1

PRAGATIEDUCATIONSOCIETY

NATIONALINSTITUTEOFRETAIL MANAGEMENT
MARKS:80

COURSE:MRM

SUB:GENERALMANAGEMENT N.B.: 1) 2) AttemptanyFourCases

Allquestionscarriesequalmarks.

Case:1
TRISTATETELEPHONE JohnGodwin,ChiefexecutiveofTriStateTelephone,leanedbackinhischair andlookedattheceiling.Howwasheevergoingtogetoutofthismess?Atlast nightspublichearing. 150angrycustomershadmarchedintoprotestTri States latest rate request. After the rancorous shouting was over and the acrimonioussignsputaway,theprotestershadpresentedstateregulatorswith some sophisticated economic analyses in support of their case. Additionally, therewereanumberofemotionalappealsfromelderlycustomerswhoregarded phoneserviceastheirlifelinetotheoutsideworld. TriStateTelephoneoperatedinthreestatesandhadsalesofover$3billion. Duringthelastfiveyears,thecompanyhadexperiencedatremendousamountof change. In 1984, the AT & T divestiture sent shock waves throughout the industry, and TriState Telephone had felt the effects, as pricing for long distancetelephoneservicechangeddramatically.TheFederalCommunications Commissioninstitutedachargetotheeffectthatcustomersshouldhaveaccess tolongdistancecompanieswhetherornottheywereinthehabitofmaking long distance calls. Consumergroups, including theConsumerFederationof

2 AmericaandtheCongressofConsumerOrganizations,hadjoinedtheprotest, increasing their attention on the industry and intervening in regulatory proceedingswhereverpossible.TheFCCwasconsideringderegulatingasmuch oftheindustryaspossible,andcongresswaslookingoverthecommissioners shoulder.Meanwhile,theDepartmentofJusticeandJudgeHaroldGreeneboth ofwhomwereresponsibleformonitoringtheAT&Tdivestiture)continuedto argueaboutwhatbusinesscompanieslikeTriStateshouldbeengagedin. In addition, technology was changing rapidly. Cellular telephones, primarily used in cars, were now handheld and could be substituted for standardphones. Digitaltechnologywasgoingforward,leadingtolowercasts andrequiringcompanieslikeTristatetoinvesttokeepupwiththestateofthe art. Meanwhile,rateincreasesnegotiatedduringtheinflationary1970swere keeping earnings higher than regulators would authorize. New Intelligent terminals and software developments gave rise to new uses for the phone network(suchasusingthephoneforanaarmsystem),butaslongascustomers paidoneflatfee,thephonecompanycouldnotbenefitfromthesenewservices. Godwinscompanyhasrecentlyproposedanewpricingsystemwhereby users of local telephoneservices would simplypayforwhat theyused rather thanamonthlyflatfee.Alloftheseniormanagerswereconvincedthattheplan wasfairer,eventhoughsomegroupswhousedthephonewithnetablefrequency (likerealestateagents)wouldpaymore.Itwouldgivethecompanyanincentive tobringnewservicestotheircustomers,andcustomerswouldbeabletochoose whichonestobuy.Noneofthemhadanticipatedthehueandcryfromthevery customerswhowouldsavemoneyunderthenewplan. Forinstance,Godwins studiesshowedthattheelderlywereverylightusersoflocalserviceandcould saveasmuchas20percentunderthenewplan.

3 Afterthedebacleatthehearingthepreviousnight,Godwinwasunsure howtoproceed.Ifhebackedoffthenewpricingplan,hewouldhavetofinda different way to meet the challenges of the future may be even different businessestoaugmentcompanyincome. Alternatively,thecompanycouldnot standthenegativepressfromaprotractedbattle,eventhoughGodwinthought thattheregulatorswerefavorablydisposedtowardhisplan. Infact,Godwin himselfbelievedthecompanyshouldhelpitscustomersratherthanfightwith them.

