Term | Session | Course/Theme | Case | Who | When | Where | Case Leads/Due Date |
2 | 1 | LACC | The Atchison Corp | Jerry Atchison – previous CEO now on board Price Millman – new CEO (Case A) John Day – Mgr Chicago Sales Div (Case B) Amory Hanks – previous board member (Case C) | January 1994 | St. Louis | Ahsan R. / Svetlana A. |
What – Situation/Issues/Risks/ Decision |
- Record gross sales and lowest profit (% of sales)
- Retirement of CEO Jerome Atchison
- In Dec 2014, Investment Inc. assumed a controlling position of the firm and Price Millman was brought in as a CEO
- Price bringing “fight until you die” philosophy
Case B & C - Employee morale is down however profits up
- Should Millman continue to fire up the battle-ground or ease up?
| What do they do? - Manufacturer and distributor of consumer products in Canada, US, and European (export) markets
| History of Company? - Founded in 1948
- Ethical family firm founded on the principles of Bible, fair play and integrity
- In 1970, firm name changes and share ownership was opened to other families
- By 1990s, all families owned < 5% of o/s shares
- In Dec 1993, a new investment company took majority control
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PEST (political, economic, social, technological) (External) | SWOT | Competitors | Company Business Model |
P - Political evaluation | E - Economic evaluation | S - Internal strengths. - High quality at low cost
- Low turnover
- “We take care of our family” notion
- Experienced mgmt (40+ years of service)
| W - Internal weaknesses - Conservative compensations & no bonus plans
- Falling behind competition
- Safe organization hesitant in taking risks
- No mandatory retirement
- Minimal marketing $
| Who are competitors? Possible unforeseen new entrants? - 3 major competitors outpaced Atchison
- A marketing group (competitor) doubled sales and profits in the last 5 years
- Competitor’s aggressive & stealing market share.
| Evaluate the business model. “Murray Bryant” style. - 4 regional plants located close to raw materials and distribution centres in key North American cities
- Structurally – 8 major divisions
- 7 Regional sales and 1 central manufacturing division.
- Sales force sells to retail outlets – primarily supermarkets
- Sales people were working under corporate policies with little control over prices.
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S - Social evaluation | T - Tech evaluation | O - Ext opportunities - Management structure overhaul needed
| T - External threats |
Marketing Analysis | Marketing Strategy |
Target Market | Differentiation | Position - Credible brand name with family history
| Value Proposition | Product | Price | Place / Sales Force - Sales force organized regionally under sales division
- Low salaries
| Promotion |
Financials | Options & Evaluation |
Revenues / costs / EBITDA / trends / Ratios | Alternatives to what is presented in the case? What are the lead options for characters? Reduce / Increase / Eliminate / Create |
Recommendation & Rationale | Action / Implementation |
Succinct next steps. Further studies and hiring consultants don’t count. | What immediate next steps need to be taken?
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Key Learnings & Why is this important |
Takeaways from the case. Critical points to raise in class discussion.
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Questions - Compare the pre-Millman and post-Millman Atchison organization?
Pre-Millman (CASE A) A safe and conservative company losing its grip on the market to competitors due to a wide variety of issues. - Atchison’s primary sales force is compensated lower than the industry. They have no incentive to perform better – lifers
- Tenured employees past the typical retirement age are stalling the progress of the company. No new product development has taken place as a testament to old management style. No one can be fired unless an ethical reason!!
- Centralized structure with little leeway to change prices to respond to local demand. HO also sets quotas on sales
- Centralized accounting with quarterly reports do not show trends across the plants
- Good employee assistance and educational program benefits
- Sales’ increasing but bottom line is suffering.
Post-Millman (CASE B) - Profits have turned around in the company but 3 out of 7 division managers left the company and dozen first line & middle mgrs.
- Corporate Vietnam reference – fierce and aggressive internal culture promoted
- Best get promoted with plant capital investments while earning bonuses of 25% - 100% of salary and rest get canned. Company is gradually losing its heritage of integrity and fair play.
- Organize the company in lots of profit centres. Each unit gets measure on sales and perf and expense items
- Monthly reporting of each profit centre to track progress.
- What if anything, would you change in the present Atchison organization to counter Day’s concerns re: morale, turnover, stolen sales, firing, lack of cooperation and refusal to take back poor merchandise?
- The turnover issue is real however much of it was needed. A thorough management shake-up was required to send the message that performance is the only determinant of one’s future with the company.
- Millman has been very effective in turning around the company in just one year however minor tweaks are now needed to preserve the corporate culture and retain top talent.
- Turnover can be solved by giving stock options to profit centre managers so they now become invested in the growth of the company. Educational subsidies talked about in Case A were missing and Millman should consider reinstating a refreshed employee benefit program and offer more than just monetary incentives.
- Territories should be clearly defined with no ambiguity in solving the issue of stolen sales.
- Customer satisfaction should be the primary focus of the company and new survey based measures should be introduced to track that element re: poor merchandise etc.
- To enhance coordination and cooperation among the centres, a corporation wide program should be rolled where the most successful centre will be hosting a two-day seminar at the head-office. Town-hall meetings should be held regularly to disseminate information to all centres on their progress (make it public but not fiercely competitive).
- Firing decisions should not merely be based on current sales and all managers should be given sufficient time to prove their worth.
- If you would not change anything in the post-Millman organization, state your reasons and consequences?
- As indicated above, he needs to soften his stance on a couple of qualitative factors. John’s concerns were valid but it is noted that he is past his retirement change and could potentially be resistant to change.
- Factors other than monetary compensation should be brought in play. If employee training and advancement is emphasized throughout the corporate culture, it will definitely create a positive working environment and in turn impact profitability.
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