Would “guerrilla” recruiting tactics help McDonald's attract more applicants Why or why not If so, what tactics might be effective

Would “guerrilla” recruiting tactics help McDonald's attract more applicants Why or why not If so, what tactics might be effective

Would “guerrilla” recruiting tactics help McDonald's attract more applicants Why or why not If so, what tactics might be effective

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General Management

CASE  1:  Coke’s European Scare

What seemed like an isolated incident of a few bad cans of Coca-Cola at a school in Belgium turned into near disaster for the soft drink giant’s European operations. In June 1999, Coke experienced its worst nightmare—a contamination scare resulting in the recall of 14 million cases of Coke products in five European countries and a huge blow to consumer confidence in the quality and safety of the world’s most recognizable brand.

            After the initial scare in Bornem, Belgium, Coke and Coca-Cola Enterprises (CCE), a bottler 40 per cent owned by Coca-Cola, thought they isolated the problem. Scientists at the CCE bottling plant in Antwerp found that lapses in quality control had led to contaminated carbon dioxide that were used in the bottling of a recent batch of Coke. Company officials saw the contamination as minor problem and they issued an apology to the school.

            At the same time that the problems were being dealt with an Antwerp, things were breaking down at Coke’s Dunkirk, France, bottling plant. In Belsele, 10 miles from Bornem, children and teachers were complaining of illnesses related to drinking Coke products. The vending machines at the school were stocked with Coke from the company’s Dunkirk plant and were thought to be safe. Now a second bottling plant’s practices were being questioned. What initially seemed like an isolated incident was now a crisis.

            Immediately following the second scare, Belgium’s health minister banned the sale of all products produced in the Antwerp and Dunkirk plants. Things got worse when Coke gave an incomplete set of recall codes to a school in Lochristi, Belgium, resulting in 38 children being rushed to the hospital. Immediately following this incident, French officials banned the sale of soft drinks produced in the Dunkirk plant. It was believed that fungicide on wooden shipping pallets were the cause of the illnesses at the Dunkirk plant.

            On June 15, 1999, 11 days after the initial scare in Bornem, Coke finally issued an explanation to the public. Most Europeans were not satisfied. Coca-Cola officials used vague language and often contradicted one another when making statements. France’s health minister, Bernard Kouchner, stated, “That a company so very expert in advertising and marketing should be so poor in communicating on this matter is astonishing”

            After three weeks of testing by both Coke officials and French government scientists, it was concluded that the plants were safe and that there was no immediate threat to the health of consumers. Coke has destroyed all of the pallets in Dunkirk and tightened quality control on co2.

            How could this happen to the company that is revered worldwide for its quality control and the superiority of its products? Coke has spent decades building its reputation overseas and the European market now represent 73 per cent of total profits. While the scare has had some effect on Coke’s profits in Europe, the company is more concerned with damages to its reputation and consumer confidence in its products.

            Many critics say that Coke’s slow response time, insisting that no real problem existed and belated apology have severely damaged the company’s reputation in Europe. Some would disagree and feel that Coke handled the situation as best it could. “I think that Coke acted in a responsible, diligent way,” says John Sitcher, editor of Beverage Digest. “Their first responsibility was to ascertain the facts in a clear and unequivocal way. And as soon as Coke knew what the facts were, they put out a statement to the Belgium people.”

            The character and quality of a company can often be measured by how it responds to adversity. Coca-Cola believes that this crisis has forced the company to re-examine both its marketing and management strategies in Europe. Coke executives in Brussels are predicting that the company will double its European sales in the next decade and that this setback will only make the company stronger. Wall Street analysts seem to agree. Only time will tell.

Would “guerrilla” recruiting tactics help McDonald's attract more applicants Why or why not If so, what tactics might be effective

Would “guerrilla” recruiting tactics help McDonald's attract more applicants Why or why not If so, what tactics might be effective

Question:

1. What are the management issues in this case?

    2.      What did Coke do and what could have been done differently?

      3.      What are the key factors that were or should have been considered by management?

CASE 2:   INFORMATION TECHNOLOGY AT AMERICAN AIRLINES

The information system at American Airlines has become an integral part of the overall strategy to gain a competitive edge in the industry. The extensive use of computers began in the 1950s in payroll and inventory control and extended to customer service. In the early 1960s, American developed the widely known SABRE system (SABRE stands for Semi-Automated Business Research Environment). It is one of the most sophisticated passenger reservation system used by travel agents and customers.

            Shortly after implementing SABRE, American also used the system for other tasks, such as controlling freight shipments, as well as dispatching and tracking flights. When the government deregulated the airline industry in 1978, the information system became an even more important tool for competing against the low-cost airlines whose labour costs were as much as 40 to 50 per cent lower. American Airlines’ strategy was to use the information technology to compete in a variety of ways. One application was to have as many aircrafts seats as possible filled without having many passengers “bumped” through overbooking. Another application was to obtain the proper balance between discount and regular fares. It was estimated that revenues could be increased dramatically by shifting only one per cent of discount fares to the full fare—clearly a competitive advantage in a market where price change occur daily and even hourly. Still another application of the information system was to find the most efficient way to fly in order to reduce fuel cost, which is the second largest expense. Some airplanes have sensors on board to monitor essential equipment; the operational information is sent to the ground station. Maintenance can then be planned effectively and performed more efficiently when the aircraft lands. Still another application of the computer was to determine the most profitable routes. The complexity of scheduling over 13,000 pilots and flight attendants on 1300 daily flights is horrendous. The high cost of overtime can put an airline at a competitive disadvantage.

            Robert L Crandall, the former chairman and president of American Airlines, thinks that information systems are the key for success. He stated: “We have taken what was once a basic reservation system and built it into an integrated information system that drives our corporate strategy as much as it is driven by that strategy.” While American Airlines has been the industry leader in the use of information technology, competition developed. The 1992 program of the European Community (EC, now the European Union or EU) was designed to eliminate trade and many political barriers. The European airline industry also became deregulated than engaging in mergers, some airlines are now integrated into a network linking selected carriers together. An illustration of the cooperation among airlines involves the two computer reservation systems called Galileo and Amadeus. Thus, American Airlines—with a strategy of expanding in the European market, the largest market in the industrialized world—has ample competition. Recently, the five biggest US Airlines (Continental, Delta, Northeast, United Airlines, and now also American Airlines) developed a common website called Orbitz.com (www.orbitz.com), which could also affect SABRE.

