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Chapter 6 Organizing the Business Enterprise 191

delivery details. Suppliers, meanwhile, can review do business only with subcontractors and suppliers
the call and submit bids directly to the contractor. who are able to work online. We may never live and
This overall improvement in efficiency can poten- work in virtual buildings, but, increasingly, the con-
tially save thousands of dollars on a big construc- struction of bricks-and-mortar facilities is taking
tion project. Now, blueprints can be posted online; place in cyberspace.
each supplier and each subcontractor can review his
or her part of the project, including scheduling de- CASE QUESTIONS
tails, online. E-mail can be sent to everyone involved,
work schedules can be issued, and bid requests can 1. What elements of organizational structure are most
be sent to potential suppliers, all with the push of a relevant to the construction industry?
button or the click of a mouse. The advent of newer 2. Why do you think some firms are so eager and
hand-held computers is also accelerating change be- some are reluctant to adopt this new technology?
cause these devices allow contractors, subcontractors, 3. What new pitfalls might exist for a construction
supervisors, and workers to access information at project being managed completely online?
the construction project.
4. Are the organizational effects of new technology
Of course, not everyone is rushing to this new way
more likely to be felt within a given construction
of doing business. However, all of the major con-
company or in the way that construction companies
struction companies are at least taking steps in this
relate to one another? Why?
direction. Indeed, experts forecast that by 2004 at
least 10 percent of all construction-industry busi- 5. In what ways, if any, might new technology affect
ness will be conducted online. One major construc- the informal organization that exists at a con-
tion firm, WebCor, indicates that in two years it will struction site? ◆

Concluding Case 6-2

Jersak Holdings Ltd.

Vaclav Jersak was born in Prague, Czechoslovakia, station, and over the next three years he opened
in 1930. His family had long been active in the retail several more. In 1971, he purchased a franchise of
trade in that city. The Jersak family was very close, but a major fast-food outlet, and by 1977 he owned four
the 1930s and 1940s were a time of great turbu- fast-food restaurants. His entrepreneurial instincts led
lence in central Europe. In 1938, Hitler’s troops in- him into a wide variety of business operations after
vaded Czechoslovakia and five years of war followed. that. From 1977 to 1991, he expanded his activ-
After the war, Czechoslovakia came under the influ- ity into the manufacture of auto parts, microcom-
ence of the Soviet Union, and capitalistic ventures puters, textiles, and office furniture. He purchased
that had been such an integral part of the Jersak five franchises of a retail auto parts store, two au-
family were severely restricted. By the early 1960s, tomobile dealerships, and a carpet business that
there were some hints of a return to a more capital- sells to both residential and commercial users. A
istic economy. To Jersak’s dismay, these were snuffed mining company, a soft drink bottling plant, and a
out by the Soviet Union’s invasion of Czechoslovakia five-store chain of shoe stores are also part of Jersak
in 1968. Holdings Ltd.
The invasion was the last straw for Jersak, who As each new business venture was added, Jersak
had felt for some years that the environment for pri- hired a person to manage the operating company.
vate business activity was very poor. At age 38, he de- He also added individuals with expertise in ac-
cided to leave Czechoslovakia for a better life in counting, finance, marketing, and production in his
Canada. He arrived in Toronto in December 1968, de- head office. Currently, Jersak Holdings Ltd. contain
termined to apply his entrepreneurial talents in a 17 operating companies, each headed by a manager
more promising business environment. (see Figure 6.7). Employment ranges from five to
Jersak quickly discovered the freedom that en- ten people in each company. In 1999, sales totalled
trepreneurs had in Canada. He started a small gas $37 million and profits were $4.7 million.
GRIFFIN*06*NEW 3/14/01 3:09 PM Page 192

192 PART TWO The Business of Managing

Jersak Holdings Ltd.

President

V-P
V-P V-P V-P
Human
Finance Marketing Manufacturing
Resources

Operating Operating Operating Operating Operating

Company #1 Company #2 Company #3 Company #4 Company #17
...

Figure 6.7
Organization of Jersak Holdings Ltd.

Head office staff make most of the strategic de- had much experience in making important decisions.
cisions in the firm. Jersak and the other top executives He also fears that head office will lose control of the
have frequent informal meetings to discuss matters of operating companies. Jersak feels that it is impor-
importance to the firm. Discussions usually continue tant for head office staff to know some of the details
until a consensus is reached on a course of action. The of each operating company. Without this knowledge,
operating managers are expected to put into practice he feels that the head office staff will be unable to
the strategic plans that are made at head office. make good decisions regarding the operating com-
As Vaclav Jersak looks back on the last 30 years, panies.
he feels a great sense of satisfaction that he has ac- Other friends of Jersak argue that the time has
complished so much. He has been thinking that the come to centralize control at head office because the
top management group operates smoothly because firm has gotten so large and is so diverse. Only in
the people have worked together for many years. But this way, they argue, will top management be able to
he feels that areas of authority should be more clearly effectively control all of the activities of Jersak
defined so that when changes occur in top manage- Holdings Ltd.
ment because of retirements, the new people will Jersak is uncertain about what to do, but he feels
know exactly what they are responsible for. he must do something to ensure that his life’s work will
Some of Jersak’s business acquaintances are of not disappear when he retires.
the view that he should delegate considerably more au-
thority to the managers of the operating companies. CASE QUESTIONS
In effect, they recommend that he turn these operating
1. Discuss the advantages and disadvantages of cen-
managers into presidents of their own firms, each of
tralization and decentralization as they relate to
them being responsible for making a profit in their
Jersak Holdings Ltd.
particular enterprise. His acquaintances point out
that giving the managers of the operating companies 2. Which basic approach—centralization or decen-
this level of responsibility will motivate them to tralization—should Jersak Holdings Ltd. adopt?
achieve much more than they are now. Also, it should Defend your answer.
motivate the employees in these firms because they 3. What problems are evident in the current organi-
will have more discretion as well. Jersak sees some zational structure of Jersak Holdings Ltd.? Design
real benefits in this approach, but worries that the a new organization chart for the company that will
current managers of the operating companies haven’t solve these problems. ◆

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