Ruby, a recent fashion design school graduate, has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Ruby?
A) Once the firm starts growing and attracting more customers she is likely to feel overloaded.
B) Hiring more employees will result in loss of intellectual property.
C) People are highly unlikely to buy clothes from a store run by a fashion design student.
D) The online admiration of her designs will not translate into sales.

Question

Quizplus · Accepted Answer

A likely pitfall of this organizational structure established by Ruby is that once the firm starts growing and attracting more customers she is likely to feel overloaded. A simple structure generally is used by small firms with low organizational complexity. In such firms, the founders tend to make all the important strategic decisions and run the day-to-day operations. Typically, neither professional managers nor sophisticated systems are in place, which often leads to an overload for the founder and/or CEO when the firms experience growth.

Ruby, a Recent Fashion Design School Graduate, Has Received Praise