying out tasks, and it has proved to works efficiently. The expansion would lead to a larger staff. The current teams have a fixed number of members that is manageable; however, the expansion will lead to a larger staff and increase in the number of team members respectively. The positive impact of this will be the addition of talent to the teams that would, therefore, allow the company to take in more work. The teams will also need to have a bigger managerial structure of their own. Combining this with the potential work coming in, the already existing vices such as team members being idle would be reduced significantly. This will overall improve the efficiency, productivity, and morale of every member of the team. The recommendation for handling this scenario would be to research carefully the proper size of a team that can remain productive and ways to manage the increased number of its members.
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Will the organizational growth negatively affect company culture? Naturally, in a smaller team with fewer members, people can interact with each other and bond without effortlessly. Office culture is, therefore, easier to foster. However, with expansion, more people will come into the team, and consequently, individuals will begin to lose familiarity with each other the lesser they see one another. This can gradually erode office culture. To handle this, the organization should put in place team bonding practices such tours, meeting rooms and even office competitions. This can prove to be expensive, but these costs will be reimbursed by the greater revenue that a larger, more motivated staff could bring in.
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Company Leadership and Management
Lebowitz notes that at the early stages of his company, they actively avoided middle management. At that particular moment, that would have been too much structure, and an extra level of management would have reduced interaction of top executives with regular employees. However, with the expansion, a much larger team has to be taken into consideration, and an extra layer of management is simply necessary. No doubt, it might have the adverse effect of reducing the interaction between top management and ordinary workers and, therefore, lead back to the office culture erosion issue. Moreover, an extra level of management may worsen the cohesion between each and every member of the team as previously taken team decisions now need to flow through stages with fewer and fewer people being involved moving up the hierarchy.
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A recommendation to help with this would be to encourage the autonomy of the team model already at play at Big Spaceship. Such a step would assist in making each team an active, almost independent entity, that can manage most of its operations with team members reporting to team leaders and, therefore, in a way, preserving the previous model. Projects would be handled entirely by the team with most decisions flowing between team leaders and team members with only very major decisions needing the involvement of the top management. The executives will, however, have to strive to meet with the teams on a regular basis to see what they are working on and check on their progress.
The expansion will most likely come with increase in revenue due to the ability to take on more projects. Unfortunately, this growth will also lead to greater expenses for the company. For instance, it will have to deal with the larger wage bill, bigger office, maintenance costs, and office infrastructure. This will lead to a strain on the enterprise's profits despite the expansion. To cope with this, the company could strive to diversify its products and sell its services to more clients offering a wider variety of them. They could also try to get the potential high-value clients as they provide a larger payment incentive. The business could also consider going public; however, Lebowitz has his reservations about this as most times this means that the core objectives change from providing top quality services to meeting the growth targets that investors have set.
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Therefore, the right time to expand is hard to gauge. Nevertheless, in the case of a company like Big Spaceship that has reached the point of sustainability but not growth, not taking action towards development means that their revenue reserves do not have any potential to grow. The consequences of this are that they cannot offer higher pay to their talent pool, and therefore, their employees could be poached. There is also the issue of competitors rising. The rivals could copy the model of Big Spaceship from their early days and, therefore, achieve great success with the potential of getting into their client base. Thus, the current stage that they find themselves is the right time to expand. The expansion will provide the business with the opportunity to grow and to be able to deal with external elements such as competition while also allowing the organization to explore other products that it could offer as a larger staff presents the opportunity for starting up a research arm. The move can also boost staff morale as they will work at a ‘bigger’ company with potentially higher pay preventing them from being poached and also enabling them to be more productive with the increased salary incentive at play. Therefore, a company at this stage should definitely consider organizational expansion.
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