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At the beginning of the case, in 1993, what was Crown Point Cabinetry’s strategy? Describe that strategy using terminology we discussed in class. In particular you should ensure that you mention the Critical Success Factors inherent in that strategy.
Crown Point Cabinetry adopted a multiple level strategy specifically that of related diversified firms, in 1993 when the managerial and operational activities were operating below the expected standards. Despite the continual growth in revenues, employees were suffering. This implied that financial management was problematic. The same effect escalated absenteeism figures by day and in turn, a high employee turnover was taking the lead. As a strategy, introduction of multiple level technique improved employer-employee relationship through team-based management. The efficiency of the remuneration methods improved, as the grievance system and promotion of workers became a responsibility of the workers.
The major components of multiple level strategies entail creating a distinction between corporate strategy and business unit strategy. The corporate strategy identifies the overall organizational goals and their projected financial performance and expenditures. Development of these activities occurs at strategic level management but implemented by tactical and operational managers. These managers have the sole responsibility of ensuring that the company’s objectives are in line with the priorities in the market industry. The business unit strategy meant to enhance contact between managers and employees, which fastened problem-solving issues influencing employee performance and implementation of decisions.
When a company operates related but diversified firms, in terms of specialization, the cost of operation reduces. This is attributed to the synergy that arises from sharing of common inputs and competencies in the company. Multiple level strategies at Crown Point Cabinetry have brought order in the production process by synchronizing diverse activities and forecasting the future operational demands.
Who are Crown Point Cabinetry’s most important 5 stakeholders? For each stakeholder, identify and explain their interests and needs with respect to the activities and performance of the company. Are there any particular stakeholder needs or issues which will require particular attention in the design of the management control system (be specific)
Various entities in Crown Point Cabinetry Company have direct interest to the performance of the company from its inception to date. Regardless of the many team players who ensures that the firm’s objectives are achieved (operational managers and other employees); a few strategic entities are recognized as the backbone of the entire company. Among them is Norm Stowell, the founder of the company Crown Point Cabinetry. He is interested to see that the company succeeds and the employees’ production is at their optimum best, but at a low or manageable cost. Consequently, Norm’s interest in the security of the employees at work place motivated him to institute a safety program under his stewardship. These implied that employees become self-conscious of their workplace safety. Furthermore, his complete withdrawal from the management position implies that he had trust on the current management performance. Therefore, for the general welfare and in the best interest of the company, his withdrawal led to a paradigm shift in organization structure and employee management, which would otherwise be impossible in his presence.
Brian Stowell, one of the Stowell’s children is the key stakeholder in the Crown Point Cabinetry company. His role began earlier as a sales manager of the company. The nature of unfolding events compelled him to think of restructuring the entire firm but through a gradual process. To begin with, he thought of changing the philosophy, purposely to influence the workers attitude positively. Despite instituting evaluation criteria to justify remunerations and quality of their labour forces, the company still experienced problems with its finances. Brian Stowell needed support and acceptance from family members and other stakeholders like the customers. The position of the chief executive in a production company like Crown Point Cabinetry has tedious responsibilities. Gaining siblings approval and acceptable public image accompanying sales, requires competence in managing public relations; at that time, it was a crucial skill for the CEO. Brian’s most challenging role was to balance the labour cost and the revenues for the Crown Point Cabinetry as an entity. Collaboration among different stakeholders translates to improved managerial activities, which acts as a motivational tool for the entire company to embrace teamwork.
Becky Stowell: is not only part of the Stowell’s family (as Brian’s wife), but also a crucial stakeholder in the operations of the Crown Point Cabinetry company. Her interest on the performance of the company compelled her to propose devolution in the system of employees’ management. That is, creating self-managed teams in different departments who will be answerable for their performance. Restructuring improved efficiency in implementing management decisions (Kolarik, 1995). Consequently, Brian’s wife needed recommendation and support from the rest of the executive to implement her proposals. The most important skill she requires to convince other staff members is negotiation skills and be conversant with the guiding principles of negotiation, for example developing a win-win situation for all stakeholder.
Jeff Stowell, Brian’s brother: is one of the stakeholders in Crown Point Cabinetry Company. His mandates influence him to develop interest in the employee safety and security at work place. The company litigious issues could result to the companying losing a lot of money on unnecessary compensations or on penalties charged against the company.
The company, Crown Point Cabinetry: as an entity is legally one of the shareholders optimistic to survive a lifetime. Therefore, revenue generating activities and the source of resources has to be guaranteed. This will enable the Crown Point Cabinetry to grow and develop franchises.
At the beginning of the case, in 1993, what key stakeholder needs are being met? What key stakeholder needs is not being met? Describe and explain them, as applicable in each case.
Norman Stowell’s need was to develop the safety program, meant to deter employees from being careless when handling machines or generally in the working environment. Its success was beneficial not only to the company but to the health of the employees. This is because the number of claims and compensation declined with time. In addition, Norman’s view to relinquishing his executive duties to Brian was doubt because of their previous different opinion on certain issues. It is to his surprise that Brian was right in his managerial styles and decisions than him. A few financial issues, which Norman would wish settled, propagated further and time for the permanent solution in his tenure, become infinite.
Becky Stowell, that is, Brian’s wife ambition was to change the management structure and realize employee potential, which would otherwise have remained latent and unexploited. As a goal, she had planned for; she needed support and acknowledgement from other team players. The moral support and acceptance is what Becky needed to materialize her desires.