            Technology that may have given once a competitive advantage to a company may, in time, become obsolete unless it adapts to new demands and develops new applications. Max Hopper, the architect of the SABRE system, suggests that old models are no longer sufficient. Those who can use the available tools and modify them will gain a competitive edge. The trend is away from stand-alone applications to platforms that facilitate new approaches to problem solving and decision making. SABRE is not only a reservation system, but also a system for inventory control, making flight plans, and scheduling flight crews. Other data-basses were added for car rentals, hotel reservations, and theatre shows. SABRE has become an electronic travel supermarket.

Questions:

1.                   Discuss the evolving use of information technology at American Airlines?

2.                  Should American Airlines expand its position in Europe? What are the arguments for and against this expansion?

CASE: 3       REBRANDING MCJOBS

As with most fast-food restaurant chains, McDonald’s needs more people to fill jobs in its vast empire. Yet McDonald’s executives are finding that recruiting is a tough sell. The industry is taking a beating from an increasingly health-conscious society and the popular film Supersize Me. Equally troublesome is a further decline in the already dreary image of employment in a fast-food restaurant. It doesn’t help that McJob, a slang term closely connected to McDonald’s, was recently added to both Merriam-Webster’s Collegiate Dictionary and the Oxford English Dictionary as a legitimate concept meaning a low-paying, low-prestige, dead-end, mindless service job in which the employee’s work is highly regulated.

McDonald’s has tried to shore up its employment image in recent years by improving wages and adding some employee benefits. A few years ago it created the “I’m loving it” campaign, which took aim at a positive image of the golden arches for employees as well as customers. The campaign had some effect, but McDonald’s executives realized that a focused effort was needed to battle the McJob image.

Now McDonald's is fighting back with a “My First” campaign to show the public—and prospective job applicants—that working at McDonald's is a way to start their careers and develop valuable life skills. The campaign’s centerpiece is a television commercial showing successful people from around the world whose first job was at the fast-food restaurant. “Working at McDonald's really helped lay the foundation for my career,” says ten-time Olympic track and field medalist and former McDonald's crew member Carl Lewis, who is featured in the TV ad. “It was the place where I learned the true meaning of excelling in a fast-paced environment and what it means to operate as part of a team.”

Richard Floersch, McDonald's executive vice president of human resources, claims that the company’s top management has deep talent, but the campaign should help to retain current staff and hire new people further down to hierarchy. “It’s a very strong message about how when you start at McDonald's, the opportunities are limitless,” says Floersch. Even the McDonald's application form vividly communicates this message by showing a group of culturally diverse smiling employees and the caption “At McDonald's You Can Go Anywhere!”

McDonald's has also distributed media kits in several countries with factoids debunking the McJob myth. The American documentation points out that McDonald's CEO Jim Skinner began his career working the restaurant’s front lines, as did 40 percent of the top 50 members of the worldwide management team, 70 percent of all restaurant managers, and 40 percent of all owner/operators. “People do come in with a ‘job’ mentality, but after three months or so, they become evangelists because of the leadership and community spirit that exists in stores,” says David Fairhurst, the vice president for people at McDonald's in the United Kingdom. “For many, it’s not a job, but a career.”

McDonald's also hopes the new campaign will raise employee pride and loyalty, which would motivate the 1.6 million staff members to recruit more friends and acquaintances through word of mouth. “If each employee tells just five people something cool about working at McDonald's, the net effect is huge,” explains McDonald's global chief marketing officer. So far the campaign is having the desired effect. The company’s measure of employee pride has increased by 14 percent, loyalty scores are up by 6 percent, and 90-day employee turnover for hourly staff has dropped by 5 percent.

But McDonald's isn't betting on its new campaign to attract enough new employees. For many years it has been an innovator in recruiting retirees and people with disabilities. The most recent innovation at McDonald's UK, called the Family Contract, allows wives, husbands, grandparents, and children over the age of 16 to swap shifts without notifying management. The arrangement extends to cohabiting partners and same-sex partners. The Family Contract is potentially a recruiting tool because family members can now share the same job and take responsibility for scheduling which family member takes each shift.

Even with these campaigns and human resource changes, some senior McDonald's executives acknowledge that the entry-level positions are not a “lifestyle” job. “Most of the workers we have are students—it’s a complementary job,” says Denis Hennequin, the Paris-based executive vice president for McDonald's Europe.

Questions

1.                   Discuss McDonald's current situation from a human resource planning perspective.

2.                  Is McDonald's taking the best approach to improving its employer brand? Why or why not? If you were in charge of developing the McDonald's employer brand, what would you do differently?

3.                 Would “guerrilla” recruiting tactics help McDonald's attract more applicants? Why or why not? If so, what tactics might be effective?

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Within the framework of the emotional intelligence domains of self-awareness, self-management, social awareness, and relationship management, discuss the various factors that might have to led

Within the framework of the emotional intelligence domains of self-awareness, self-management, social awareness, and relationship management, discuss the various factors that might have to led

 Within the framework of the emotional intelligence domains of self-awareness, self-management, social awareness, and relationship management, discuss the various factors that might have to led

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Organizational Behavior

Note: Solve any 4 Case Study’s

   CASE: I    Diana’s Disappointment: The Promotion Stumbling Block

       Diana Gillen had an uneasy feeling of apprehension as she arrived at the Cobb Street Grille corporate offices. Today she was meeting with her supervisor, Julie Spencer, and regional director, Tom Miner, to learn the outcome of her promotion interview for the district manager position. Diana had been employed by this casual dining restaurant chain for 12 years and had worked her way up from waitress to general manager. Based on her track record, she was the obvious choice for the promotion; and her friends assured her that her interview process was merely a formality. Diana was still anxious, though, and feared that the news might not be positive. She knew she was more than qualified for the job, but that didn’t guarantee anything these days.

Nine months ago, when Diana interviewed for the last district manager opening, she thought her selection for the job was inevitable. She was shocked when that didn’t happen. Diana was so upset about not getting promoted then that she initially decided not to apply for the current opening. She eventually changed her mind—afterall, the company had just named her “restaurant manager of the year” and trusted her with managing their flagship location. Diana thought her chances had to be really good this time.

