Assignment # 1

Case Study

Out with the Old, In with the New

The Anderson Corporation was started in 1962as a small consumer products company. During the first 20 years, the company’s R&D staff developed a series of new products that proved to be very popular in the marketplace. Things went so well that the company had to add a second production shift just to keep up with the demand. During this time period, the firm expanded its plant on three separate occasions.
In an interview with a national magazine, the firm’s founder, Paul Anderson, said, “We don’t sell our products. We allocate them.” This comment was in reference to the fact that the firm had only 24 salespeople and was able to garner annual revenues in excess of $62 million. Three years ago, Anderson suffered its first financial setback. The company had a net operating loss of $1.2 million, and last year it was $4.7 million. The accountant estimates that this year the firm will loose approximately $10 million.
Alarmed by this information, Citizen’s Bank, the company’s largest creditor, insisted that the firm make some changes and start turning things around. In response to this request, Paul Anderson agreed to step aside. The Board of Directors replaced him with Mary Hartmann, head of the marketing division of one of the country’s largest consumer products firm.
After making an analysis of the situation, Mary has come to the conclusion that there are a number of changes that must be made if the firm is to be turned around. The three most important are as follows:
1. More attention must be given to the marketing side of business. The most vital factor for success in the sale of the consumer goods produced by Anderson is an effective sales force.
2. There must be an improvement in product quality. Currently 2% of Anderson’s output is defective as against 0.5% for the average firm in the industry. In the past, the demand for Anderson’s output was so great that quality control was not an important factor. Now it is proving to be very costly area.
3. There must be a reduction in the number of people in the operation. Anderson can get by with two-thirds of its current production personnel and only half of its administrative staff.
Mary has not shared these ideas with the Board of Directors, but she intends to do so. For the moment, she is considering the steps that will have to be taken in making these changes and the effect that all of this might have on the employees and the overall operation.

Questions:
1. What is wrong with the old organizational culture? What needs to be done to change it?
2. Why might it be difficult for Mary to change the existing culture?
3. What specific steps does Mary need to take in changing culture?
4. Suggest a change agenda for Mary that is, how should she go about ushering change in the organization, what should she do and what would be the sequence of intervention programme.