Institute Of Accountancy Arusha Business Essays

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Identify the strand of organisation structure and innovation approach used by the Bakhresa Group. Is it 'organic' or 'mechanistic' structure followed by the Bakhresa Group? Among the two which one is more suitable to innovation and why?

How can Bakhresa Group manage the tension between the need for creativity and efficiency?

Discuss the main organisational characteristics that facilitate the innovation process in the Bakhresa Group.

Explain the key individual roles within the innovation process and the activities they perform in the Bakhresa Group.

How did Bakhresa Group establish innovative environment that propagates the virtuous circle of innovation? Explain its features.



BDS - Business Development Services

CBOs - Community Based Organisations

CEO - Chief Executive Officer

CNC - Computer-Numerically Control Machine Tool

EPZ - Export Processing Zones

ERP - Economic Recovery Programme

FAWETA - Federation of Association of Female Entrepreneurs in Tanzania

FISOTA - Federation of Informal Sector Operators in Tanzania

IPP - Independent Power Producers

ISPs - Internet Service Providers

METL - Mohamed Enterprises Tanzania Limited

NGOs - Non-Governmental Organisations

PMORALG - Prime Minister's Office Regional Administration and Local Government

QGL - Quality Group Limited (T)

SACAs - Savings and Credit Associations

SACCOs - Savings and Credit Cooperative Societies

SELF - Small Entrepreneur Loan Facility

SME - Small Medium Enterprises

TANROADS - Tanzania National Roads Agency

TIC - Tanzania Investment Centre

TWB - Tanzania Women's Bank

URT - United Republic of Tanzania



Describe bakhresa case in few sentences

Say that your main concern innovation approach

Tell what are you doing with it? And if possible why

Talk about your item of analysis and source of data

Discuss the limitation of source of data and how you have dealt with it

Introduce the outline of the paper



Bakhresa Group is one of the leading Industrial Houses in Tanzania, East Africa. Started in a humble manner with a small restaurant in the Port City of Dar Es Salaam, Tanzania, in mid-seventies, it has now emerged as a respected business group in the Region. The Group has its operations spread in Tanzania, Zanzibar, Uganda, Kenya, Malawi, and Zambia and most recently in Mozambique. Plans are in place to spread its wings to other countries. The group now boasts of a turnover of more than Three Hundred Million United Sates Dollars and is a proud employer of more than two thousand employees associated directly. There are several companies under its umbrella and have investments mainly in Food and Beverage Sector, Packaging, Logistics and Real Estate

In the Bakhresa Group, the organization is treated as an instrument for achieving established goals, in which the members of the organization are made to serve these goals and rewards are given to motivate them. The organization structure contributes to the dominance of the technology-push model of innovation.

On the one hand Bakhresa Group requires stability and static routines to accomplish the daily tasks efficiently and quickly and on the other hand, Bakhresa Group also needs to develop new ideas and new products to be competitive in future and it needs to nurture a creative environment where ideas can be tested and developed.

The channel of communication is highly structured, there is restricted information flow, and operating styles are uniform and restricted. Authority for decision is based on formal line management position and the management is reluctant to adapt changing circumstances.

The management of the Bakhresa Group is committed to long-term growth rather than short-term profit and the organization is willing to invest in the long-term development of technology and is aware of its threats and opportunities.

The Bakhresa Group engages commercial scanner, gatekeeper and project leader and sponsor to facilitate the innovation process.

The Bakhresa Group, given the importance of innovation, has spent enormous sums of money trying to develop an environment that fosters innovation. The Bakhresa Group is aware of developing a reputation for innovation which helps propagate a virtuous circle that reinforces Group's abilities.

The Bakhresa Group has established companies dealing with variety of products from manufacturing of Food and Beverage Sector, Packaging, Logistics and Real Estate and has become a market leader because of innovation and entrepreneurship.


Identify the strand of organisation structure and innovation approach used by the Bakhresa Group. Is it 'organic' or 'mechanistic' structure followed by the Bakhresa Group? Among the two which one is more suitable to innovation and why?

Organizational Structures

Organizational structure refers to the way that an organization arranges people and jobs so that its work can be performed and its goals can be met. When a work group is very small and face-to-face communication is frequent, formal structure may be unnecessary, but in a larger organization decisions have to be made about the delegation of various tasks. Thus, procedures are established that assign responsibilities for various functions. It is these decisions that determine the organizational structure. In an organization of any size or complexity, employees' responsibilities typically are defined by what they do, who they report to, and for managers, who reports to them.