A multi-unit management position was desirable move up for any general manager and was a goal to which Diana had aspired since she began working in the industry. When she had not been promoted the last time, Julie, her supervisor, explained that her people skills needed to improve. But Diana knew that explanation had little to do with why she hadn’t gotten the job—the real reason was corporate politics. She heard that the person they hired was some superstar from the outside—a district manager from another restaurant company who supposedly had strong multi-unit management experience and a proven track record of developing restaurant managers. Despite what she was told, she was convinced that Tom, her regional manager, had been unduly pressured to hire this person, who had been referred by the CEO.

The decision to hire the outsider may have impressed the CEO, but it enraged Diana. With her successful track record as a store manager for the Cobb Street Grille, she was much more capable, in her opinion, of overseeing multiple units than someone who was new to the operation. Besides, district managers had always been promoted internally from among the store managers, and she was unofficially designated as the next one to move up to a district position. Tom had hired the outside candidate as a political maneuver to put himself in a good light with management, even though it meant overlooking a loyal employee lime her in the process. Diana had no patience with people who made business decisions for the wrong reasons. She worked very hard to avoid politics and it especially irritated her when the political actions of others negatively impacted her.

Diana was ready to be a district manager nine months ago, and she thought she was even more qualified today—provided the decision was based on performance. She ran a tight ship, managing her restaurant completely by the book. She meticulously controlled expenses. Her sales were growing, in spite of new competition in the market, and she received relatively few customer complaints. The only number that was a little out of line was the higher turnover among her staff. Diana was not too concerned about the increasing number of terminations, however; there was a perfectly logical explanation for this. It was because she had high standards for both herself and her employees. Any  Who delivered less than 110 percent at all times would be better off finding a job somewhere else. Diana didn’t think she should bend the rules for anyone, for whatever reason. A few months ago, for example, she had to fire three otherwise good employees who decided to try a new customer service tactic-a so-called innovation they dreamed up-rather than complying with the established process. As the general manager, it was her responsibility to make sure that the restaurant was managed strictly in accordance with the operations manual, and she could not allow deviations. This by-the-book approach to managing had served her well for many years. It got her promoted in the past, and she was not about to jinx that now. Losing a few employees now and then—particularly those who had difficulty following the rules—was simply the cost of doing business.  During a recent store visit Julie suggested that Diana might try creating a friendlier work environment because she seemed aloof and interacted with employees somewhat mechanically. Julie even told her that she overheard employees refer to Diana as the “ice maiden” behind her back. Diana was surprised that Julie brought this up because her boss rarely criticized her. They had an unspoken agreement: Because Diana was so technically competent and always met her financial targets, Julie didn’t need to give her much input. Diana was happy to be left alone to run her restaurant without needless advice. At any rate, Diana rarely paid attention to what employees said about her. She wasn’t about to let something as childish as a silly name cause her to modify a successful management strategy. What’s more, even though she had recently lost more than the average number of employees due to “personality differences” or “miscommunications” over her directives, her superiors did not seem to mind when she consistently delivered strong bottom-line results every month. As she waited in the conference room for the others, Diana worried that she was not going to get this promotion. Julie had sounded different in the voicemail message she left to inform her about this meeting, but Diana couldn’t put her finger on exactly what it was. She would be very angry if she was passed over again and wondered what excuse they would have this time. Then her mind wandered to how her employees would respond to her if she did not get the promotion. They all knew how much she wanted the job, and she cringed at how embarrassed she would be if she didn’t get it. Her eyes began to mist over at the sheer thought of having to face them if she was not promoted today. Julie and Tom entered the room then, and the meeting started. They told Diana, as kindly as they could, that she would not be promoted at this time; one of her colleagues would become the new district manager. She was incredulous. The individual who got promoted had been with the company only three years—and Diana had trained her! She tried to comprehend how this happened, but it did not make sense. Before any further explanation could be offered, she burst into tears and left the room. As she tried in vain to regain her composure, Diana was overcome with crushing disappointment.

Question:

1.                Within the framework of the emotional intelligence domains of self-awareness, self-management, social awareness, and relationship management, discuss the various factors that might have to led to Diana’s failure to be promoted.

2.               What competencies does Diana need to develop to be promotable in the future? What can the company do to support her developmental efforts?

CASE: II    Buddy’s Snack Company

        Buddy’s Snack Company is a family-owned company located in the Rocky Mountains. Buddy Forest started the business in 1951 by selling home-made potato chips out of the back of his pickup truck. Nowadays Buddy’s in a $36 million snack food company that is struggling to regain market lost to Frito-Lay and other fierce competitors. In the early eighties Buddy passed the business to his son, Buddy Jr., who is currently grooming his son, Mark, to succeed himself as head of the company.  Six months ago Mark joined Buddy’s Snacks as a salesperson, and after four months he quickly promoted to sales manager. Mark recently graduated from a local university with an MBA in marketing, and Buddy Jr. was hoping that Mark would be able to implement strategies that could help turn the company around. One of Mark’s initial strategies was to introduce a new sales performance management system. As part of this approach, any salesperson who receives a below average performance rating would be required to attend a mandatory coaching session with his or her supervisor. Mark Forest is hoping that these coaching sessions will motivate employees to increase their sales. This case describes the reaction of three salespeople who have been required to attend a coaching session because of their low performance over the previous quarter.

Lynda Lewis

      Lynda is a hard worker, who takes pride in her work ethic. She has spent a lot of time reading the training material and learning selling techniques, viewing training videos or her own time, and accompanying top salespeople on their calls. Lynda has no problem asking for advice and doing whatever needs to be done to learn the business. Everyone agrees that Lynda has a cheery attitude and is a real “team player,” giving the company 150 percent at all times. It has been a tough quarter for Lynda due to the downturn in the economy, but she is doing her best to make quota during this past quarter is not to lack of effort, but just bad luck in the economy. She is hopeful that things will turn around in the next quarter.

Lynda is upset with Mark about having to attend the coaching session because this is the first time in three years that her sales quota has not been met. Although Lynda is willing to do whatever it takes to be successful, she is concerned that the coaching sessions will be held on a Saturday. Doesn’t Mark realize that Lynda has to raise three boys by herself and that weekends are an important time for her family? Because Lynda is a dedicated employee, she will somehow manage to rearrange the family’s schedule.

Lynda is now very concerned about how her efforts are being perceived by Mark. After all, she exceeded the sales quota for the previous quarter, yet she did not receive thanks or congratulation for those efforts. The entire experience has left Lynda unmotivated and questioning her future with the company.

