London School of Commerce
MODULE TITLE: Introduction to Business
PROGRAMME: Degree Foundation
SEMESTER: Semester 1, 2
SUBMISSION METHOD/MODE: - The Report to be uploaded to Turnitin.
Individual Assignment (50%)
Written Examination – (50%)
This examination will be timetabled during the LSC examination period (towards the end of the Semester).
Students will be notified of these details closer to this examination period.
1. Discuss how and why the management of this company can be improved by introducing the key principles of working as teams.
2. Provide your advice on how and why the leadership of this company may be improved.
3. With reference to a theory of Motivation, examine how this might improve the performances within this company.
[Please note: that whilst this is a real organisation this is also a fictitious scenario so do not look to reporting actual behaviour you should be applying what you have learnt about in the module
CASE STUDY – Casual Togs Inc.
Casual Togs is a 20 year old firm producing moderately priced women’s apparel, headquartered in a Midwestern city. About 80% of production is sold to large and middle sized department stores in cities throughout the country. The remaining 20% is sold to small women’s speciality shops. All clothes carry the firm’s well-known brand label. Products are principally shorts and blouses, with some knit dresses making up the balance.
The owner and principal stockholder, Cy Geldmark, is an entrepreneur. Cy served a long apprenticeship in the New York garment district and saved part of his meagre wages until he could open his own firm, staffed primarily with relatives and friends. An innovator, Cy pioneered in the ‘mix and/or match’ coordinate idea of fashion ensembles whereby a customer of moderate means could buy a complete wardrobe of casual and work clothes. Designers with trend-setting styles and above average quality (considering the semi-mass-production methods employed) helped propel Casual Togs to a prominent position in the industry.
However the mix-and-match coordinate idea was not parented, and intense fashion competition has now developed from larger firms as well as from new, smaller companies with fresh fashion ideas. In Cy’s words ‘fashion competition is ‘deadly’. The company has rapidly expanded in the last five years, setting up production plants in seven southern states as well as one in Arkansas to capitalize on wage rates in those areas.
All facilities in those states are leased. Notwithstanding the use of the use of the latest in large-capacity cutters and high speed sewing machines, production hinges on a great expenditure of careful, personal effort by the individual worker. Many quality checks are necessary before a garment is finished.
In an attempt to coordinate production and delivery, the company is constructing a new multi-million-dollar central distribution plant at the present home office location, where all administrative and some production functions are performed. All production runs will be shipped to this new facility and then dispatched by a computer-programmed delivery-inventory scheduled method. The facility is planned to help cope with the increasingly serious problem of merchandise being returned from customers who refuse acceptance because delivery is later than promised.
The fashion industry is characterised by five distinct selling ‘seasons’, consequently garments must be ordered, produced and delivered within a relatively short time period. The fie-season cycle produces unusual production and forecasting problems. On the basis of pilot sales during the first two weeks of each season, forecasts are developed about the quality and styles to be produced for the entire season. Once the bolts of cloth are cut into a particular season’s patterns, there is no turning back. If pilot sales are not indicative of the rest of the season or if the sales forecast is an error, the company is saddled with stock that can be disposed of only through ‘off-price’ outlets, usually at a loss.
In an effort to increase the accuracy of sales forecasting and to pinpoint specific reasons for late deliveries, Cy instituted a computer printout of each day’s sales, as reported by telephone by field salesmen. This printout was initially distributed to the president, vice-president of sales, the sales forecast manager, the treasurer, the production manager and eight regional sales managers. All of these people were located at the firm’s headquarters offices. The printout as voluminous, often running 100 pages or more.
Cy relied greatly on his ‘feel of the situation’ for making decisions. Although he made all final important operating and policy decisions, he said that all department heads should feel free to act as ‘you see fit’; he said that he would back any decisions made without consultation with him. Despite Cy’s exhortations that he need not be consulted, almost all vice-presidents and departmental managers conferred daily with him, usually about the progress of the current fashion season’s products. During each fashion season, many style modifications and quantity level changes were made. With rare exceptions, Cy made all important daily decisions in those matters.
The daily decision sessions were marked with emotional outbursts by various management personnel. The meetings were informal and non-scheduled and different groups would meet at different times with Cy. The groups were not formal or even based on functional problem lines. If one individual felt that a daily printout indicated change ‘X’ regardless or not of whether it affected his department, he would go to the president asking that the change be effected. If another department manager or even vice-president were present and disagreed, inevitably a shouting match developed in the president’s office. Usually Cy remained impassive during such interchanges, giving his decision after all other participants had finished.
Some management personnel said Cy was ‘too lenient’ and should curb the emotionally charged sessions because they were disruptive and led to erroneous decisions. The same critics pointed to Cy’s reputation as an easy mark for suppliers if a supplier had some previous tie from the old days or was remotely related to someone in Cy’s family, he would be assured of at least some orders, despite the fact that his prices were higher than some of those of some competing suppliers.
