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Presentation based on case study about Costal Uniformas
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S
Control Management - Case Study
Coastal UniformsAdriana Coelles
Ossama El FatouhiRonan Le Page
Klaudia WypustekŁukasz CichyJose Cortes
Agenda
Introduction
Company Background
Farming Problem
SWOT Analysis
Alternatives
Recommendations
International Examples
Introduction
Coastal Uniforms provides an attempt to improve share- holder profitability by setting
higher performance targets.
Enables discussion of the rights of shareholders, the utility and effectiveness of very stressful performance targets, and the limits on the moral rights of an employer to
require them.
Company Background
COASTAL UNIFORMS
The Case
1999: Signs of Trouble Several small competitors wrested key contracts
from Coastal. Change in Coastal management had to be made in
order to compete with new leaders that were driving sales at a furious pace.
Sales and profit were flat. “Rule 35,” profit and revenue growth increases had
to add up to 35.
The Case
2000: The Beginning of the Decline General managers collectively pressured the sales
representatives increase their sales targets by 20 per cent. Sell catalog items to the customers on their route. Products were re-examined. Ordering lower quality. Reduce what they believed to be unnecessary features on
uniforms to save costs. “delivery surcharge”.
The Case
2001: More Initiatives Are Put in Place Delivery personnel were increased from $300 a week
to $800 a week. Environmental charge was added to invoices. Hazardous Analysis Critical Control Points (HACCP)
charge was added to all invoices. Charge of $30 per $300 was added.
Company hit its “35” target.
Coastal loss five key customers, who discovered an extra thousand dollars a week of extra charges on their invoices.
The Case
2002: More Efforts to Drive Revenue and Profits Additional challenge was put to sales reps: Lose any
customer you signed and you lose your entire bonus for the year.
Increased targets for delivery reps to $1,200 a week.
Up to 25 per cent of customers were “dissatisfied”.
To meet weekly targets they were leaving products at the client’s location (without the client’s knowledge) and charging them for it.
Who is Andrew Vila?
Andrew Vila
Sales representati
ve
Familiar with the
firms practices
Had a pending bonus
Considered legal action and quitting
SWOT Analysis
Strengths-Recognized brand - Constant Growth
- Well running business- Innovative and Diversified.
- Employee motivation- Efficient recruitment
Weaknesses- No attention to competitors
- Pre established profit and growth levels
- Employee pressure- Increasing turnover.
- Bad strategic decisions
Opportunities- Big domestic market
- Innovative products and services- Diversification (connected services:
mechanical tools, stationery,…)- Internationalization
Threats- Several small fierce competitors
- Gasoline price fluctuations- Increasing charges (HACCP,
environmental charges…)- Mature market
- New entrants from abroad
Analysis of Management Control
General managers
Sales representative
sDelivery
representatives
Hierarchy of the sales department:
Aggressive : based on performances (Rule 35). Profit centered strategy. General managers rewarded with bonuses if they reach
their objectives. Strong incentive (40% of their total compensation) Employees not reaching the goals are either dismissed or
not given any bonuses. Efficient recruitment of new employees thanks to their
brand image.
Work environment: Stressful lifestyle Increasing turnover rate by 20%
Management Style
ALTERNATIVES
CUSTOMER RELATIONSHIP Segmentation of clients: propose different products at
different prices To change its bad image → REBRANDING
To behave in an unethical way is damageable overtime: Low quality product with the same price Gasoline surcharge Environmental cleaning charge HACCP charge
HUGE LOSS OF MARKET SHARE
ALTERNATIVES
Human Resource Management
Should have kept
its key managers.
Be more respectful
toward workers.
Increase motivation
through other
means.
ALTERNATIVES
Rename the company
Revamp the company
With Villa: Take legal actions Don't take legal actions Quit his job Agreement
RECOMMENDATIONS
Redesign the policies
Stop using un-ethical initiatives.
Disregard rule 35 – focus on quality due to the 1999 crisis.
Reconcile an agreement so that Vila and the company are satisfied
RECOMMENDATIONS
To take more seriously the competitors.
Horizontal growth.
Catch new markets abroad.
Diversification.
Invest in R&D and innovate constantly.
1st priority: customer satisfaction.
Reduce costs and maintain a good quality. Improve the logistics and the supply chain.
International Examples
Venezuela - Movistar
Two High Executives in charge of the acquisition of Terminals have mocked internal control system.
Internal Corruption.
Received bribery from cell phone fabricants and distributors to give preference for specific models.
Brightstar is being investigated.
Estimate el 15MM Euros of fraud.
Concern in Telefonica Madrid for incrementing control over subsidiaries.
Poland - APEXIM
APEXIM:
One of the largest company of polish IT market
Working area: tele-IT infrastructure
Andrzej Rybkowski - founder, CEO and largest shareholder of a company
Bankruptcy - September 2002
Analysis of APEXIM
1997 1998 1999 2000 2001 -
10
20
30
40
50
60
70
80
90
100
Apexim - Net Income(in million złoty)
Analysis of APEXIM
1997 1998 1999 2000 2001
-120
-100
-80
-60
-40
-20
0
20
Apexim - Net profit / loss(shown in million złoty)
Analysis of APEXIM
BANKRUPTCY: Unenlightenment on the competition. Unsuccessful attempt to market of 'Application
Integration’. Reckless actions and investments. Scams.
BANKRUPTCY - ANALYTICAL APPROACH: Hypertrophy of employment. Inefficient control of costs. Carelessness in taking loans and signing bad contracts.
Colombia- False Combat Killings Scandal Falsos Positivos
Scandale des faux positifsFalse Combat Kill
Towards the end of 2008, the scandal involved members of the Army of Colombia with the murder of innocent civilians to pass them off as guerrillas killed in combat in the context of armed conflict in the country. These killings were intended to present results from combat brigades.
France – France Telecom
France Telecom
Waves of suicides in the organization
Causes:
Stressful environment
Fracture between managers and employees
Strategy based on profits and costs savings
Staff reduction plan
QUESTIONS?