Innovation is the act of developing a new process or product and introducing it to the market. It is essentially an entrepreneurial act, whether it takes place in a start-up firm, a large organization, a not-for-profit, or a public-sector agency. Innovation means change: sometimes radical change, such as the development of the computer, and sometimes incremental change, such as the modification of existing computer software.

Innovation is the act of introducing something new or doing something in a different way. Innovation in business differs from creativity in that the latter is generally associated with the generation of new ideas. In contrast, innovation refers to taking those new ideas and actually implementing them in the marketplace. Thus, creativity is simply one element of the innovation process through which new ideas lead to new products, procedures, or services. Business scholars often attribute company success to innovation. Because of growing international competition, innovation became even more vital for companies toward the end of the 20th century

Organizational Structures and Innovation

The structure of an organization is the sum total of ways in which it divides its labour into distinct tasks and then achieves coordination among them. One of the problems is recognizing that different groups within an organization behave differently and interact with different parts of the wider external environment. None the less, there have been numerous useful studies exploring the link between the organizational structure and innovative performance.


Organizational structures can be sorted between organic and mechanistic. Organizational cultural also plays a big role when implementing change. Some resistance forces we are likely to encounter are within our organization. Once the organizational structure and cultural attribute is determined then the designing process can begin.

Organic and mechanistic are on different ends of the spectrum. "In contingency theory, the term organic structure is used to describe an organizational structure that is designed to promote flexibility so that employees can initiate change and adapt quickly to changing conditions" (George & Jones, 2005, p. 508). This flexible structure is more like a team environment in which all the employees are able to handle any of the tasks. "In contingency theory, the term mechanistic structure is used to describe an organizational structure that is designed to induce employees to behave in predictable, accountable ways" (George & Jones, 2005, p. 508). All of the employees working in a mechanistic structure have assigned duties that they must perform and are prohibited to take on additional duties unless they are told so by management.

Through their Theory of Mechanistic and Organic Systems, Tom Burns and G.M. Stalker (1961) have provided a way to understand which organization forms fit to specific circumstances of change or stability. In their highly influential work "The Management of Innovation", they provide the following characteristics of Mechanic vs. Organic Systems:



Mechanistic Organization Form  / Management System



Organic Organization Form  / Management System


Appropriate Conditions



Distribution of tasks

Specialized differentiation of functional tasks into which the problems and tasks facing a concern as a whole are broken down

Contributive nature of special knowledge and experience to the common task of the concern

Nature of Individual task

The abstract nature of each individual task, which is pursued with techniques and purposes more or less distinct from those of the concern as a whole: i.e., the functionaries tend to pursue the technical improvements of means, rather than the accomplishment of the ends of the concern

The "realistic" nature of the individual task, which is seen as set by the total situation of the concern

Who (re)defines tasks

The reconciliation, for each level in the hierarchy, of these distinct performances by the immediate superiors, who are also, in turn, responsible for seeing that each is relevant in his own special part of the main task

The adjustment and continual redefinition of individual tasks through interaction with others

Task scope

The precise definition of rights and obligations and technical methods attached to each functional role

The shedding of "responsibility" as a limited field of rights, obligations and methods (problems may not be posted upwards, downwards or sideways as being someone else's responsibility)

How is task conformance ensured

The translation of rights and obligations and methods into the responsibilities of a functional position

The spread of commitment to the concern beyond any technical definition

Structure of control, authority and communication

Hierarchic, Contractual

Network, Presumed Community of Interest

Locating of knowledge

Reinforcement of the hierarchic structure by the location of knowledge of actualities exclusively at the top of the hierarchy, where the final reconciliation of distinct tasks and assessment of relevance is made

Omniscience no longer imputed to the head of the concern; knowledge about the technical or commercial nature of the here and now may be located anywhere in the network

Communication between members of concern

Vertical; i.e., between superior and subordinate

Lateral; i.e., between people of different rank, resembling consultation rather than command

Governance for operations and working behavior

Instructions and decisions issued by superiors

Information and advice rather than instructions and decisions


Insistence on loyalty to the concern and obedience to superiors as a condition of membership

Commitment to the concern's task and to the "technological ethos" of material progress and expansion is more highly valued than loyalty and obedience


Greater importance and prestige attaching to internal (local) than to general (cosmopolitan) knowledge, experience, and skill

Importance and prestige attach to affiliations and expertise valid in the industrial and technical and commercial milieux external to the firm

(Book: Tom Burns, G.M. Stalker - The Management of Innovation)

It is evident that among the two organisation structures, the Organic one is more suitable for promoting and fostering innovation within an organization. Because it encourages creativity, allow free flow of communication and flexibility and adaptation to changing circumstances.

