DDBA 4990 Week 3 Structure Memo Example

Memorandum

To: Owner, Tri-County Restaurant Supply

From: Business essentials student consultant

Date: October 5, 2026

Re: Reorganizing by region before the Lexington opening

Recommendation

Reorganize the sales and warehouse staff by region before the Lexington territory opens next spring, keeping purchasing and accounts central under you. The regional structure will cost about $78,000 a year more, mainly for one regional manager, and of the two it alone will still work with three territories.

The Firm Today

Tri-County Restaurant Supply, a composite distributor, sells food-service disposables, small wares and cleaning supplies to about 900 restaurants, schools and caterers in the Louisville and Cincinnati areas from two warehouses. It employs 47 people. Today the firm is organized by function: purchasing, warehousing, sales and accounts each have a supervisor, and all four supervisors report to you.

Table 1

Chart A: Current Functional Structure

Titles only; names omitted.

The Alternative

Table 2

Chart B: Proposed Regional Structure

Each regional manager supervises that region's representatives and warehouse crew.

Comparison

I compared the two charts on three criteria fixed before drawing them: how much coordination each requires, how much work each duplicates and how close each puts decisions to customers.

Coordination cost. Under the functional chart, every problem that crosses sales and warehousing, such as a late delivery to a school district, goes to you, because you are the only person above both. Your calendar shows that such problems took about nine hours of your week in September. Under the regional chart, the regional manager settles them. Mintzberg (1979) described how grouping work by market rather than function lets units handle their own interdependencies, which is exactly what this criterion measures.

Duplication. The functional chart duplicates almost nothing; the regional chart duplicates supervision, since each region needs its own manager. That is the main cost: a third manager's salary and benefits, about $78,000, once Lexington opens, because the two existing regional managers would be promoted from current supervisor roles at modest raises.

Closeness to customers. Under the functional chart, a Cincinnati restaurant's representative and the warehouse that serves it answer to different supervisors in different cities. Under the regional chart, both answer to one person in Cincinnati.

The Growth Test

Adding Lexington to the functional chart means one sales supervisor managing representatives in three cities and one warehouse supervisor managing three buildings, with every cross-functional problem still reaching you. Your nine hours a week would likely become thirteen or more. Adding Lexington to the regional chart means adding one box. Chandler (1962) traced how firms that grew into new markets tended to move from functional to regional or divisional structures once central coordination could no longer keep up, and Tri-County is at that point. Miles et al. (1978) argued that structure should fit the firm's strategy; a strategy of geographic growth fits a regional structure.

What the Choice Costs

The regional structure costs money and gives up some purchasing power if regional managers begin buying locally. Keeping purchasing central protects volume discounts. It also places more trust in three managers, two of whom have not yet managed both sales and warehouse staff. I recommend a six-month review of delivery times and margins by region after Lexington opens.

References

Chandler, A. D., Jr. (1962). Strategy and structure: Chapters in the history of the industrial enterprise. MIT Press.

Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman, H. J., Jr. (1978). Organizational strategy, structure, and process. Academy of Management Review, 3(3), 546-562. https://doi.org/10.5465/amr.1978.4305755

Mintzberg, H. (1979). The structuring of organizations: A synthesis of the research. Prentice-Hall.