Question

American Dream Holdings, Ltd. (“ADHL”), is the 100% owner of 88 subsidiary corporations, some of which operate in virtually every state of the United States and many of which operate in a limited number of states. One of the subsidiary corporations, EFC Corp., is the general partner of 2000 limited partnerships with operations scattered around the world. EFC Corp. is the flagship and largest of ADHL’s subsidiary companies. ADHL also has 20% to 50% ownership interests in other business operations. ADHL is owned by two individuals, one, Mr. Major, with 80% and the other, Mr. Minor, with 20%. The individual owners operate additional businesses not under the ADHL umbrella. Such additional businesses are considered affiliates. ADHL provides legal, financial, and administrative services including payroll and human resource management to all of its subsidiaries as well as to many affiliates. ADHL collects a monthly fee for such services. The fee is based on estimated needs for the services and is due regardless of the number of hours actually spent on a particular company’s matters. ADHL does not assess or collect supplemental fees for work done in excess of the estimate. The group of 88 subsidiaries and ADHL employ 2,000 individual employees. All employees participate in the year-end bonus plan that is based upon group net profit attainment. The organizational structure including departmental organization is dictated by ADHL executives. The Chief Operating Officer of ADHL, Ms. Iwon, was initially selected and hired by the 80% owner to be EFC Corp.’s Senior Vice President. EFC Corp.’s Chief Operating Officer, Mr. Toolate, was selected and hired by the 20% owner approximately two months after Ms. Iwon was hired. Approximately one year after Mr. Toolate was hired, Ms. Iwon orchestrated a reorganization that included her being promoted to the parent holding company position. EFC Corp. is perpetually three months behind in paying fees to ADHL. EFC Corp. is recalcitrant in distributing financial reports to ADHL.

Case Discussion Questions:

1. Using a systems approach, identify the system or systems and their sub-systems as well as the various relationships and interdependencies you see. You may utilize a drawing such as a sociogram, if you like.

2. Using a systems approach, identify the various conflicts in the case and describe how each is a conflict. Be sure to note how each conflict you identify meets the definition of a conflict.

3. Continue your diagnosis and assessment by analyzing the function served by, or the effect of, each conflict in the case, whether the system structure is competitive, avoidant, or collaborative, and determining your strategy and/or strategies.

Solution Preview

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Introduction

The systems approach is useful to understand the relationship between several factors (Swayne, Duncan & Ginter. 2005). In this case we are studying a complex company structure and the associated interdependencies. The company under study is American Dream holding Ltd and its subsidiaries. This case study reveals the complexity and the possible conflicts involved in a multilayer business model.

1) In this study the parent company is American Dream Holding Ltd (ADHL). ADHL is having 100% ownership in 88 Subsidiaries Company. Here we are seeing the first level parent subsidiary relationship....

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