Appex Corporation Case Analysis
APPEX CORPORATION
Background
Appex Corporation's business is supplying management information systems and intercarrier network services to various cellular phone companies. In 1986, Appex entered this fast-growing market as a very small organization. Between 1986 and 1990, revenues grew 1600%. Similar growth was also seen inside the company as the number of employees rose from 26 to 180 between 1988 and 1990. Due to the relative youth of both cellular phone technology and Appex, the company faced major difficulties in transitioning to the larger landscape. As it became clear that the current internal structure needed change, newly hired COO Shikhar Ghosh brought several ideas to the company in an effort to improve the organizational structure. Ghosh changed the organizational structure about every six months, with each new structure presenting new problems to the company. A couple years after Ghosh was brought in, Appex was bought out. The organization that acquired Appex gave them freedom in choosing a structure to work with, as long as it fit in with their direction. I recommend that the Appex division adhere to a matrix (network) structure.
Porter's Five Forces * Threat of Entry of New Competitors: The cellular phone industry was just getting off the ground in the late 1980s and was growing at an extremely fast pace. Because of this fast paced growth, the threat of new entrants was very high. Kalakota's eBusiness 2.0 mentioned the high number of young, fast-growing industry-leading companies failing to maintain their market share due to new entrants outperforming them. The best example is America Online. Both Prodigy and CompuServe had carved out their own section as a leading internet provider only to see America Online come in and take it from them. The threat of new entrants is high for Appex. * Intensity of Competitive Rivalry: Much like the threat of new entrants, the intensity of competitive rivalry is also high. Appex had
Background
Appex Corporation's business is supplying management information systems and intercarrier network services to various cellular phone companies. In 1986, Appex entered this fast-growing market as a very small organization. Between 1986 and 1990, revenues grew 1600%. Similar growth was also seen inside the company as the number of employees rose from 26 to 180 between 1988 and 1990. Due to the relative youth of both cellular phone technology and Appex, the company faced major difficulties in transitioning to the larger landscape. As it became clear that the current internal structure needed change, newly hired COO Shikhar Ghosh brought several ideas to the company in an effort to improve the organizational structure. Ghosh changed the organizational structure about every six months, with each new structure presenting new problems to the company. A couple years after Ghosh was brought in, Appex was bought out. The organization that acquired Appex gave them freedom in choosing a structure to work with, as long as it fit in with their direction. I recommend that the Appex division adhere to a matrix (network) structure.
Porter's Five Forces * Threat of Entry of New Competitors: The cellular phone industry was just getting off the ground in the late 1980s and was growing at an extremely fast pace. Because of this fast paced growth, the threat of new entrants was very high. Kalakota's eBusiness 2.0 mentioned the high number of young, fast-growing industry-leading companies failing to maintain their market share due to new entrants outperforming them. The best example is America Online. Both Prodigy and CompuServe had carved out their own section as a leading internet provider only to see America Online come in and take it from them. The threat of new entrants is high for Appex. * Intensity of Competitive Rivalry: Much like the threat of new entrants, the intensity of competitive rivalry is also high. Appex had
References: Cash, Introduction to Organization Structure Kalakota, e-Business 2.0