Describes the issues that entrepreneurs and their firms must deal with in attempting to make the transition from entrepreneurial to professional management. The note suggests that the delegation of responsibility and the implementation of formal controls are two key steps in this transition.
The first in a series of cases that explores the causes and methods of fraudulent financial reporting and the lines between acceptable, unethical, and fraudulent behaviors.
Describes events occurring over a four-year period in one division of Graves Industries. The division goes through a business cycle and uses several methods of managing earnings to meet its budget targets. The purpose of the case is to allow the exploration of the causes of the unethical (or fraudulent) behaviors and ways in which they could have been prevented, or at least detected more effectively.
Describes events occurring over a three-year period in a division of Graves Industries. The division is being squeezed for profit, and managers in the division get involved in some fraudulent financial reporting schemes involving revenues and capitalization of expenses. A number of issues are raised concerning causes of the frauds and methods of preventing and/or detecting them.
Mueller-Lehmkuhl sells apparel fasteners and rents attaching machines. It views these two products as effectively a single item and prices them accordingly, the fasteners at high profit and its attaching machines at a loss. The cost system allocates the cost of the attaching machines to the fasteners. The Japanese have entered the market and found a way to unbundle the two products. As a result they are challenging the European way of doing business. The case asks the student to analyze the true cost and profitability of the products.
The president of Ohmeda, a wholly owned company of the BOC Group, plans to grow the company's medical equipment sales from $95 million in 1985 to $158 million in five years by focusing on the sale of "high-tech" equipment. At the same time, the president expects to sell Ohmeda's medical supplies business ($22 million in sales) and to transfer its medical gases business ($27.2 million in sales) to another business unit of the BOC Group. The changes in Ohmeda's products combined with the planned growth in medical equipment cause the president to reassess Ohmeda's marketing system. The new strategic thrust requires him to review the role of Ohmeda's direct sales and dealer sales coverage. In doing so he evaluates the economics of three options: 1) continuing with Ohmeda's present system, 2) eliminating dealer sales coverage, and 3) specializing salespeople by product group.
Kodak must decide whether to make a major investment in a production facility designed around a new technique for producing the gelatin critical to so many film and paper products. Currently, gelatin making is an arcane art, unchanged in 150 years and heavily dependent upon the sensory skills of experienced foremen. The new process, in a pilot stage now, is a chemical reaction which reduces the process time for one step from 6 months to 48 hours and which is much more "scientific." However, the old plant is fully paid for, the new process is only one potential avenue for improvement, and demand for gelatin is falling.
Lotus Development Corp., the number one microsoftware firm has traditionally sold to its customers through a distributor-retail dealer network. In early 1986, the company is considering the option of selling direct to large corporate customers. Students are expected to analyze the pros and cons of such a change in making their decisions.
Describes the three distinct approaches to quality management represented by W. Edwards Deming, Joseph Juran, and Philip B. Crosby. Designed to introduce students to the elements of statistical quality control, structured approaches to quality improvement, and zero defects programs and to show them that there is more than one way to improve quality.
Many top executives pride themselves on their skill in avoiding and managing conflict. However, when managers neither speak candidly nor put important facts on the table, candor is lost, communication suffers and so does the company. Skilled incompetence is a condition in which people excell at doing what they shouldn't because it seems right. These managers are "skilled" because they act without thinking. They are "incompetent" because their skill produces unintended results. A special application of the case method can be the first step to recognizing and correcting what's wrong.
The worst-case forecast of most capital expansion projects is rarely pessimistic enough. Staying power analysis can help a company better assess whether it can withstand the worst circumstances. These are the steps to take when doing a staying power analysis: 1) describe a hostile environment, 2) translate the consequent deteriorations into operating statement and balance sheet results, 3) make estimates based on the assumption that capital projects will encounter trouble, and 4) analyze cost-cutting possibilities. If the analysis shows company assets won't be able to cover the debt, that must be known in advance. Then if people want to risk the company, at least they know that's what they're doing.
The age of competitive strategy may be past. Sophisticated managers are learning that handsome returns come directly from superior strategic execution--not strategic planning. Their method: hustle and get it right. A look at the financial services industry provides valuable lessons. Few of the bases of competitive advantage exist--no economies of scale, few obstacles to product imitation, minimal costs and time required to bring out a new product. The organization's people and their executional skills--not the company's fixed assets--determine the bottom line.
Our blind allegiance to free trade threatens our national standard of living and economic future. Free trade puts us in direct competition with low-wage nations - countries that have a lower standard of living than the United States. By allowing these nations to take over big sectors of our market, we permit the permanent interruption of the relationship between demand and supply that has been the main force behind economic growth in U.S. history.
Innumerable business experts urge executives of growing companies to help themselves and their organizations by delegating responsibility. However well meaning, the dispensers of such advice usually underestimate the difficulty entrepreneurs have in giving up their cherished roles. Entrepreneurs pride themselves on their skills and talents and thrive on being in all places at once. But as their organizations expand, they can better spend their time coaching and planning rather than doing. Otherwise, their staffs can never mature, and they themselves won't have time to chart the company's future.
The success of a business depends on its ability to sustain its competitive advantage over time. Product innovation, production processes, and marketing are areas in which intense competitive pressure has multiplied with the increase in domestic and international competition. Analyses of companies identified as outstanding performers in their industries sought to understand the sources of their competitive advantage, to determine why the advantages proved sustainable, and to assess their future security.
Before managers can take meaningful steps to boost factory performance, they need an accurate way to judge what good performance is and to compare performance among facilities. The measurement systems in place at many factories fail to tell managers what they really need to know. To clarify the variables that affect productivity, 12 factories in 3 companies were studied over time. A new measuring system called total factor productivity (TFP) was devised to gauge each plant's overall efficiency. Then, the managerial practices that, when done right, make a difference were identified: investing in new equipment, reducing waste, and cutting work-in-process inventories by solving the problems that produced them in the first place.
Facilitates a discussion of the sources of Wal-Mart Stores' competitive advantage in discount retailing, and the future sustainability of that advantage. Also profiles the company's major diversification move in the early 1980s.