Questions: 1. Whoarethestakeholdersinthiscase? Thestakeholdersareasfollow: 1. TriStatescustomersandemployees 2. FederalCommunicationsCommission 3. Consumergroups likethe ConsumerFederationofAmerica and the CongressofConsumerOrganizationsand DepartmentofJusticeand JudgeHaroldGreene(bothofwhomwereresponsibleformonitoring theAT&Tdivestiture)whokeptinterferinginTriStatesdecision making 4. Thecommunicationsindustryaswholewasatthecuspoftechnological revolution and all the telephone companies were a part of the revolutionbroughtbythecellulartechnologyandrequiredinvestments andrevisedtariffs

2. Whichstakeholdersaremostimportant? Thecustomersasstakeholdersarethemostimportantonesastheyareoneswho generatetherevenueandutilizetheservices.

3. WhatarethecriticaltrendsinTriStatesenvironment? ThecriticaltrendsinTriStatesenvironmentare Owing to the A&T divesture, the long distance telephony had changed dramatically,withacompulsorylongdistanceaccesstoitscustomersas dictatedbytheFederalCommunicationsCommission(FCC).TheFCCwas alsoinfavourofderegulation InterventionbyConsumerGroupsinregulatoryproceedingsandaffairs InterventionbytheDepartmentofJusticeandJudgeHaroldGreene ImpactofTechnologyandneedsfornewinvestmentsandrevisionintariff plans OppositionforthenewpricingsystemfromtheconsumersoftheTristate andnegativepublicityensuingthereafter

4. WhydoyouthinkTriStatescustomersaresoupset? IthinkTriStatescustomersaresoupsetbecauseoffollowingreasons: 1. Noninclusionindecisionmakingastochangesinthenewpricingsystem 2. Noclarityaboutthenewpricingsystem 3. Change in the status quo and its opposition consumers were used to payingaflatmonthlyfeeandfeltthisnewchargeasperusageasaruse forchargingmore 4. Tristatesargumentthatconsumersneededmorelongdistanceservices thanthelocalonestookpreferencesanddecisionsoutofconsumershands 5. Vested interest groups like those who used the phone with netable frequencyandwhowouldpaymoreinthenewpricingsystemmighthave convincedalargergroupofconsumersthatthenewpricingsystemwas unfair

6. WhatshouldJohnGodwindo? JohnGodwinshoulddothefollowing: ReachouttoTristatesconsumersandconvincethemofthenewpricing systemandhowitcouldbebeneficialtothem.Forthis,hewouldneedto initiatesomefreetrialsandcashbackoffers Makeanemotionalappealtotheelderlyasbeingtheirallyandintroduce anewschemewhichgivesadiscountonceacertainamountinthebillis reached Givevalueaddedservicesbesidestelephonyandadvertiseitinalucrative andattractivewaysothatchallengesoftechnologyaremetatonehand andcustomersareretainedatanother Understandthewaythewindisblowingandgoforderegulationallthe way Increasetheotherchargeswhilekeepingtheflatmonthlyfeestructure somethingthatthecustomersweregunghoabout.

Case:2
DISNEYSDESIGN The Walt Disney Company is heralded as the worlds largest entertainment company. Ithasearnedthisastoundingreputationthroughtightcontrolover theentireoperation:controlovertheopenendedbrainstormingthattakes place 24 hours aday;control over the engineers who construct the fabulous themeparkrides;controlovertheanimatorswhocreateanddesignbeloved charactersandadventurousscenarios;andcontroloverthetalentthatbrings

