ASSIGNMENT 1

AN AMERICAN TRAGEDY: HOW A GOOD COMPANY DIED

WRITE A REPORT THAT OUTLINES THE REASONS (BOTH INTERNAL AND

EXTERNAL) FOR BURGMASTERS DEMISE, AND WHETHER OPERATION
MANAGEMENT PLAYED A SIGNIFICANT ROLE IN THE DEMISE.

NAME

: RAFIDAH BINTI ABD RAHMAN

ID NO

: 819441

An American Tragedy : How a Good Company Died

This case study tells us the story of Burgmaster Corp which is a machine
tool maker company. Burgmaster was a thriving enterprise by 1965, when
annual sales amounted to about $8 million. Although it needed backing to
expand, it sold out to Buffalo-based conglomerate Houdaille Industries Inc.
The case study also, informs us too many machine- tools and auto parts
factories are silent, too many U.S. industries still cant hold their own.
Holland uses Burgmasters demise to explore some key issues of
economic and trade policy. The LBO chocked off Burgmasters investment
funds when foreign competition made them most necessary.
Houdailles charge that a cartel led by the Japanese government had
injured U.S. tool makers.
Holland offers plenty of ammunition by creating enormous pressure to
generate cash. Burgmaster pushed its products out as fast as possible. It
shipped defective machines. It promised customers features that
engineers hadnt yet designed.

The Internal Forces for Burgmaster Corp Demise

1. The system for computerizing production scheduling was too crude;
2. High cost and much expensive machines;
3. Defective machines as a result of pushing products as fast as possible
without
regarding to quality and customers needs;
4. NO Cash to fund process and procedures to face competition;
5. No formula was a substitute for management involvement on the shop
floor;
6. A dramatic depiction of supply snafus that resulted in delays and cost
increases.

The External Forces for Burgmaster Corp Demise

1. The Government policies: tax laws and macroeconomics policies that
encourage LBOs and speculation instead of productive investment;
2. Pentagon procurement policies for favouring
machines over standard, low cost models;

exotic

custom

3. The industrial policy : Domestic tool makers were too complacent

when imports seized the lower end of the product line , the ill
prepared for change and struggling to restructure;
4. A cartel led by the Japanese government had injured U.S. tool
makers;
5. Foreign competition made.

The role of the operations management in that demise

i)

Companies must be competitive to sell their goods and services in

the marketplace. This company didnt follow the operations
management principles or functions in its three major departments:
finance, operations and marketing;

ii)

Burgmaster Corp didnt identify customer needs. It didnt follow the policy
of
low price and high quality;

iii)

It didnt be able to reflect joint efforts of product and service design;

iv)

No match between financial resources, operations capabilities, supply

chains
and consumer needs;

v)

It didnt follow inventory strategy to be competitive;

vi)

It neglected operations strategy;

vii)

It didnt develop productivity measures for all operations;

viii)

It didnt develop methods for achieving productivity improvements such

as
soliciting ideas from workers and re-examining the way work is
done.