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  • 1. Case 1 United Products, Inc.Teaching NotesCopyright Gareth R. Jones, 1994SynopsisUnited Products, Inc., is a small office products and supply company, headed by the son of the founder,George Brown, President. Brown is a laissez-faire president/owner who is about to leave on a three-weekEuropean vacation. He doesnt want much growth because he is unprepared to put forth extra effort.Growth is limited by his motivation to work harder. Students will tend to be critical of Brown, hismanagement style, and organizational strategy and structure.Brown has a good track record as president: His company has grown at an enviable 20 percent a year, andthe functional organizational structure works well. Brown knows how to delegate and decentralizecontrol. He allows employees to demonstrate their abilities and rewards them for performance, and hecreates an enjoyable organizational culture. His time on vacation or playing golf is a tribute to hismanagement skills and ability to design a structure that allows for delegation. The case considers basicmanagement issues such as what organizations do.Teaching Objectives1. To familiarize students with small company operations and present the meaning of competition, strategy, and structure.2. To critique the management style of a president who appears lazy, but is actually entrepreneurial.3. To expose a functional organizational structure and a simple hierarchy and show role relationships in an organic structure.This case can be used after Chapter 1 or 2 as the first case of the semester. It is easy to analyze andunderstand, and is a good preview for many organizational theory topics in the text. Encourage a negativeperspective of Brown and then show the opposite side of the picture. This strategy promotes debate, andalso allows the students to begin to think creatively about management.Pop Quiz Questions1. What kind of structure does United Products use?Answer: A functional structure2. True or false: George Brown delegates too much authority to lower-level employees.Answer: FalseIssues and Discussion Questions1. Critically evaluate George Browns management style. What does he do well or poorly?Discuss his personal attitudes and behaviors that appear to be somewhat negative:1. By his own admission, he doesnt work long hours.2. Coming from a wealthy background, he lacks ambition and drive.3. He is not willing to exert effort and energy to help the company grow faster than 20 percent per year. 184
  • 2. 4. His family comes first.5. He took a 10-month vacation from his company a few years ago.Consider his managerial policies:1. There are no formal job descriptions.2. He has very conservative financial policies and avoids all debt.3. There are no specific performance standards for employees; salespeople have no specific sales quotas, but are paid a percentage of sales.4. There is no formal planning process.5. There are no profit goals.6. The size of the workforce and facilities is too large for the volume of business, thus increasing costs.7. There are very weak training programs; employees train themselves.It is clear the company is not doing well, and that Brown is a lazy, spoiled millionaire.2. How well is UPI doing?From a financial standpoint UPI is very successful. Sales have doubled in the last four years. In 1973sales were up 22 percent, profits rose 40 percent above 1972, and net worth increased by $123,500. Fromthe stakeholders viewpoint, employees earned above-average wages; sales suggest customer satisfaction.Brown goes out of his way to create a good working atmosphere, and has a personal relationship withemployees and high ethical standards. It seems that the organization is satisfying stakeholders.3. What explains UPIs level of performance; for example, is it Brown, luck and chance, or the strategy pursued by the company over time?The question arises as to why UPI is doing so well. There will be many reasons offered for the success ofthe company. Write them on the board before coming to any conclusions.Some students will attribute UPIs success to Browns personal actions; play this down and focus onother factors. Maybe it is chance and luck, the highly motivated sales force, or the strategy developed byBrowns father. Consider the companys strategy. UPIs product lines are broader than its competitors; it carries over 3,500 items in eight major product categories. This means its customers may need to deal only with UPI. Limiting contact with many suppliers gives UPI a competitive edge. None of its rivals offer such a wide range of products. UPI offers a very high level of service, is responsive to customer needs, maintains large inventory stocks to shorten delivery times, and offers good repair services. UPI continually adds new product lines and adds additional salespeople to meet customer needs. To provide the high level of quality service and maintain expensive inventory, UPI charges a price above the level of its competitors. Its prices are 10 percent higher than competitorsthe premium customers pay for good-quality service.UPI is doing a good job of managing its environment and meeting stakeholder needs. UPI is pursuing adifferentiation strategy and is offering a product and service that customers perceive to be unique andworth a premium price. Because the company operates only in the Northeast, its strategy could be calledfocused differentiation strategy as opposed to a strategy pursued at the national or global level. Itsstrategy could be the chief reason for its success, but the question arises as to who devised its strategy.4. Who was responsible for orchestrating UPIs strategy? 185
  • 3. Brown, because he decided: When to add product lines To add new salespeople On the differentiation, high-service/high-price strategy On UPIs structure to match strategySo, has Brown been a good leader? Students must reassess Browns role, and his apparent laziness has tobe balanced against his successful strategy. Perhaps he doesnt work 12 hours a day because he has doneeverything right, particularly in designing the structure to let people work independently.5. How has the way Brown designed his structure helped UPI? How does UPIs structure help explain his personal and managerial style?UPIs structure can be analyzed, and it becomes obvious that Brown has designed UPIs structure toallow his employees to perform roles effectively. Being a small company, UPI has a functional structure,like the B.A.R. and Grille. But unlike many entrepreneurs who are afraid to delegate responsibility andmake all decisions themselves, Brown had recruited a general manager, Hank Stevens, and hasdecentralized operating responsibility to him. Brown retains responsibility for strategic decision-makingand makes decisions for the future, but Stevens controls daily business, freeing up Brown to plan andthink ahead.Brown created the new level of manager in the hierarchy and had all the functional managers report toStevens. Stevens is also the sales manager and performs a dual role. UPI employs 34 people and has fourlevels in the hierarchy. In terms of the design challenges discussed in Chapter 2:1. UPI is a simple company. It has a low degree of differentiation and needs only a low level of integration.2. Brown has decentralized all day-to-day decision-making and centralized all strategic long-term decision-making.3. Brown makes limited use of formalization and encourages the use of mutual adjustment, meeting with his managers regularly where issues get thrashed out.6. Because it is a small company, the informal organization and organizational culture play very important roles in coordinating and motivating employees.Brown has designed a relatively organic structure in which his employees have freedom and autonomy torespond to customers needs and to search out new accounts. They are rewarded with a generouscommission system. The structure allows UPI to perform well and meet its goals. It gives Brown thefreedom to plan for the future. He may be taking European vacations, but UPIs strategy is clearly on hismind. 186
  • 4. 7. What problems might Brown and his managers confront in the future in operating UPIs structure as the company grows?Browns company is growing, and he has sought out other companies for mergers to become thedominant regional competitor. As his company grows, he needs to separate the general manager rolefrom the sales manager role and employ a sales and marketing specialist for training. He may need toadopt a divisional form of organization, probably a product division structure, and divide up the 3,500products UPI sells into three or four main product categories. Thus he may need to increase UPIs levelof differentiation, which will require increased integration and formalization and standardization. 187
  • 5. Case 2 The Paradoxical Twins: Acme and Omega ElectronicsTeaching NotesCopyright Gareth R. Jones, 1994SynopsisBased on real events, this case is very useful for discussing the di

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