Often the president’s sister Judy, who was vice-president in charge of administration, would wander into the daily decision sessions. She would often object to proposed changes on the grounds that they have been proposed by ‘imbeciles’ or were ‘too damned expensive’. Judy was everywhere, initiating changes herself in every department. Her decision affected everything, from copier paper to salesman’s commissions to rest period schedules for clerical help. She often countermanded a department manager’s instructions and would hire and fire personnel with the manager’s knowledge. Judy’s personality was judged abrasive by all those who had contact with her; she was given to using profanity publicly at a ‘longshoreman’s quality level’. When speaking ‘normally’, she could be heard for some distance. Cy’s always backed Judy’s decisions once they were made.
Although the formal organisational chart depicted Judy and the treasurer being on the same level, the treasurer Stan Seeburg (Cy’s nephew), was not allowed to approve any expenditure over $1,000 without Judy’s informal approval. Judy was one of the original founders, owned 12% of the firm’s stock, was unmarried and of middle age. From time to time Cy tried, by his own admission, to calm her down, with a notable lack of success. But several sources reported that if Judy and her brother had an argument in private, Judy always deferred to her brother’s decisions.
For many years Cy’s chief source of sales data and forecast was Andy Johnson, sales forecast/budget manager. Andy prepared daily handwritten recaps from telephone reports in earlier years and from the printout in more recent years. Using intuition and a very thorough knowledge of the garment industry Andy would prepare the season’s forecasts and modify them as the actual sales started coming in. He has a rapport with Cy and was quite proud of the clearly evident esteem the president had for him.
The rapport was important for Andy for the reasons of self-esteem. Andy had been with the firm 15 years, but despite his knowledge had never been promoted. He resented this keenly and attributed his lack of success to the fact he was not a relative or of the same nationality as the other managers. At least, Andy once said ‘Cy listens to me more than most of those ‘shirt-tailed relatives’. Andy was one of the very few people who called the president by his first name in public.
In a recent change in office location, Andy and his former co-worker, Sol Green, were moved from one large, shared office, which housed subordinates as well, to an individual glass-partitioned offices. The subordinates were now located adjacent to Andy’s and Sol’s offices. After this move, Sol was promoted to manager/internal accounting and sales, and was given control over all subordinates who had previously worked collectively for Andy and Sol.
Andy was given one new man to help with sales forecasts and budgets; the new man had an MBA and was trained in statistical analysis. Andy held a bachelor’s degree in business. Bill Smith, the new man suggested several new methods of collating and analysing the daily printout to Andy, who abruptly rejected the ideas saying ‘Cy isn’t used to getting data in that form; he would be confused by a change’.
As the daily printouts became more detailed and more widely distributed, Andy became more critical of them than usual. He said they didn’t ‘really’ show what styles were leading, and that there were many errors. Andy quoted personal conversations with field salesmen to prove his points. When Bill cited several new styles in what had previously been one category, Andy replied that he was using horse sense to report data in a way Cy and the others would best understand. Andy was away from his desk for long periods during this time, attending numerous management meetings that the president called. The pattern of the meetings was as before, or worse; there were loud emotional arguments punctuated by fist-pounding and door-slamming.
The problem of returns was now most acute; on average, 40% of all shipments were being returned. Although all management personnel agreed that the reason for returns was late deliveries, some managers argued that forecasting by style lines was inaccurate and resulted in erroneous production scheduling, and others said that there was no coordination between the nine production shipping and/or production methods were not efficient. The production manager said there was a disparity between the delivery dates given by customers and those in the salesman’s orders, which served as the basis of a production run. The sales manager maintained that poor quality was the real reason for returns: customers did not want to become embroiled in arguments with home office personnel over quality questions and therefore wrote ‘late delivery’ on sub-standard merchandise because it was simpler.
In an effort to sole the dilemma, Cy hired an experienced market analysis, Stan Levine, who had a strong computer-orientated background. Stan was given a private office and authority to effect any changes he deemed necessary. Several events happened immediately; a supplemental recap of the printout was published every day by Stan in addition to Andy’s handwritten recap, and the printout format was changed. Sol objected violently to the new format, saying that it did not provide accounting with the categorizations necessary for their work. Andy began a ‘war’ with Stan, ‘to show up this egotistical snot-nosed kid’.
At the same time, several new designers were hired, salesmen’s commission schedules were changed, many regional vice-presidents were put on the road ‘temporarily’, and Andy, backed by Cy, cut all departments ‘budgets by 15 % (the company was in the middle of a 12-month budget period).
Approximately four weeks after all those changes had occurred, the following events transpired: returns had increased to an even higher level, many old customers had stopped ordering, saying that poor quality and late deliveries made Casual Togs undependable; the distribution center construction was halted at midpoint because ‘the company could not find a qualified individual to fill the job of supervisor’; the nine plant centers fell, on average 15% under previously established production goals; two of the new designers resigned; Judy fired the new vice-president of industrial relations after he had been on the job four weeks (he held a three year management contract for $60,000 a year); neither Andy Johnson, Sol Green or Stan Levine would speak to each other, Andy began distributing two daily sales recap reports to a select, small group of top managers; and the computer services department complained directly to Cy that their new workload was too great because Stan now required them to produce a daily selling forecast, by week, month and season.