A CASE STUDY ANALYSIS

The Bits and Pieces International Corporation (BPIC) is one company that appears to be succeeding and growth has become a part of its agenda for the next few years. This is quite unusual for a company whose certificate of incorporation has only been approved by the Securities and Exchange Commission four years ago.

BPIC is maintaining an office at Makati Avenue in Makati and a plant at Sta. Rosa, Laguna. The company is producing various injection molded plastic products classified as consumer and industrial.

The key Officers of the company are as follows:

President and Chairman of the Board: Engineer Rodrigo Reyes

Vice President and General Manager; Engineer Jesus Ualat Corporate Secretary: Mrs. Mildred Salazar Treasurer: Mrs. Purita Toquilar Engineering Manager: Engineer Silvino Santiago Production Manager: Engineer Severo Lagayan

The organization chart of BPIC is shown in Exhibit 1.

The company classified as a manufacturing corporation, operates on two activities:

production of stocks to be sold to the local market

production as a subcontractor

BPIC does not maintain a sales force. The general manager acts as marketing executive and directly transacts business with customers.

Product Average Sales Per Month

Ball Pen Tips Ᵽ 340,000

Sputum Cups 900,000

Grease Cups 100,000

Bottle Caps 100,000

PVC Fittings 200,000

Total Ᵽ 1,640,000

At current output levels, the company was declared profitable. The following financial data were provided.

profit margin (net income/sales) = 32% return on total assets (net income/total assets) =

72% annual turnover = 15 times current ratio = 1.1 acid test ratio = 1.05

An analysis of the company’s market potential convinced the top management to consider expansion. It was also decided that a new product, the tissue holder, must be added to its existing line of products.

Product Year 1 Year 2 Year 3

Ball Pen Tips Ᵽ 6M Ᵽ 7M Ᵽ 8M

Sputum Cups 12M 22M 33M

Grease Cups 12M 13M 14M

Bottle Caps 24M 36M 54M

PVC Fittings 48M 58M 70M

Tissue Holder 48M 58M 70M

Total Ᵽ154M Ᵽ194M Ᵽ249M

  Position Quantity

Finance Manager 1

Quality Control and Research and Development Manager

1

Senior Machinist 1

Junior Machinist 2

Helpers 2

The president ordered the general manager to prepare an organization chart for the new set-up.

The key officers of the company were directed to review the proposed set-up and present their comments on an executive meeting scheduled next week. The proposed organization chart is shown in Exhibit 2.

Engineer Lagayan is now contemplating on what credible points he is going to raise in the meeting.

The problem is that Engineer Lagayan (the production manager) wants to give credible points to raise on the proposed set-up in the executive meeting given the available information on plant expansion.

To comment on the proposed new positions. To review on the proposed organization

chart.

To accept the proposed organization chart and new positions as is.

Comment: The proposal needs to be reviewed first by the key company officers. The general manager might have some mistakes.

To propose an adhoc committee to contemplate on the proposed set-up for a longer time (i.e. 1 month).

Comment: It requires scheduling because the some of the key officers are based at Makati Office while some are at the Plant Site in Laguna.

To decrease number of machinists and helpers.Comment: Growing sales might mean better maintenance of

process equipment fabrication of more equipment spare parts.

To hire a sales manager or officer for the growing number of sales especially with the addition of tissue holder to the product line.

Comment: The general manager is already up to this task.

To incorporate the product or market organization structure into proposed set-up (There will be two associate production managers).

Comment: Since there are two production activities for the plant (for stocks sold to the local market and for those to the subcontractors), product or market organization is recommended. Particularly, this type is a market organization.

Decrease number of shifts per day from 3 to 2.Comment: Decreasing number of shifts per day from 3 to 2

might mean company savings but special incentives are given to the production team (i.e. 4 additional hours = 4 overtime hours).

To add subordinate officers to (1) the financial manager and (2) quality control and research and development manager.

Comment: To be able to be called managers, they must

have subordinate officers to exercise their authority.

Reference: Medina, R. Engineering Management. Manila: Rex Bookstore, 1999.