Question

Answer the following questions in detail on company "Vitamin Shoppe".

(Note: Do not attempt to solve if you cannot answer all questions.)

1) What is the current organizational structure? How would you label or describe it?

2) What are the strengths and weaknesses of this type of structure?

3) How do the strengths and weaknesses of this structure align with the new strategy or strategies?

4) Does the current organizational structure serve the new strategy? If so, how could it be improved to align even better?

5) Does the current organizational structure not serve the new strategy? If so, how could/should it be changed?

Answer 1

1)

The current organizational structure of Vitamin Shoppe is a product divisional organizational structure. It has around ten product divisions, viz., Protein & Fitness, Digestion, Healthy Weight, Superfoods & Groceries, Herbs & Natural Remedies, Natural Beauty & Skin, Aromatherapy, Home & Lifestyle, Intimate Well-being and Kids.

The company sells 26,000 health and nutrition products of around 400 popular brands and also its own brands. It has an extensive assortment of products including minerals, vitamins, sports nutrition supplements and others. Since it has multiple product offerings of various categories, a product divisional organizational structure is very appropriate.

2)

Strengths of Product Divisional Organizational Structure are as follows:

• This type of structure helps in improved coordination and better utilization of employee skills and specialized knowledge.
• It helps in proper nurturing of various products offered to different customers.
• Detailed product analysis can be carried out more effectively.
• It helps company to come out with new products without disrupting the existing ones.
• It provides a very good training ground for managers.

Weaknesses of Product Divisional Organizational Structure are as follows:

• Operational cots often increase due to duplication of certain activities like Sales, Accounting and others.
• Sometimes top management control of different divisions becomes difficult.

3)

The company sells a wide variety of products and hence careful attention can be given to all the products because of this organizational structure. Also the detailed performance of each product can be found out easily.

The company’s strategy is to develop new private brands and at the same time to grow the existing ones. This strategy is very much met by this organizational structure.

According to the “reinvention strategy” introduced by the company from financial year 2015, the company is trying to reduce its operational costs to a great extent. But the first weakness of this type of organizational structure may prove to be a hindrance.

4)

The current organizational structure partially serves one aspect of the new strategy, i.e, development of new private brands while nurturing the existing ones. However, it also trying to go for cost control in a big way, which may not be fulfilled by this type of organizational structure.

The company may need to go for a hybrid structure which will be a combination of functional structure and product divisional structure. Economies of scale can be achieved by having a functional structure, thus reducing the cost of operations.

5)

The present organizational structure will not be able to reduce the cost of operations to a large extent. Hence, a hybrid structure which will be a mix of functional structure and product divisional structure will be necessary.