6 the many concepts and characters to life. Although control pervades the company,itisnottoostrongagrip. Employeesineachdepartmentarewell aware of their objectives and the parameters established to meet those objectives. But in conjunction with the predetermined responsibilities, managersatDisneyencourageindependentandinnovativethinking. PeopleatthecompanyhaveadoptedthephraseDreamasaTeamasa reminderthatwhimsicalthoughts,adventurousideas,andalloutdreaming are at the core of the company philosophy. The over all control over each departmentistemperedbythisconcept. Disneymanagersstrivetoempower their employees by leaving room for their creative juices to flow. In fact, managers at Disney do more than encourage innovation. They demand it. Projectsassignedtothestaffimaginersseemimpossibleatfirstglance. At Disney, doing the seemingly impossible is part of what innovation means. Teamsofimaginers gathertogetherinabrainstormingsessionknownasthe Blue Sky phase. Under the Blue Sky, an uninhibited exchange of wild, ludicrous,outrageousideas,bothgoodandbad,continuesuntilsolutionsare foundandtheimpossibleisdone. Bydemandingsomuchoftheiremployees, Disneymanagerseffectivelydrivetheiremployeestobecreative. CurrentDisneyleaderMichaelEisnerhasestablishedtheDreamasa Team concept. Eisner realized that managers at Disney needed to let their employees brainstorm and create with support. As Disney president Frank Wedssays,Ifagoodideaisthere,youknowit,youfeelit,youdoit,nomatter whereitcomesfrom.

Questions:

7 1. What environmental factors influenced management style at Disney? The environmental factors influencing the management style at Disney which is in the Entertainment Sector are cited below: Multi-billion and huge size of the company Coming up with new and exciting concepts for the theme parks, animations and product ranges Disney's Reputation Multi-continental nature of employees Diasporas Out-of-the Box Thinking which is independent and innovative Control over all these processes so that Disney is one up on competition

2. What kind(s) of organizational structure seem to be consistent withDreamasaTeam? The organizational structure consistent with Dream as a Team is that of an informal decentralized Team where every member is charged with innovation and creativity. Importance is given to individual contribution throughout the company hierarchy and management style is empowering and inclusive

3. Howandwheremighttheinformalorganizationbearealassetat Disney? The informal organisation helps teams at Disney to develop some cohesiveness among them and thereby it tries to create effective work teams out of them. It perpetuates cultural values which the team holds as important. It satisfies the "belonging needs" of the organisational members. The individuals do feel that there are others in the organisation that can take care for them and who have got more concern towards compared to the formal management.

8 The informal organisation makes the individuals to help each other in realizing their role expectations. The communication network of the informal organisation is more effective than the formal channel. It spreads very quickly since the channels in the informal setup are never doubted. 5.Reduction of stressful relationship dynamics amongst different levels of management

Case:3 THATSNOTMYJOBLEARNINGDELEGATION ATCINMADE

WhenRobertFreypurchasedCinMadein1984,thecompanywasnearruin. TheCincinnati,Ohiobasedmanufacturerofpaperpackaginghadnotalteredits product line in 20 years. Labor costs had hit the ceiling, while profits were fallingthroughthefloor.Asolidquarterofthecompanysshipmentswerelate and absenteeism was high. Management and workers were at each others throats. Ten years later, Cin Made is producing a new assortment of highly differentiatedcompositecans,andpretaxprofitshaveincreasedmorethanfive times. TheCinMadeworkforceisbothflexibleanddeeplycommittedtothe successofthecompany. Ontimedeliveryofproductshasreached98percent, andabsenteeismhasvirtuallydisappeared. Thereareevenplanstoformtwo spinoffcompaniestobeownedandoperatedbyCinMadeemployees.Infact, attheonedayFutureoftheAmericanWorkforceconferenceheldinJuly1993, CinMade was recognized by President Clinton as one of the best run companiesintheUnitedStates.