The Bakhresa group seems to follow the Mechanistic organization structure, because their channel of communication is highly structured, there is restricted information flow, and operating styles are uniform and restricted. Authority for decision is based on formal line management position and the management is reluctant to adapt to changing circumstances.


Mechanistic organization structure tends to offer a less suitable environment for managing the creativity and the innovation process. Because of its degree of formalisation, centralisation, Size and complexity of its organisation,


There is some evidence of an inverse relationship between formalization and innovation. That is an increase in formalization of procedures will result in a disease in innovative activity.


Where these are several different type of professional groups are working in an organization, it would represent a complex organization


It refers to the decision making activity and the location of power within an organization. In a decentralized organization fewer levels of hierarchy are usually required: This tends to lead to more responsive decision making closer to the action.

Organisational Size

A small business with fewer employees differs significantly on terms of resources from an organization which is big size is a proxy variable for more meaningful dimensions such as economic and organization resources, including number of employees.


Regardless of the mechanistic structure in use by the Bakhresa Group, its great achievements are obviously due to its continuous innovation in new products and new markets. One can conclude that due to the large size and complexity organisation of the Group as a whole, it is necessary to apply the centralisation and formalisation. But the style of operations and management at the subsidiary companies level may be allowing certain flexibility that is promoting creativity and innovation.


How can Bakhresa Group manage the tension between the need for creativity and efficiency?

The Dilemma of Innovation Management

Within organizations there is a fundamental tension between the need for stability and the need for creativity. On the one hand, companies require stability and static routines to accomplish daily tasks efficiently and quickly. This enables the organization to compete today. For example processing of millions of cheques by banks everyday.

On the other hand, companies also need to develop new ideas and new products to be competitive in the future. Hence they need to nurture a creative environment where ideas can be tested and developed. This poses one of the most fundamental problems for management today.

Managing the tension between the need for creativity and efficiency.


Efficiency gains

The efficient day to day operations within an organization require stable routines which can be achieved in stable and controlled environments

The development of new products/services requires creativity and room to try out new ideas this is achieved in a loose and flexible environment

Creativity gains

Take any medium to large company and examine its operations and activities. Every company has to ensure that their products are carefully manufactured to precise specifications and that they are delivered for customers on time day after day. In this hectic, repetitive and highly organized environment, the need to squeeze out any slack or inefficiencies is crucial to ensure a firm's costs are lower than their competitors'. However the long-term economic growth is dependent on the ability of firms to make improvements to products and manufacturing processes. The firms need to make room for creativity and innovation, that is, allow black in the system. These then is the dilemma: how do firms try to reduce costs and slack to improve competitiveness on the one hand and then try to provide slack for innovation on the other? The firm has to do balancing: The firm needs to ensure there is a constant pressure to drive down costs and improve efficiency in its operations. At the same time it needs to provide room for new product development and improvements to be made the most obvious way forward is to separate production from R & D. However there are many improvements and innovations that arise out of the operations of the firm.


Discuss the main organisational characteristics that facilitate the innovation process in the Bakhresa Group

Organizational Characteristics that Facilitate the Innovation Process

Growth Orientation is characterized by a commitment to long-term growth rather than short-term profit. Not all companies' first and foremost objective is growth. Some companies are established merely to exploit a short-term opportunity, other companies would like to maintain the company at its existing size: the objective of innovative companies is to grow the business the actively plan for the long-term.


It is characterized by the ability of the organization to be aware of its threats and opportunities. Vigilance requires continual external scanning e.g. within the marketing function the activity would form part of market research and competitor analysis collecting valuable information is one thing, but relaying it to the necessary individuals and acting on it are two necessary associated requirements.

Commitment to Technology

It is characterized by the willingness to invest in the longterm development of technology. Most innovative firms exhibit patience in permitting ideas to geminate and develop overtime. This needs to be accompanied by a commitment to resources in terms of intellectual input without a longterm approach it would be extremely difficult for the company to attract good scientists.

