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ALLENTOWN MATERIALS CORPORATION :

THE ELECTRONIC PRODUCTS DIVISIONCASE ANALYSIS


BY GROUP 6:
Anirudh

Ashutosh Atreya
Bhanu Kumar
Sachin Sitani
Satish

Vishnu Praveen

COMPANY BACKGROUND
Allentown materials corporation was a leading
manufacturer of specialty glass whose reputation
was built on a strong capability in invention and
manufacture of glass products supported by a
robust Research and Development Department.
Don Rogers was heading the Electronics Product
Division which specialized in manufacturing high
quality electronic components such as capacitors
and resistors and the division sold to both the
public and private sector in the U.S.A.

PROBLEM STATEMENT
Don Rogers took over as Vice President and General
Manager of EPD after the untimely death of Joe Bennett,
the previous VP and GM, in 1990.
Upon taking up office, Don decided to divide the marketing
and sales department into two separate departments and
this lead to friction between the two departments.
The Marketing function was also given the responsibility of
new product development, thus putting it at loggerheads
with the Product Development division.
The sales and profitability of EPD had declined over the
two years of 1991 and 1992 and Rogers was unable to
understand whether the drop in sales was due to the
conflicts between functions or whether the conflicts arose
due to poor sales performance of EPD.

KEY ISSUES IDENTIFIED


Don Rogers was concerned about the specifics of the new
products but was not concerned adequately about getting the
various departments to work together towards the goal of better
product development and sales. He also lacked leadership
qualities and experience. He has not demonstrated risk taking
capabilities
Rogers restructured EPD leading to overlaps between the new
functional units which caused a lot of conflicts and disputes
between the marketing, sales and product development
departments.
Restructuring of the EPD involved selecting managers from
outside EPD who did not have relevant experience for the Job
profiles.
EPD consequently was delayed in launching new innovative
products and the restructuring also led to decay in prices of
existing products due to competiveness.

REASONS OF CONFLICT AMONG


DIFFERENT DIVISIONS OF THE EPD

Manufacturing team felt that marketing has failed in


responsibility to provide direction to division for profitable
growth.
The Manufacturing department blamed sales for getting
low gross margin business and not fighting hard enough for
getting fair price.
The sales team performance was evaluated on the basis of
sales volume and it was not paid on commission basis.
There is a break down in common agreement when it comes
to pricing. Sales will sell for anything and the plant wont
buy unless 40% margin is involved.
Manufacturing dept. felt that they were not getting a large
no of new products and due to price erosion in the current
product line they need a new product for profitability.

REASONS OF CONFLICT AMONG


DIFFERENT DIVISIONS OF THE EPD
Marketing dept. complained that Product Development's priorities were
wrong and projects were always late. They also complained about lack of
cooperation from manufacturing.
Marketing functions had many new people transferred from sales who
lacked expertise and they blamed product development team for the
absence of standards of process development which lead to delay of
projects.
Product development has conflicts with marketing department regarding
product specifications for the new products.
Product development is critical of technical staff division regarding
scheduling which lead to delay in product development.
No direct contact with sales group also created issues for product
development.
In terms of price reduction, sales people felt that manufacturing dont
concern themselves as seriously as they do.
Sales forecast was based on customer canvassing while Marketing used
Analytical tools.

SUGESSTIONS AND RECOMMENDATIONS

The Marketing and Product Development Departments


should be merged in order to reduce conflicts and align them
to a common goal.
The sales department should be evaluated based on
profitability rather than sales volume targets.
Management should discourage the leadership style of Don
Rogers.
Target Setting for each department should be done with
proper consensus of the target department which is in line
with the goal of the organization.
More focus should be given to new product development
rather than price reduction.
Inter department communication should be stronger and
organization goals should be clearer.