There might be a number of reasons why his system is working. One key reason is the risk minimization which is because of the reduction of the possibility of error. Another reason is that the company probably is not looking to be innovative or grow aggressively anytime in the near future. Having such a structured stable environment can be very comforting to customer’s already associated with the business. However if the company was in a very competitive market or looking to grow them it would need more flexibility rather then structure otherwise the company would be badly hurt.
The success of the organizational culture and structure is very dependent on the environment in which an organization works. Such a system is likely to fail in a competitive market which keeps changing because of changing competitors, different customer perceptions and the impact of globalization. In such markets the demand is that employees are innovative and able to think on their feet and act independently if the need ever arises. Another downside also referred to in the case is the high turnover because of employee dissatisfaction. This factor can raise administration costs and reduce employee morale.
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