Michael Benjamin

       Michael is happy to have his job at Buddy’s Snack Company, although he really doesn’t like sales work that much. Michael accepted this position because he felt that he wouldn’t have to work hard and would have a lot of free time during the day. Michael was sent to coaching mainly because his customer satisfaction reports were low; in fact, they were the lowest in the company. Michael tends to give canned presentations and does not listen closely to the customer’s needs. Consequently, Michael makes numerous errors in new sales orders, which delay shipments and lose business and goodwill for Buddy’s Snack Company. Michael doesn’t really care because most of his customers do not spend much money, and he doesn’t think it is worth his while.

There has been a recent change in the company commission structure. Instead of selling to the warehouse stores and possibly earning a high commission, Michael is now forced to sell to lower-volume convenience stores. In other words, he will have to sell twice as much product to earn the same amount of money. Michael does not think this change in commission is fair, and he feels that the coaching session will be waste of time. He believes that the other members of the sales team are getting all the good leads, and that is why they are so successful. Michael doesn’t socialize with others in the office and attributes others’ success and promotions to “whom they know” in the company rather than the fact that they are hard workers. He thinks that no matter how much effort is put into the job, he will never be adequately rewarded.

Kyle Sherbo

For three of the last five years Kyle was the number one salesperson in the division and had hopes of being promoted to sales manager. When Mark joined the company, Kyle worked closely with Buddy Jr. to help Mark learn all facets of the business. Kyle thought this close relationship with Buddy Jr. would assure his upcoming promotion to the coveted position of sales manager, and he was devastated to learn that Mark received the promotion that he thought was his. During the past quarter there was a noticeable change in Kyle’s work habits. It has become commonplace for Kyle to be late for appointments or miss them entirely, not return phone calls, and not follow up on leads. His sales performance declined dramatically, which resulted in a drastic loss of income. Although Kyle had been dedicated and fiercely loyal to Buddy Jr. and the company for many years, he is now looking for other employment. Buddy’s Snack is located in a rural community, which leaves Kyle with limited job opportunities. He was, however, offered a position as a sales manager with a competing company in a larger town, but Kyle’s wife refuses to leave the area because of her strong family ties. Kyle is bitter and resentful of his current situation and now faces a mandatory coaching session that will be conducted by Mark.

Within the framework of the emotional intelligence domains of self-awareness, self-management, social awareness, and relationship management, discuss the various factors that might have to led

Within the framework of the emotional intelligence domains of self-awareness, self-management, social awareness, and relationship management, discuss the various factors that might have to led

Question:

1.                   You have met three employees of Buddy’s Snacks. Explain how each employee’s situation relates to equity theory.

2.                  Explain the motivation of these three employees in terms of the expectancy theory of motivation.

CASE: III    Sabeer Bhatia: An Icon Of Creativity

      Sabeer Bhatia, the co-founder of Hotmail is the recipient of the ‘TR 100” award presented by MIT to 100 young innovators who are expected to have the greatest impact on technology in the next few years. He has won several laurels—‘Elite 100’ list of top trendsetters in the New Economy by Upside Magazine, ‘People to watch’ in International Business by TIME (2002), ‘Entrepreneur of the Year’ by a venture capital firm Draper Fisher Jurvetson (1997), and one of the ten most successful entrepreneurs by San Jose Mercury News and POV magazine (1998).  One needs to know what has gone into making him a highly creative person. Born in Chandigarh, India, he completed his early schooling at Bangalore, in schools with ethical values. His parents were both professionals; father, Baldev, a senior officer in Ministry of Defense, and mother, Daman, a senior official in the Central Bank of India, who attracted great value to education. He has been a brilliant student who would solve problems on the blackboard. He was a perfectionist and would feel miserable if he was unable to write everything he knew in his answer book during an exam, due to limited time. He has also been entrepreneurial during his school days and once opened a sandwich shop. He joined the Birla Institute of Technology, which he left to study at California Institute of after winning full scholarship. He completed his masters from Stanford University and joined Apple, where he worked for nine months. He had an urge to do something unique using the net, and he came up with javasoft—a method of using the web to create a personal database, where people could preserve their personal things. He shared his plan with his colleague Jack Smith, who suggested to e-mail to javasoft. Bhatia worked the whole night to develop the business plan. The two tried various options and came up with ‘Hotmail’ as their final choice, and a brand was launched in 1995. After a year, Microsoft approached them, and Hotmail was sold to Microsoft for $400 million. Bhatia worked with Microsoft for a year, and has launched two more products: Arzoo and BlogEverywhere. From the above account it is obvious that Sabeer Bhatia is brilliant, persistent, and innovative, and has scientific and technical knowledge. His friends find him “persistent, focused and disciplined”. To top it all, he is a perfectionist and entrepreneurial at heart. He has an unquenching desire to create new ventures, and bubbles with new ideas. He feels Indian IT companies can be more creative. Creativity seems to be his motivation in life; he is still single.

Question:

1.                   What competencies are needed to be creative?

2.                  Identify methods through which creativity can be nurtured.

CASE: IV    Women Leaders In The Corporate World

There are not many women in the position of leadership in corporate India.

     The growth of women in the corporate world has been slow, probably due to the glass ceiling and role stereotypes. Barring a few females who have made it to the top, others have only reached till the middle/senior level of management. Family and social support and education level are important factors for leadership in the business world. Besides, family has priority over career for women in India. Thus, few women cut through all the barriers and reach the top. One such example is Naina Lal Kidwai, Chairperson and Managing Director, The Hongkong and Shanghai Corporation’s (HSBC) investment banking and securities business in India. According to her, in India, “There is an extended family of mothers, sisters, and mothers-in-law ready to step in along with the easily available domestic help. However, despite these advantages in the urban class in India, women are only now entering the corporate world.” (Emmons, 2004)

A graduate from HBS, Naina joined ANZ Grindlays Bank in India in 1982. Having done her stints in a variety of jobs in merchant, retail and investment banking, she moved to Morgan and Stanley in 1994 to manage its operations in India. She has been a high achiever throughout. Naina was ranked 3rd by Fortune Magazine in their maiden list of the world’s top women in business in Asia (2000), and later it placed her among the top 50 Women in Business in three successive years 2001, 2002, and 2003. Time Magazine selected her as one of 2002’s fifteen emerging ‘Global Influentials’. She is Chairperson of various committees of Industry Associations, and is on the Governing Body of National Council of Applied Manpower Research as a member. She is also Director, International Board of Digital Partners Foundation, USA. Naina is not only successful in professional life, but in her personal life too; she is married with two children.

