General Management

05 Jul


Marsha Jackson is a recent MBA graduate with a degree in marketing. She has accepted a position with General America, a large firm selling a number of consumer products. Her first assignment is to conduct research on the sales of one of her company’s products versus sales of competing products.

This division is responsible for sales of over-the-counter drugs such as headache remedies, indigestion cures, and similar products. In business school, Marsha had worked with a personal computer in her MBA program and was happy to see that General America had a local area network (LAN) for the marketing department subscribed to several different services that provided sales results for over-the-counter drugs. Some of her fellow workers had private databases, and a few even keyed data into their PCs from lengthy printouts they had purchased.

Marsha feels that there must be a better way to conduct market research, particularly given the fact that the department has a LAN with a lot of capacity. What solutions to this problem can you recommend?



Assume you have just been appointed to chair the board of a medium sized manufacturing firm that makes small consumer appliances. The company has experienced stagnant growth over the past five years, and a new board of directors was recently elected by dissident stockholders.

One of your first tasks is to help top management discover why sales are constant and profits have been declining. Currently, the firm is faced with excessive inventory and problems in acquiring raw materials. Prices for these materials have been fluctuating widely in recent months; the previous management seems to have been unable to cope with this problem.

How will you approach this task? What sources of information will you seek to help understand and solve problems in the company?



The governor of a state is confronted with a series of conflicting recommendations from his staff. Recently welfare costs have been dropping, and he is concerned that they will start to rise again.

The director of the state welfare department suggested in her report that the new reduced payments schedule passed by the legislature has reduced overall expenditures and so the downward trend will continue. The governor’s advisor for economic affairs indicated that the recent improvement in the state’s economy had resulted in large increases in employment. These new jobs are attracting people and taking them off the welfare roles. A state senate leader, however, felt that most of the change resulted from enforcing requirements for welfare, limits on how long one can collect payments, and requirements to work.

Who is right? What is responsible for so many different positions? How can the governor reconcile these conflicting viewpoints and arrive at the true cause of the problem?



Dave Masters in vice president of manufacturing for Siliconix, an electronic components manufacturer. Siliconix runs most of its production control and factory systems on an IBM mainframe computer. The firm has just purchased another company that makes similar components, but the newly purchased another company that makes similar components, but the newly purchased division runs its applications using a package called SAP R/3 on a client-server computer configuration.

Masters has to decide what to do about the different computer applications. The staff of the corporate management department wants to make the new division feel welcome and does not want to upset its employees. Staff members argue that SAP is probably better than their old custom-programmed system on the mainframe. However, the implementation of SAP is a major task, and they do not recommend undertaking it right now. They are content to run the two systems separately.

Masters is concerned because he feels the entire company would be better off with a single production control system. However, he recognizes that the merger will cause some disruptions, and he questions the wisdom of undertaking a major systems conversion at the same time.

What do you recommend? How should Masters go about making his decision?



Block and Thomas, a regional stockbrokerage firm, hired a chief information officer (CIO), a senior manager who is responsible for all technology in the firm. The brokerage firm uses technology heavily as is typical in the industry. Block and Thomas has a number of systems to process stock trades and support its brokers. It also subscribes to a broker workstation system provided by a market data vendor. Each broker has a personal computer that provides a great deal of data and analytic capabilities in different windows on the screen.

The new CIO surveyed users and potential users at Block and Thomas. He concluded that in the past, users had very negative attitudes toward systems. However, the interviews he conducted convinced him that users’ attitudes were now different. The users described problems but also mentioned that they were very optimistic about the potential of technology and wished they could implement the technology faster. The new CIO was surprised by the creative suggestions that came from users during the interviews.

What events do you think are responsible for the new attitudes on the part of users? How can the CIO take advantage of them?



The traditional organization is characterized by tacit understandings among managers and subordinates. In some instances, the rights and responsibilities of each group are contained in a detailed contract, such as the one between a union and management. Under a tacit understanding, an employee responds to a supervisor for a number of reasons. Custom or habit is a very important reason; organizations throughout history have functional through a hierarchical relationship like that found in the armed forces. A manager usually has the ability to determine the subordinate’s pay and can even arrange to have the subordinate dismissed. Because there is a long history of this type of relationship, most people in organizations are quite comfortable with it.

In some of the organizations described in this chapter, managers form alliances with various partners. These alliance firms may provide a virtual component for your organization. However, the employees involved in this alliance do work for two different firms. How does a manager manage under these conditions? Suppose that your firm enters into a relationship with another firm to take over its inventory of raw materials and to become a just-in-time supplier. The partner firm hires your former inventory employees so they no longer work directly for you. Describe the role of a manager in working with an alliance partner that provides you with a virtual component of your firm?



Boats-R-Us operates a group of 50 discount marine supply houses throughout the U.S., primarily on the east and west coasts and around the Great Lakes. The company has both walk-in and mail-order business. It has been organized traditionally as a retail store and several warehouses. A central order processing site accepts orders over 800 numbers and by mail and fax: this site distributes the order to the warehouse that is closest to the customer and that has the products requested in stock. A large number of purchasing agents is involved in determining what to stock and in negotiating purchases.

