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CASE STUDY

The Recalcitrant Director at Byte Products, Inc

Dan R. Dalton, Richard A.Cosier, and Cathy A. Enz

Byte Products, Inc has been the industry leader (more than 32% market share) in the field of manufacturing specialized computer components . However, this great success also brings a problem for the company. Byte can't meet the high quantity demand for its products; even though all Bytes' manufacturing facilities already maximized their production capacity.

Worrying that the company will lose its market share and attract more competitors into the market, CEO James M. Elliott and Byte's Board of Directors authorized for a new manufacturing facility in the southwestern United States. Unfortunately, it will take three years to get the plant completed. Jim Elliott, hence, determines to find a more short-termed like solution for the problem. Several suggestions such as licensing Byte's products to other manufacturers or foreign licensing were all considered but rejected. The company doesn't want to risk losing its patents. Moreover, the cost involved with these outsourcing transactions will make Byte's product price increase.

Finally, there was one recommemdation that could solve Byte's problem in the short run came to Jim Elliott's attention. Members of Jim's staff notified him about an abandoned plant currently available in Plainville, a small town in the northeastern United States. However, due to the poor location and high labor costs, there was a lot of doubts that the plant would be efficient and profitable. The staff all agreed that the plant, then, would be used for three years or so until the new plan could be built.

When Jim Elliott presents the temporary plant proposal to the 11-member board (himself, 3 inside members, 7 outside members), all except one member are