Question:

1.                   What are the barriers for women to become corporate leaders?

2.                  What competencies are needed by women to succeed in corporate life?

CASE: V    The Excellent Employee

Emily, who had the reputation of being an excellent worker, was a machine operator in a furniture manufacturing plant that had been growing at a rate of between 15 percent and 20 percent each year for the past decade. New additions were built onto the plant, new plants opened in the region, workers hired, new product lines developed – lots of expansion – but with no significant change in overall approaches to operations, plant layout, ways of managing workers, or design processes. Plant operations as well as organizational culture were rooted in traditional Western management practices and logic, based largely on the notion of mass production and economies of scale. Over the past four years the company had grown in number and variety of products and in market penetration; however, profitability was flattening and showing signs of decline. As a result, managers were beginning to focus on production operations (internal focus) rather than mainly focusing on new market strategies, new products, and new market segments (external focus) in developing their strategic plans. They hoped to reduce manufacturing costs, improving consistency of quality and ability to meet delivery times better while decreasing inventory and increasing flexibility. One of several new programs initiated by managers in this effort to improve flexibility and lower costs was to get workers cross-trained. However, when a representative from Human Resources explained this program to Emily’s supervisor, Jim, he reluctantly agreed to cross-train most of his workers, but not Emily. Jim explained to the Human Resources person that Emily worked on a machine that was very complex and not easy to effectively operate. She had to “babysit” it much of the time. He had tried to train many workers on it, but Emily was the only person who could consistently get products through the machine that were within specifications and still meet production schedules. When anyone else tried to operate the machine, which performed a key function in the manufacturing process, it ended up either being a big bottleneck or producing excessive waste, which create a lot of trouble for Jim. Jim went on to explain that Emily knew this sophisticated and complicated machine inside and out; she had been running it for five years. She liked the challenge, and she said it made the day go by faster, too. She was meticulous in her work-a skilled employee who really cared about the quality of her work. Jim told the HR person that he wished all of his workers were like Emily. In spite of difficulty of running this machine, Emily could run it so well that product piled up at the next workstation in the production process, which couldn’t keep up with her!

Jim was adamant about keeping Emily on this machine and not cross-training her. The HR was frustrated. He could see Jim’s point, but he had to follow executive orders: “Get these people cross-trained.”

Around the same time a University student was doing a field study in the section of the plant where Emily worked, and Emily was one of the workers he interviewed. Emily told the student that in spite of the fact that the plant had some problems with employee morale and excessive employee turn-over, she really liked working there. She liked the piece-rate pay system and hoped she did not have to participate in the recent “program of the month,” which was having operators learn each other’s jobs. She told the student that it would just create more waste if they tried to have other employees run her machine. She told him that other employees had tried to learn how to operate her machine but couldn’t do it as well as she could.

Emily seemed to like the student and began to open up to him. She told him that her machine really didn’t need to be so difficult and touchy to operate: With a couple of minor design changes in the machine and better maintenance, virtually anyone could run it. She had tried to explain this to her supervisor a couple of years ago, but he just told her to “do her work and leave operations to the manufacturing engineers.” She also said that if workers upstream in the process would spend a little more time and care to keep the raw material in slightly tighter specifications, it would go through her machine much more easily; but they were too focused on speed and making more piece-rate pay. She expressed a lack of respect for the managers who couldn’t see this and even joked about how “managers didn’t know anything.”

Question:

1.                   Identify the sources of resistance to change in this case.

2.                  Discuss whether this resistance is justified or could be overcome. 

3.                  Recommend ways to minimize resistance to change in this incident or in future incidents.

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What steps are the Detroit automobile makers taking to reduce product development time and tooling costs If they are successful, what are the implications

What steps are the Detroit automobile makers taking to reduce product development time and tooling costs If they are successful, what are the implications

What steps are the Detroit automobile makers taking to reduce product development time and tooling costs If they are successful, what are the implications

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General Management

CASE: 1       THE PHARMACEUTICAL INDUSTRY

Managers in pharmaceutical firms face a dynamic and challenging task environment that creates both opportunities and threats. Demand for pharmaceuticals is strong and has been growing steadily for decades. Between 1990 and 2005 there was a 12.5 percent annual increase in spending on prescription drugs in United States. The strong growth was driven by demographics. As people grow older they tend to consume more prescription medicines, and the population in most advance nations has been growing older as the post – World War II baby boom generation ages.

Moreover, successful new prescription drugs can be extraordinarily profitable. Consider Lipitor, the cholesterol-lowering drug sold by Pfizer. Introduced in 1997, by 2005 this drug generated a staggering $12 billion in annual sales for Pfizer. The costs of manufacturing, packaging, and distributing Lipitor amounted to only about 10 percent of revenues, or around $1.2 billion. Pfizer spent close to $400 million on advertising and promoting Lipitor and perhaps as much again on maintaining a sales force to sell the product. That still leaves Pfizer with a gross profit from Lipitor of perhaps $10 billion.

Lipitor is highly profitable because the drug is protected from direct competition by a 20-year patent. This temporary monopoly allows Pfizer to charge a high price. Once the patent expires, other firms will be able to produce generic versions of Lipitor, and the price will fall—typically by 80 percent within a year—but that is some time away.

Competing firms can produce drugs that are similar (but not identical) to a patent-protected drug. Drug firms patent a specific molecule, and competing firms can patent similar, but not identical, molecules that have a similar pharmacological effect. Thus Lipitor does have competitors in the market for cholesterol-lowering drugs—such as Zocor, sold by Merck, and Crestor, sold by AstraZeneca. But these competing drugs are also patent protected. Moreover, due to Federal Drug Administration regulations and requirements for demonstrating that a drug is safe and effective, the cost and risks associated with developing a new drug and bringing it to market are very high. Out of 5,000 compounds tested in the laboratory by a drug company, only five enter clinical trials, and only one of these will ultimately make it to the market. On average, estimates suggest that it costs some $800 million and takes anywhere from 10 to 15 years to bring a new drug to market. Once on the market, on the market, only 3 out of 10 drugs ever recoup their R&D and marketing costs and turn a profit. Thus the high profitability of the pharmaceutical industry rests on a handful of blockbuster drugs. To produce a blockbuster, a drug company must spend great amounts of money on research, most of which fails to produce a product. Pfizer, for example, spent over $7.4 billion on R&D in 2005 alone, equivalent to 14.6 percent of its total revenues.