Acceptance of RISKS:

it is characterized by the willingness to include risky opportunities in a balanced portfolio. It means the willingness to consider carefully risky opportunities. Ability to take calculated risks and include them in a balanced portfolio of projects.

Cross-functional Cooperation:

it is characterized by mutual respect among individuals and a willingness to work together across functions. Inter-departmental conflict is a well-documented barrier to innovation. Often conflict has been observed between marketing and R & D functions as the two groups often have very different interests.


It is characterized by the ability to be aware of, to identify and take effective advantage of externally developed technology. Most technology based innovations involve a combination of several different technologies. It would be unusual for all the technology to be developed in house. That is why business are witnessing an increasing number of joint ventures and alliances.


It is characterized by an ability to manage the innovation dilemma and provide room for creativity while organizations place a great emphasis on the need for efficiency, there is also a need for a certain amount of 'slack' to allow individuals room to think, experiment, discuss ideas and be creative.


It is characterized by a readiness to accept change. The development of new product innovations will invariably lead to disruptions to established organizational activities. Major or radical innovations may result in significant changes, although the two are not necessarily linked. The organization must be ready to accept change in the way it manages its internal activities. Otherwise proposed innovations would be stifled due to a reluctance to alter existing ways of working or to learn new techniques.

Diverse Range of Skills:

it is characterized by a combination of specialization and diversity of knowledge and skills organizations require individuals of a hybrid nature who are able to understand a variety of technical subjects and facilitate the transfer of knowledge within the company. It is the ability of the organization to manage this diversity of knowledge skills effectively that lies at the heart of the innovation process.


Explain the key individual roles within the innovation process and the activities they perform in the Bakhresa Group

The Role of the individual in the innovation Process

Innovation process is essentially a people process and that organizational structure, formal decision making processes, delegation of authority and other formal aspects of a so-called well run company are not necessary conditions for successful technological innovation. The study of Rubenstein has revealed that certain individuals had fulfilled a variety of roles that had contributed to successful technological innovation.

Technical Innovator:

This individual is an expert in one or two fields. Generates new ideas and sees new and different ways of doing things. Also referred to as the 'mad scientific'

Technical/Commercial Scanner

This individual acquires vast amounts of information from outside the organization, often through networking. This may include market and technical information.


This individual keeps informed of related developments that

occur outside the organization through journals, conferences, colleagues and other companies. Passes information on to others, finds it easy to talk to colleagues. Serves as an informatted resource for others in the organization.

Product champion:

This individual sells new ideas to others in the

organization. Acquires resources. Aggressive in championing his/her cause. Takes risks.

Project Leader:

This individual provides the team with leadership and motivation. Plans

and organizes the project ensures that administrative requirements are met. Provides necessary coronation among team members sees that Project moves forward effectively. Balances Project goals with organizational needs.


This individual provides access to a power base within the organization: a senior person. Buffers the Project team from unnecessary organizational constraints. Helps the project team too get what it needs from other parts of the organization. Provides legitimacy and organizational confidence in the project.


How did Bakhresa Group establish innovative environment that propagates the virtuous circle of innovation? Explain its features.

Establishing an innovative environment and Propagating this virtuous circle

Given the importance of innovation, many businesses have spent enormous sum of money trying to develop an environment that fosters innovation.

Creating a virtuous circle of innovation means getting competitive advantage over others.

Virtuous circle of innovation

Reputation of the Organisation

It takes many years to develop. It is strongly linked to overall performance. Some companies are able to achieve wide exposure of new products or new research.

Attraction of creative people

Creative people will be attracted to those companies that themselves are viewed as creative. TOP scientists and researchers will seek employment with such companies.

Organizational encouragement of creativity

The creativity has to be supported with actions and resources with the time to be creative: Organization can try to build sufficient slack into the system to allow for creative thinking and tolerates errors and mistakes and successful ideas need to be rewarded.

Development of Innovative Products

Developing new products that are genuine improvements compared with products currently available.

Willingness to Accept New Ideas

many organizations suffer from an inability to implement changes and new ideas even after rewarding the people involved in developing those ideas. Once a new product idea has been accepted it is important that it is carried through to completion.

Increased Motivation and Reduced formation

individuals within the organization can see their ideas and efforts contributing to the performance of the business, they will be encouraged still further: on the other hand if seemingly good ideas are constantly overlooked, this will lead to increased frustrations.

High Morale and Retention of Creative people

A rewarding and enjoyable working environment will help to retain creative people. This in turn should reinforce the company's innovative capabilities.