The president of the company has read about new organizational forms enabled by information technology. The only technology in place now is the order entry and warehouse inventory system. The president would like to make Boats-R-Us both more efficient and more responsive to its customers. What new kinds of organization forms for Boats-R-Us might be enabled by information technology?



Harold Rubin has spent a career in banking. He how works for a large money-center bank that has global presence. However, Harold is worried: He has been the explosion in interest in the Internet and World Wide Web, and he thinks there will be profound implications from IT for banking. The picture is confused, however. Some banks are reducing the number of physical branches as they are expensive in terms of real estate and labor. The banks replace branches with ATMs and phone banking; other banks offer PC banking so that customers can do almost everything they can in a branch from home. They are usually able to pay bills via their home computers as well.

To Rubin, these changes seem evolutionary and rather mild. He has read articles about electronic commerce and even shopped on the Web to try it out. He also sees small firms becoming global as they advertise their products on the Web. What kinds of banking services will these firms want? How will changes in commerce and life styles influence what customers, both individual and corporations, want from a bank? Will a bank become “a piece of computer software on a network,” a statement attributed to the chairman of Citibank?



Standard International (SI) is the subsidiary of a large manufacturing firm; it is responsible for marketing, sales, and distribution outside the United States. Standard International does not develop products; the parent firm creates all products it sells. SI has operations in 30 countries. In virtually all these countries the local SI operations in treated legally as a subsidiary of Standard International.

Recently a new president took control of SI. Historically the firm’s systems were oriented to finance and accounting because the technology group reports to the vice president of finance. Accounting applications are important because so many different currencies are involved. The new president, however, is impatient and feels that technology should be able to do something for marketing and sales.

She asked you to consult with SI in the hope of finding a strategic application for information technology: “I want something that will give us a competitive edge,” she said. What kind of process would you follow to try to identify a strategic application? What applications areas look promising? How does a firm like SI develop a strategic system? How does it establish and maintain a competitive advantage?



Autozip sells accessories for cars through a chain of stores on the West Coast. The company started a catalog sales division 4 years ago that now accounts for 25 percent of sales. Customers like the convenience of calling a toll-free number and having the parts they order delivered via USP or an overnight carrier such as Federal Express.

The president of Autozip realizes that the firm needs to have a presence on the Internet. He is trying to decide whether to accept orders on the Internet. He is trying so decide whether to accept orders on the Web, and if so, how. He is caught between two positions offered by his staff. The marketing vice president advocates taking orders on the Web. Her reasoning is: What have we got to lose? We have everything to gain; it’s another market channel and our competitors are already there or will be soon. We save money because customers act as their own order entry personnel.

The controller disagrees. His reasoning is: Any advantage we gain will be temporary; it is so easy to set up a system to order on the Web that everyone will take Web orders and we won’t gain a sustainable advantage.

The president has to make a decision. First, should Autozip accept orders on the Web, and second, if so, how? Should it go to a firm that hosts Web marketplaces, buy software and set up its own site, or develop its own software?



Hershey and Sherman is a medium-sized consulting firm that specializes in helping clients install “enterprise software,” the kind of applications packages that automate all aspects of a company’s operations. The company has always stayed at a high level, and according to Sheila Hershey, “We deal with management to prepare a change program. We are not programmers.” However, the tremendous success of several enterprise software packages, most notably SAP’s R/3 and a series of applications from Oracle and PeopleSoft, have created a problem for Hershey and Sherman.

Clients are asking for recommendations from the firm on whether to purchase one of these packages, and then they want help implementing it. Sheila is confronted with several choices for responding. “We can try to hire more technical people, but everything we read and hear says that it is very difficult to find consultants with expertise in these systems. The demand is very high, and all of the big consulting firms have practices devoted to installing SAP. Hiring specialists would also change the character of our firm.

“Another option is to form an alliance with a firm that does have technical capabilities. We can continue to do our high-level management consulting and then bring in a firm appropriate to the client’s needs. The problem here is that we may be helping provide our competitors with business—one day we are partners, the next day we are after the same client.”

What advice would you give Hershey and Sherman? What are the pros and cons of strategic alliances in this situation?



Bill Roberts is the chief information officer for a multinational company. He reports to the company president and has a staff of 50 at headquarters. This group runs systems for the headquarters operation and also tries to provide standards for subsidiaries in foreign countries.

Headquarters has developed a standard library of financial and accounting applications that runs on most of the computers in the subsidiaries. (Bill was successful a few years ago in getting all the subsidiaries expect the largest to agree on one model of computer.) Since many of the subsidiaries are not large and have trouble recruiting skilled technology staff members, they are quite happy with the library of programs.

Each Country has its own information services department manager, generally reporting to the controller or possibly the president of the subsidiary. Bill and his staff travel extensively to try to help each subsidiary better manage its technology effort.

Bill is facing a major problem in at least two countries; he and his staff think the local person in charge of information systems is not doing a good job. “After several years of working with the people in charge in two countries, I have come to the conclusion that we really should let them go. However, I have no real responsibility; these people report to a manager in the country, not to me.”

How can Bill help the company solve this problem? Do you think they need to reorganize the structure of their IT units? Does it make sense to have foreign operations reporting to Bill? If not, how can he influence what goes on in subsidiaries outside the U.S.?

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