In addition to R&D spending, the incumbent firms in the pharmaceutical industry spend much money on advertising and sales promotion. Although the $400 million a year that Pfizer spends promoting Lipitor is small relative to the drug’s revenues, it is a large amount for a new competitor to match, making market entry difficult unless the competitor has a significantly better product.

There are also some big opportunities on the horizon for firms in the industry. new scientific break-throughs in genomics portend that within the next decade pharmaceutical firms might be able to bring new drugs to market that treat some of the most intractable medical conditions, including Alzheimer’s, Parkinson’s disease, cancer, heart disease, stroke, and HIV.

On the other hand, managers in the industry face serious challenges. Many patent-protected medicines are scheduled to come off patent in the next decade, and to maintain profitability, pharmaceutical firms must find new drugs to replace them. In addition, as spending on health care rises, seniors are complaining about the high costs of prescription medicines, and politicians are looking for ways to limit this. One possibility is some form of price controls on prescription drugs. Pharmaceutical price controls are already in effect in most developed nations, and although they have not yet been introduced in the United States, that could happen. Another possibility is to make it easy for U.S. residents to purchase pharmaceuticals from foreign nations where prices are lower.

A further challenge is associated with the growth of large health care providers, who have millions of subscribers and are starting to use their power to reduce the drug prices their subscribers pay. In some cases they are refusing to provide insurance coverage for high-priced pharmaceuticals when lower-priced generic alternatives are available.

Questions

1.                     What are the barriers to entry into the pharmaceutical industry? To what extent do you think these entries barriers protect established pharmaceutical companies from new competitors?

2.                    The pharmaceutical industry has long been one of the most profitable in the United States. Why do you think this is the case?

3.                    What forces in the general environment influence the nature of competition in the task environment facing pharmaceutical firms?

4. Are there reasons for believing that the profitability of the industry might come under threat over the next decade? What do you think managers in the industry should do to counter this threat?

CASE: 2: IMPROVING PRODUCTIVITY IN THE AUTO INDUSTRY

In 2004 Detroit’s big three care makers—GM, Ford, and Daimler Chrysler—accounted for only 58.6 percent of vehicles sold in the United States, the lowest level ever, down from 76.7 percent in 1984. For most of the last decade strong sales of sports utility vehicles, in which Detroit dominates, have held overall market share losses in check; but now foreign producers such as Toyota, Honda, and Kia are going after that segment too, creating huge potential problems for Detroit.

The American automobile makers have responded by trying to reinvigorate their passenger car business, coming out with a host of new designs and cutting the costs of developing and producing those cars. The old rule of thumb in the industry was that it took four years and cost $1 billion to design a new car and tool a factory to produce it. To recoup these costs, Detroit would typically sell a car for seven years before developing a new design. Unfortunately for the American producers, the Japanese have shortened the life cycle of a typical vehicle to five years; and by lowering development and tooling costs, they have been able to make good money on their car models.

Now the American producers are trying to strike back. Typical is Ford, which has reduced its product development time by a quarter since the late 1990s and continues to reduce development time by 10 percent per year. Ford now designs almost a third of its models in less than 30 months. One reason for this progress has been the increase in communication among designers at Ford. Ford designers used to work in different teams and did not share enough knowledge about parts and platform design. Now teams get together to see they can share the design work.

Moreover, design teams are trying to use the same parts in a wider variety of car models, and where appropriate use parts from old models in new cars. Detroit auto designers used to boast that new models were completely redesigned from the floor up with all new parts. Now that is seen as costly and time-consuming. At General Motors, for example, the goal is now to reuse 40–60 percent of parts from one car generation to the next, thereby reducing design time and tooling costs. At Ford the number of parts has been slashed. For example, Ford engineers now choose from just 4 steering wheels instead of contemplating 14 different designs.

Another important trend has been to reduce the number of platforms used for car models. This is something Japanese producers have long done.  Honda, for example, builds its Odyssey minivan and Pilot and Acura MDX SUVs on the same platform and has added a pickup truck to the mix. Currently Chrysler bases its vehicle fleet on 13 distinct platforms. The company is trying to bring this down to just four platforms, reducing the product development budget from $42 billion to $30 billion in the process Ford and General Motors have similar aims. The platform for GM’s new small car offering, the Pontiac Solstice, will also be used for its new Saturn coupe and perhaps one more GM car. As GM develops its next generation Chevy Silverado and GMC Sierra pickups, it plans to reuse much of the existing platform, cutting development costs in half to nearly $3 billion. Over the next eight years Ford plans to use its Mazda 6 sedan platform (Ford owns Mazda) as the basis for 10 new vehicles. The idea, according to Ford’s head of operations, is to engineer it once and use it often.

Along with these changes in design philosophy, the Detroit companies are retooling their factories to reduce costs and make them capable of producing several car models from the same line. By doing so they hope to reduce the breakeven point for a new car model. GM’s Solstice, for example, is forecast to sell around 25,000 units a year—too few to recoup fixed costs under the old design and build philosophy. But GM has cut design costs (by using a common platform and parts) and tooling costs (by investing in flexible manufacturing technologies that can produce multiple designs based on the Solstice platform from the same basic line). GM has also worked hard to get unions to agree to changes in inflexible work rules. Assembly-line workers now perform several different jobs, which reduces waste and boosts productivity. Similarly, Ford hopes to have 75 percent of its production built on flexible assembly lines by 2010; if successful, its investments in flexible factories could reduce annual costs by some $2 billion a year.

The big problem with the new vision coming out of Detroit, as critics see it, is that not much is new about it. The techniques being talked about will reduce development time and tooling costs; but Japanese automakers have been pursuing the same techniques for years. The critics fear that Detroit is chasing a moving target, and when they arrive in the promised land it will be too late because their global competitors will already have taken competition to the next level.

Questions

1.                   How have lower development and tooling costs given Japanese auto manufacturers an advantage in the marketplace?

2.                  What steps are the Detroit automobile makers taking to reduce product development time and tooling costs? If they are successful, what are the implications of these initiatives for the number of car models they can sell and breakeven volumes for individual models? Will these initiatives benefit Detroit’s customers? How?

3.                  The Japanese producers have for years used many of the methodologies now being introduced in Detroit. Why do you think it has taken the Detroit automakers so long to respond to their foreign competitors?