9 How did we achieve this startling turnaround ? mused Frey. Employeeempowermentisonepartoftheanswer.Profitsharingisanother. Inthelatespringof1986,relationsbetweenmanagementandlaborhad reached rock bottom. Having recently suffered a pay cut, employees at Cin Madecametoworkeachday,performedthedutiesrequiredoftheirparticular positions,andreturnedhomenothingmore. Freycouldseethathiscompany wassuffering.Tosurviveweneededtostopbeingworthyadversariesandstart beingworthypartners, herealized. Toward this end,Freydecided tocall a meetingwiththeunion.Heofferedtorestoreworkerpaytoitspreviouslevelby theendoftheyear.Ontopofthat,heofferedsomethingnooneexpected:a15 percentshareofCinMadespretaxprofits.Idonotchoosetoownacompany thathasanadversarialrelationshipwithitsemployees.Freyproclaimedatthe meeting. He therefore proposed a new arrangement that would encourage a collaborativeemployeemanagementrelationship Employeeparticipationwill playanessentialroleinmanagement. Managers within the company were among the first people to oppose Freysnewideaofemployeeinvolvement. Mythreemanagersfelttheywere paidtobeworthyadversariesoftheunions. Freyrecalled. Itswhattheyd beentrainedfor.Itswhatmadethemgoodmanagers.Moreover,theywerenot used to participation in any form, certainly not in decision making. The workers also resisted the idea of extending themselves beyond the written requirementsoftheirjobs.(Employees)wantedgenerouswagesandbenefits, ofcourse,buttheydidnotwanttotakeresponsibilityforanythingmorethan doing their own jobs the way they had always done them, Frey noted. Employees were therefore skeptical of Freys overtures toward employee participation.Wethoughthewastryingtoripusoffandshaftus,explained OceliaWilliams,oneofmanyCinMadeemployeeswhodistrustedFreysplans.

10 Frey,however,didnotgiveup,andheeventuallyconvincedtheunionto agreetohisterms.Iwouldnttakenoforananswer,heasserted.OnceIhad mademytwograndpronouncements,Iwasdeterminedtopressaheadandmake themcometrue. Butstillaheadlaytheconsiderablechallengeofconvincing employeestotakecharge: Imadepeoplemeetwithme,theninsteadoftellingthemwhattodo,I askedthem. Theyresisted. Howcanwecutthewasteonhisrun?Id say,or

Howarewegoingtoallocatetheovertimeonthisorder? Thatsnotmyjob,theydsay. But I need your input, Id say. How in the world can we have participativemanagementifyouwontparticipate? Idontknow,theydsay. Becausethatsnotmyjobeither. Thats yourjob.? Gradually, Frey made progress. Managers began sharing more informationwithemployees.Freywasableslowlytoexpandtheresponsibilities workerswouldcarry. Managerswhowereunabletoworkwithemployeesleft, and union relations began to improve. Empowerment began to happen. By 1993, Cin Made employees were taking responsibility for numerous tasks. Williams,forexample,usedtooperateatinslittingmachineonthecompanys factoryfloor.Shestillrunsthatsamemachine,butnowisalsoresponsiblefor orderingalmost$100,000insupplies. Williams is just one example of how job roles and duties have been redefinedthroughout CinMade. JoyceBell,presidentofthelocalunion,still runs the punch press she always has, but now also serves as Cin Mades corporate safety director. The companys scheduling team, composed of one managerandfiveleadworkersfromvariousplantareas,ischargedwithsetting

11 hours,designatinglayoffs,anddecidingwhentemporaryhelpisneeded. The hiring review team, staffed by three hourly employees and two managers, is responsibleforinterviewingapplicantsanddecidingwhomtohire.Anemployee committeeperformsbothshortandlongtermplanningoflabor,materials, equipment,productionruns,packing,anddelivery.Employeesevenmeetdaily inordertosettheirownproductionschedules.Weempoweremployeestomake decisions,notjusthaveinput,Freyremarked.Ijustcoach. Under Freys new management regime, company secrets have virtually disappeared.AllCinMadeemployees,fromentrylevelemployeesallthewayto thetop,takepartinrunningthecompany.Infact,Freyhasdelegatedsomuch ofthecompanysoperationstoitsworkersthathenowfeelslittleinthedark.I nowknowverylittleaboutwhatsgoingon,onadaytodaybasis,heconfessed. At CinMade, empowerment and delegation are more than mere buzzwords;theyarethewayofdoingbusinessgoodbusiness.We,asworkers, havealotofopportunities,saidWilliams.Ifwewanttotakeleadership,its offeredtous.

Questions: 1. How were principles of delegation and decentralization incorporatedintoCineMadeoperations? Answer :Employee participation was made an integral part of the company's management practices. Employees were encouraged to participate in decision making in the new non adversarial collaborative employee-management relationship which was based on profit sharing and harmonious relations between the employee Union and the managers.

