Organizational Performance of Berkshire Hathaway

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Organizational Performance of Berkshire Hathaway1Organizational Performance of Berkshire HathawayStudent NameCourse NameDateInstructorHow does the organizational structure of Berkshire Hathaway contribute to its performance, andwhat are the potential drawbacks of its decentralized approach to management andcommunication? Provide specific examples from the company's operations and managerial styleto support your answer.Word Count Requirement: 1500-2000 words

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Organizational Performance of Berkshire Hathaway2Berkshire Hathaway: HistoryWarren Buffett, considered the most successful investor of the 20thcentury is the CEO,PresidentandChairmanofBerkshireHathaway.Thecompanywasinitiallyintotextilemanufacturingbefore Buffett completely bought out the company. The textile business wascontinued for a while but after Berkshire’s expansion into the insurance business throughpurchasing National Indemnity Company and GEICO, the textile business was eventuallystopped. Berkshire’s insurance business through GEICO is one of the major sources of free fundsfor the company’s further investments.Apart from its insurance business, Berkshire has alsoinvested in the clothing business, building products, retail, flight services, media,food andbeverage etc. Some of the famous it owns or has invested in includes Heinz, Mars Inc., Fruit ofthe Loom, American Express, Goldman Sachs and Lubrizol(Abathi M., Eriksson J., Klotz A.,Manera L., Sobolev S., 2012-13,Warren Buffett and Berkshire Hathaway’s acquisition ofGEICO, Hult International Business School).Structure of Human relationshipsBerkshire Hathaway as a holding company has many subsidiaries spread across differentbusiness sectors.The structure of human relationships isaunique one in Berkshire Hathaway.There is a board of directors of the company headed by Buffett, then there is a small investmentteam at their headquarters in Omaha and lastly there is the management of each of BerkshireHathaway’s subsidiaries. The structure of human relationship in the company is a very informalone. There are no strict regulations when it comes to interacting with the team at Omaha.Anymanagement team can interact with Buffett or his team when need arises(Larcker, D., Tayan, B.,2009,The Management of Berkshire Hathaway, Harvard Business Publishing).

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