CASE: 3       LINCOLN ELECTRIC

Lincoln Electric is one of the leading companies in the global market for arc welding equipment. This is a cost-competitive business in which consumers are price sensitive. Lincoln’s success has been based on extremely high levels of employee productivity. The company attributes its productivity to a strong organizational culture and an incentive scheme based on piecework. Lincoln’s organizational culture dates back to James Lincoln, who in 1907 joined the company his brother had established a few years earlier. Lincoln had a strong respect for the ability of the individual and believed that, correctly motivated, ordinary people could achieve extraordinary performance. He emphasized that the company should be a meritocracy where people were rewarded for their individual effort. Strongly egalitarian, Lincoln removed barriers to communication between workers and managers, practicing an open-door policy. He made sure that all who worked for the company were treated equally; for example, everyone ate in the same cafeteria, there were no reserved parking places for managers, and so on. Lincoln also believed that any productivity gains should be shared with consumers in the form of lower prices, with employees in the form of higher pay, and with shareholders in the form of higher dividends.

The organizational culture that grew out of James Lincoln’s beliefs was reinforced by the company’s incentive system. Production workers receive no base salary but are paid according to the number of pieces they produce. The piecework rates at the company enable an employee working at a normal pace to earn an income equivalent to the average wage for manufacturing workers in the area where a factory is based. Workers are responsible for the quality of their output and must repair any defects spotted by quality inspectors before the pieces are included in the piecework calculation. Since 1934 production workers have been awarded semiannual bonuses based on merit ratings. These ratings are based on objective criteria (such as an employee’s level and output) and subjective criteria (such as an employee’s attitude toward cooperation and his or her dependability). These systems give Lincoln’s employees an incentive to work hard and to generate innovations that boost productivity—doing so influences their level of pay. Lincoln’s factory workers have been able to earn a base pay that often exceeds the average manufacturing wage in the area by more than 50 percent, and they also receive bonuses that in good years can double their base pay. Despite high employee compensation, the workers are so productive that Lincoln has a lower cost structure than its competitors.

What steps are the Detroit automobile makers taking to reduce product development time and tooling costs If they are successful, what are the implications

What steps are the Detroit automobile makers taking to reduce product development time and tooling costs If they are successful, what are the implications

Question

1.                   What kind of control system does Lincoln Electric rely on to generate high employee productivity?

2.                  Can you think of any possible unintended consequences of an incentive pay system based on piecework? How does Lincoln guard against these unintended consequences?

3.                  Do Lincoln’s control systems match the strategy of the enterprise? How?

CASE: 4       THE RISE AND FALL OF MIKE SEARS

Mike Sears was a prodigy of Harry Stonecipher, the blunt-talking, hard-driving aerospace executive who became CEO first of McDonnell Douglas and then Boeing. Picked by Stonecipher to lead the F-18 Hornet fighter program at McDonnell Douglas in the early 1990s, Sears earned a reputation as a skilled manager who restlessly cut costs and boosted productivity, building a program that was below costs and ahead of schedule. Stonecipher admired Sear’s effectiveness at assembling and managing cross-functional product development teams, establishing closer ties with suppliers and improving controls within his organization. When McDonnell Douglas was acquired by Boeing in 1996, Sears went with Stonecipher to the acquiring company, where Stonecipher became president until his retirement in 2002. Sears was appointed as chief financial officer.

It was soon clear, however, that Sears was after the top spot. As CFO he was one of the obvious candidates in line to succeed Boeing CEO Phil Condit. Other contenders included Alan Mulally, head of Boeing’s commercial aerospace group, and James Albaugh, who ran Boeing’s defense systems business. According to company insiders, Sears began to take steps to amass a power base at his rivals’ expense.

In 2002 Sears heard that Darleen Druyun, the top Air Force procurement officer, was looking to move into the private sector. Druyun was quite possibly the most sought-after executive-to-be in the entire aerospace industry. Because of her knowledge of the Pentagon procurement process and her contacts, Boeing and other aerospace companies tried hard to land her. James Albaugh had talked to her at least once but came up dry. Sears, however, somehow managed to persuade her to join the company. The coup gave Sears a huge advantage over Albaugh and Mulally. It also had the potential to expand his power base by making Druyun an ally. Unknown to others at the time, Sears had clinched the deal by promising Druyun a top job at Boeing while she was still in the middle of negotiating a $22 billion military contract with Boeing for a fleet of jet tankers, which Boeing was ultimately awarded.

In 2003 Sears pushed things further. He reportedly waged an all-out war with CEO Phil Condit, taking over all public relations responsibilities and controlling access to the media and investors—roles that were normally the prerogative of the CEO. Sears also took control of Boeing’s in-house leadership center at St. Louis. Banished from the sessions were Albaugh and Mulally. With almost any important executive passing through the center, control gave Sears unprecedented exposure within Boeing’s far-flung organization.

Sears’s stock rose further in mid-2003 when leaks to the media implied that Albaugh had withheld information from Sears about a $1.2 billion charge against earnings that Boeing was forced to take due to write-downs in its defense business. Sears was in charge of public relations at the time, and many suspected that the leak was part of a deliberate smear campaign. In an internal Boeing memo later leaked to the press, Albaugh said that “the efforts to cast the write-down as the result of me withholding information—surprising world headquarters—is not supported by the facts…..If Mike (Sears) is intent on discrediting me, he does a disservice not only to me, but also to the company.” By this time it was becoming apparent to many that Sears was anxious to succeed Phil Condit, “to the extent that it got pretty disgusting” according to a Boeing board member.

The summer of 2003 turned out to be the high point in Mike Sears’s career. In November 2003 the government accused Sears of “communicating directly and indirectly with Darleen Druyun about future employment when she had not disqualified herself from acting in her official government capacity on matters involving Boeing.” The government went on to state that the pair had attempted to conceal this infraction from company lawyers investigating the matter. It was also alleged that Druyun broke the law by telling Boeing employees confidential information about how Airbus had priced its bid for the tanker contract. Boeing fired Mike Sears immediately, and ultimately both he and Druyun pleaded guilty to criminal wrongdoing and faced jail time.

