M: Organizational Behavior 2nd Edition by Steven McShane, Mary Von Glinow

Exercise 49

Mike, an entrepreneur, employs 20 people whom he personally supervises. However, the company is most likely to employ over 200 people in production, sales, engineering and administration within a few years due to the growing success of the company's new products. The entrepreneur likes the current structure and wants to avoid other forms of departmentalization. Explain to the entrepreneur why his company would be more effective through forms of departmentalization as it grows larger.