12 The participative management made it easier for delegation of authority and empowerment in not only decision making but also decision taking by the employees Decentralized hiring process which was independent in itself and managed by designated managers and lead workers from various sites of the plant. All Cin-Made employees, from entry-level employees all the way to the top, take part in running the company

2.

WhatarethesourcesandusesofpoweratCinMade? Participative management that demanded collaboration and innovation in planning and decision making at all levels Empowerment through delegation and decentralization Deriving more output through employees' sense of ownership for their actions Improving flexibility of the companies' employees Profit sharing and sense of partnership in all the workers of the organization

3.Whatweresomeofthebarrierstodelegationandempowermentat CinMade? Identification of issues at an adversarial level with antagonistic approach between the management and the workers Lack of ownership by the workers Lack of confidence in both managers as well as employees on whether each was taking the right decision based on mutual advantage Lack of participation and involvement by the workers, mainly because they were not considered enlightened and empowered enough to take bold decisions by the managers Past experiences and overall negative image of the organization in workers mind No revamping or remodeling of obsolete and loss making structures and decision making

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4.

What lessons about management in a rapidly changing marketplace can be learned from the experience of Cin Made? Adapt and evolve in an empowering way with all your stakeholders Delegation of authority Participative management Decentralized decision making Ownership of each unit and member of the organization Having a cohesive unified workers group can meet any competitive challenge from outside, however there is an adversarial relationship within the organization, much time and energy will be lost fixing the internal problems

CASENO.4 HIGHTECHANSWERSTODISTRIBUTION PROBLEMSATROLLERBLADE Whenamangerfindsthatdemandexceedsinventory,theanswerliesinmaking moregoods.Whenamanagerfindsthatinventoryexceedsdemand,theanswer liesinmakingfewergoods.Butwhatifacompanymanagementfindsthatthey justdonotknowwhichsituationapplies?

14 ThisisthesituationthatrecentlyconfrontedmanagementatRollerblade, thepopularskatemanufacturerbasedinMinnetonka,Minnesota.Rollerblade hasbeenoneoftheleadingfirmsinthefastgrowinghighperformanceroller skate marketplace, it matters a great deal for Rollerblade managers whether demandandinventoryareinbalance,ornot. Rollerbladewasinabind.Theproductliterallycouldnotbeshippedout the door. The managers found that workers were not able to ship products because,asaresultofpoorstoragestructures,theycouldnotfindtheproducts. Oncetheywerefound,overcrowdedaisles,inadditiontootherspaceconstraints, stillpreventedefficientshippingbecausetheworkerscouldbarelymanagetoget theproductsoutthedoor.Wewereoutofcontrolbecausewedidntknowhow tousespaceanddidnthaveenoughofit,saidIanEllis,directorforfacilities andsafety.Basically,therewasnomoreuseablespaceleftinthewarehouse,a severe backlog of customer orders, and picking errors were clearly in the unacceptablerange,addedRamKrishnan,PrincipalofNRMSystems,basedin St.Paul,Minnesota. The answer for Rollerblade was found in technology. Hightech companieshaveintroducedacollectionofcomputersimulations,rangingincost roughlyfrom$10,000to$30,000,thatassistmanagersingeneratingeffective facility designs. With the help of layout Master IV simulation software, developed by NRM, Rollerblade Management was able to implement a new distribution design. As a result of the distribution improvement, Rollerblade wasabletoincreasethenumberofcustomerordersprocesseddailyfrom140to 410andeliminateorderbacklog.Nowwehaveadifferentbusiness,saysEllis. Thenewlayouthastakenusfrombeinginacrunch,tobeingabletoplan. Questions:

15 1. With retailers as their primary customers, what customer competitive imperatives could be affected by Rollerblades inventoryproblems? 2. 3. Howappropriatemightajustintimeinventorysystembefora productsuchasrollerskates? What opportunities are there fore Rollerblade managers to see themselvesassellingservices,insteadofsimplyrollerskates?