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7/29/2019 MBA Case Study- Cool Initiative
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Ultimo Efficacy, Inc
By
Group 1
A case study on
Cool Initiative
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Cool Initiative:
Initiative means taking the first step in anyventure. It determines success or failure of the
whole venture.
This case discusses about a company and itsemployee in the backdrop of recession.
Recession, is one of the 4 phases of business
cycles, caused due to problems arising out ofincreased operations during prosperity.
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Facts about the organization:
Ultimo Efficacy is a wonderful organization,doing very well even during recession times.
Adept at converting threats into opportunities.
Had valid excuse of recession to cut down onthe expenses. Even the normal expenses.
Suddenly it decides to impose cost control
measures.
The top management issues a circular to all the
employees.
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Steps taken by the company to reduce cost:
All the employees were requested toconcentrate on cost reduction.
Plans to slow down the salary rise and
promotions Avoid travel i.e. use the cheapest modes of
travel only if it is absolutely essential.
Start using both sides of paper for writing.
Pencils should be used rather than pens so that
u can save paper and the cost provided to
purchase pens
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Facts about the case:
One Mr. Simple Simpson, a junior officer inpurchase department decides to contribute his best
to the companys efforts.
It was summer time and every year the company
used to replace worn out water coolers with the
new ones.
Simple got a brainwave of substituting water
coolers with the earthen pots. The price of a water cooler was approximately
around $350- $400 and price of a pot was mere $1,
which showed huge potential of cost reduction.
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Continued
Simple then sent out enquiries for different
suppliers and finally selected one particular
supplier.
The supplier declined to lower his price but was
ready to give 20 more pots for the same value. Simple became a hero momentarily.
A young auditor who finds irregularities in the
procedures, sends a report on the same whichplaces him under enquiry.
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Reports from the auditor:
As per the budget provided, water coolersshould be provided and not earthen pots.
Discrepancy was found in number of pots that
physically exist and that quoted in the
requisition slip.
Mr. Simple Simpson who was in charge of
processing requisition said that he took all
these actions as per management directive ofcost reduction.
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A brief look on what had happened
Simpsons intentions What was supposed tobe done
Idea of substituting
water coolers with
earthen pots.
Ordering for the pots.
Negotiating with the
supplier, so that hecould bring down the
costs.
Consulting his superior
and seeking approval
from the top.
Written permission from
the boss.
Notify his boss. And tellthe suppliers offer to
him.
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Irregularities on the part of the MgmtPlan Result
Slowing down the
salary raises.
Saving money on
unnecessary travel. Seeking co-operation
of the employees in the
process of cost control. Have clean record of
everything.
Unrealistic paymentsmade to CEO & others.
Top executives
continued theirextravagancy on travel.
No ideas collected from
the employees. Ordered an enquiry
against a loyal
employee.
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Opinions:Not a very successful plan.
Lack of proper guidance.
No proper delegation of authority and
responsibility. Incomplete auditing.
Poor implementation.
No scope for employee contribution.
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Conclusion:
So initiative should not be single and it should
be merged with successful plan, properguidance, proper delegation of authority and
responsibility
Managementworkers co-operation is absolute
essential.
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Thank you
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Queries..?