Brian Stowell is the chief executive officer of the company. He needed to see success in the policies implemented. Therefore, changes in philosophy that the company took should enable ease on behaviour transition rather than being radical. Majority of Brian’s plans worked not because he was the top executive officer but due to his persistent and confidence in relevant change. Communication structure in company became efficient or witnessed minimal or no clashes as the team embraces team work and interpersonal skills (Kolarik, 1995). The idea of increasing the salaries of employees succeeded in the first phases but challenges were imminent. Other achievements that were realized during Brian’s leadership, is the recognition of Crown Company and its award for being nominated for community citizenships.
Describe the key components of Crown Point Cabinetry’s value chain. At the beginning of the case, in 1993, are there any of these components in the value chain which are underperforming and/or at risk of doing so? Explain your observations.
From the observations made, the major components of value chain Crown Point Cabinetry Company include the following: improved customer satisfaction at a low cost, splitting the firm’s activities that adds value to customers into distinctive parts, and ensure that areas of great importance to customer satisfaction are enhanced or costs associated with it be minimized. Lastly, the inputs, that is, raw materials should reach the consumer on time (Niven, 2002). At the begging of 1993, company Crown Point Cabinetry various components of the value chain were performing far below the recommended levels. For example, the most neglected value chain is the internal production linkages. The costs of operations were escalating on daily basis through pilferages; unnecessary inefficiency and delays at the inventory levels were inevitable.
The value chain that was at the verge of collapsing was the outward linkage to the customers. It is arguably that since the costs of operations were increasing, it was highly probable that either quality of the products will be compromised or the prices of the products to be increased by a certain percentage, in the quest of balancing revenues with expenses. A deficit in resources will affect directly the timing and distribution, which in turn compels the sales of the same product to reduce tremendously (Savasaneril, 2004). Vendor management costs was bound to escalate beyond control, because reduced production scales, which reduces the company’s economic bargain to negotiate for favourable prices, due to “supplier power”.
Develop a suitable corporate level Balanced Scorecard for Crown Point Cabinetry in 2002. Ensure that you describe the scope of each perspective used in the Balanced Scorecard. Each perspective must then have between one and five goals. Each goal must have at least one key measure which the company will employ in assessing its performance. (Where you do not have specific quantitative data for the formulation of a target and/or measure, you should describe what data would be used and the nature of the target. Assumptions or illustrations used in that process should be identified clearly.)
The balanced scorecard is a performance management strategy, which plays the role of monitoring the activities executed and noting the consequences they have on the company’s growth and development. In 2002, Crown Point Cabinetry’s scorecard could appear as follows according to Kaplan, & Norton, (2006):
a) Financial perspective- the objectives of financial perspectives are:
1). to enhance sustainability cash flow
2). to increase the sales volume by 40 %, thereby enhancing project profitability
3). to control the market share and consequently stimulate sales growth (sales backlog)
4). to have a forecast reliable profit
The measure of achievements of financial investment in the business will be depicted by the level of satisfaction of the stakeholders, and increasing ROE, implying achievement of the set financial perspective.
b) Customer perspective- the set objective on the customer perspective includes:
1). to assess whether another market segment can be developed for another business unit
2). to ascertain the level of customer satisfaction by developing customer satisfaction index
3). to establish the effects of competition (by substitute products) on customer loyalty
4). to be the product leader in sales and distribution on customer ranking survey
The measure for customer satisfaction will be evaluating the degree of repeated sales made by residents of a certain market segment in comparison to the number of household in existence.
c) Internal process perspective- the main goals are:
1). To select and hire competent personnel with relevant technologies
2). To support operational staffs in the event of creating better products to meet customer expectations
3). To develop and monitor a safe incident index
The measure employed to ascertain achievements of these goals is the employee rate of turnover in the company.
d) Innovation and learning process perspective- the goals set at innovation and learning process areas follows according to Kolarik, (1995):
1). to ensures employees learn and develop their entrepreneurial skills and practise it at corporate level.
2). to improve the quality of products and efficiency of various processes
3). to offer effective training and development on areas where employees excel
The indicator for measuring these achievements will relate directly with the employees morale and level of motivation. The degree of innovation will also determine whether innovative and learning perspective, as one of the key component on a scorecard, is achieved (Niven, 2006).
At the conclusion of the case timeline (i.e. 2002) the company has transitioned to a management approach which is significantly different from that employed in 1993. Are there any important issues or risks remaining in 2002 which are unresolved or which you remain concerned with? Describe and explain them
The transition in company’s management style is a success to all stakeholders. Operational mechanisms instituted have worked best for some people rather than for the benefit of the whole team and work force. For example, the retirement plan was not all-inclusive, it lack general appeal to workers in general, and as a result, ninety-five percent of employees participated in the retirement benefit plan. Consequently, the company capitalized on advertising and these led to an increase in the budget on advertising fourfold. The budget was constraint yet some activities continued to record an upward trend. It could be prudent to cut expenditure on high-level advertisement (since the company’s products were commanding a bigger proportion of the market) and save the money to cater for send-off packages for retired workers whose energies were depleted during their tenure in the company (Kaplan & Norton, 2006).
Though employee turnover has greatly reduced, absenteeism could be a potential threat to withstand looming competition from strong emerging firms, bearing in mind, the employees’ morale is high and an ingredient to motivate them will be problematic to figure-out, may be draw them back to the situation in 1993, because the source of motivation is depleted. The only weapon to salvage the company from the verge of collapsing is a great mystery.
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