Ironically the firing of Sears raised questions about the ethics of management at Boeing under Phil Condit, the man Sears had wanted to replace as CEO. Within a month Condit had resigned from the CEO position, a victim of the fallout from the scandal, which resulted in the loss of the military tanker contract. Condit was replaced by Harry Stonecipher, who came out of retirement to take the CEO position. However, in another disturbing power play at Boeing, Stonecipher was himself forced to step down after a leaked e-mail message revealed that he had initiated an extramarital affair with an employee at Boeing. Fearing that Boeing was becoming mired in scandal after scandal, the board of directors asked for Stonecipher’s resignation. He was replaced by Jim McNeary, the CEO of 3M.

Questions

1.                   From a power perspective, what do you think explains the rise of Mike Sears to the CEO position at Boeing? What were the sources of his power?

2.                  Once he became CFO, what did Mike Sears do to consolidate his power base at Boeing? What sources of power was he trying to accumulate? What was he trying to do with this power?

3.                  What do you think about the ethics of Sear’s actions? Does the fall of Mike Sears prove that power tends to corrupt?

4.                  What does the case tell you about the nature of internal organizational politics at Boeing during this period? As incoming CEO, would you see this as a problem? If so, how would you deal with it?

5.                  Do you think that power is more important in an organization like Boeing than in one that has less politics? Why?

CASE: 5       ROUGH SEAS ON THE LINK650

Professor Suzanne Baxter was preparing for her first class of the semester when Shaun O’Neill knocked lightly on the open door and announced himself: “Hi, Professor, I don’t suppose you remember me?” Professor Baxter had large classes, but she did remember that Shaun was a student in her organizational behavior class two years earlier. Shaun had decided to work in the oil industry for a couple of years before returning to school to complete his diploma.

“Welcome back!” Baxter said as she beckoned him into the office. “I heard you were working on an oil rig up in Canada. How was it?”

“Well, Professor,” Shaun began, “I had worked two summers in the oil fields and my family’s from Canada, so I hoped to get a job on the LINK650. It’s that new WestOil drilling rig that arrived with so much fanfare in Newfoundland on Canada’s east coast two years ago. The LINK650 was built by LINK Inc. in Texas. A standard practice in this industry is for the rig manufacturer to manage its day-to-day operations, so employees on the LINK650 are managed by LINK managers with no involvement from WestOil. We all know that drilling rig jobs are dangerous, but they pay well and offer generous time off. A local newspaper said that nearly a thousand people lined up to complete job applications for the 50 nontechnical positions. I was lucky enough to get one of those jobs.

“Everyone hired on the LINK650 was enthusiastic and proud. We were one of the chosen few and were really pumped up about working on a new rig that had received so much media attention. I was quite impressed with the recruiters—so were several other hires—because they really seemed to be concerned about our welfare out on the platform. I later discovered that the recruiters came from a consulting firm that specializes in hiring people. Come to think of it, we didn’t meet a single LINK manager during that process. Maybe things would have been different if some of those LINK supervisors had interviewed us.

“Working on the LINK650 was a real shock even though most of us had some experience working in the oil fields. I’d say that none of the 50 nontechnical people hired was quite prepared for the brutal jobs on the oil rig. We did the dirtiest jobs in the biting cold winds of the North Atlantic. Still, during the first few months most of us wanted to show the company that we were dedicated to getting the job done. A couple of the new hires quit within a few weeks, but most of the people hired with me really got along well—you know, just like the ideas you mentioned in class. We formed a special bond that helped us through the bad weather and grueling work.

“The LINK650 supervisors were another matter. They were tough SOBs who had worked for many years on oil rigs in the Gulf of Mexico or North Sea. They seemed to relish the idea of treating their employees the same way they had been treated before becoming managers. We put up their abuse for the first few months, but things got worse when the LINK650 was brought into portfolio twice to correct mechanical problems. These setbacks embarrassed LINK’s managers, and they put more pressure on the supervisors to get us back on schedule.

“The supervisors started to ignore equipment problems and pushed us to get jobs done more quickly without regard to safety procedures. They routinely shouted obscenities at employees in front of others. A couple of my work mates were fired, a couple of others quit their jobs. I almost lost my job one day just because my boss thought I was deliberately working slowly. He didn’t realize—or care—that the fittings I was connecting were damaged. Several people started finding ways to avoid the supervisors and get as little work done as possible. Many of my coworkers developed back problems. We jokingly called it the ‘rigger’s backache’ because some employees faked their ailment to leave the rig with paid sick leave.

“On top of the lousy supervisors, we were always kept in the dark about the problems on the rig. Supervisors said that they didn’t know anything, which was partly true; but they said we shouldn’t be so interested in things that didn’t concern us. But the rig’s problems, as well as its future contract work, were a major concern to crew members who weren't ready to quit. Their job security depended on the rig’s production levels and whether WestOil would sign contracts to drill new holes. Given the rig’s problems, most of us were concerned that we would be laid off at any time.

“Everything came to a head when Bob MacKenzie was killed because someone secured a hoist improperly. Not sure if it was mentioned in the papers here, but it was big news around this time last year. The Canadian government inquiry concluded that the person responsible wasn’t properly trained and that employees were being pushed to finish jobs without safety precautions. Anyway, while the inquiry was going on, several employees decided to call the Seafarers International Union to unionize the rig. It wasn’t long before most employees on LINK650 had signed union cards. That really shocked LINK’s management and the entire oil industry because it was, I think, just the second time that a rig had ever been unionized in Canada.

“Since then, management has been doing everything in its power to get rid of the union. It sent a ‘safety officer’ to the rig, although we eventually realized that he was a consultant the company hired to undermine union support. One safety meeting with compulsory attendance of all crew members involved watching a video describing the international union president’s association with organized crime. Several managers were sent to special seminars on how to manage a union workforce, although one of the topics was how to break the union. The guys who initiated the organizing drive were either fired or given undesirable jobs. LINK even paid one employee to challenge the union certification vote. The labor board rejected the decertification request because it discovered the company’s union-busting tactics. Last month the labor board ordered LINK to negotiate a first contract in good faith.

“So you see, Professor, I joined LINK as an enthusiastic employee and quit last month with no desire to lift a finger for them. It really bothers me because I was always told to do your best, no matter how tough the situation. It’s been quite an experience.”

Questions

1.                   Use your knowledge of emotions and attitudes to explain why the LINK650 employees were dissatisfied with their work.

2.                  Identify the various ways in which employees expressed their job dissatisfaction on the LINK650.

3.                  Shaun O’Neill commitment to the LINK organization dwindled over his two years of employment. Discuss the factors that affected his organizational commitment.

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