2. TABLE OF CONTENT
Company Background
Goals of the company
Strengths and Weakness of company
Goals of Plant Managers and Company’s
Marketing Organization.
How goals are achieved.
Suggested Solutions.
3. COMPANY BACKGROUND
Founded in mid 19th century
Survived lean years and the 1929 depression
Dominant product: blue denim jeans
One of the world’s largest clothing
manufacturers
Owned 25 manufacturing plants and
contracted 20 independent manufacturers
40 million pairs of pants; 1/3 were produced
by the contractors
4. GOALS OF THE COMPANY
Increase profitability
Become more cost efficient
Improve plants’ production efficiency
Improve production capacity
5. STRENGTHS
The company has been profitable for a long
time.
The company has 25 manufacturing units of its
own and 20 independent contractors producing
efficiently and reliably for them.
They have developed a learning curve to
develop the production’s standard hour.
1-to-5 scale reward system can motivate
employees work harder.
Use budgeting to set the quota, which can
evaluate the performance easily.
6. WEAKNESSES
There is no incentive to the manufacturing plants to exceed
production. Rather, it makes the things difficult for them as they have
to meet increased quota and have thus resorted to “Hoarding” of
stock even if there is enough demand.
Standard hour’s calculations are done on same scale for new and old
machines, which hence produces inaccurate results.
They are highly dependent on the outside independent contractors
who provide for approximately one-third of the total pants sold by
them.
The reward system is not fair. The people who work at the
headquarters are awarded higher rating than the plant managers.
There is lack of staff for some departments as they continue to
maintain 11:1 supervision ratio to achieve leadership excellence.
Thus, the immediate and significant information requirements cannot
be met on time. Also, the production cannot be increased because of
lack of personnel.
7. GOALS OF 25 PLANTS’ MANAGERS
Factors in rating
Meet the production budget figure
Meet the standard number of labour hours.
CUT COST!
Community relations
Employees
To meet the targets of sales units and sales
dollar which are set by marketing forecasts
8. HOW TO ACHIEVE THIS GOAL?
Frequent changes in product mix to cater the change
in consumer demand
The sale force’s compensation consists of salary plus
8 percent sales commissions.
The sales of each line of pants are assigned to the
respective marketing department.
1. Basic Jeans Dept.
2. Boys’ Jeans Dept.
3. Men’s Casual Dept.
4. Men’s Dress and Fashion Jeans Dept.
5. Women’s Jeans Dept.
Bonus system
9. SUGGESTED SOLUTIONS
Planning production budget based on sales
forecast.
Improve the compensation system by
lowering the weights of sales commission
and rewarding for stable needs
Such policy may incent marketing staff to
lower sales budget and ease their job.
Several new policies are needed to offset this
drawback.
10.
11. REFERENCE
Anthony, R., Govindarajan, V., Hartmann, F.,
Kraus, K., Nilsson, G. (2014). Management
Control Systems, First European Edition.
McGraw-Hill Education
