Reference no: EM131446560

Here's the change: BubbleBath Inc. is a privately owned company with approximately 2,000 employees whose make up is primarily line workers. Management makes up about 20% of the company, with the remaining 1,600 people working to produce the line of bathtubs, hot tubs/spas, and designer fixtures for which the company has become famous. The company started 10 years ago working out of the initial founder's garage, and quickly increased in size when Jacuzzis became a standard fixture in many middle-class remodels and new constructions. Due to excellent marketing strategies, BubbleBath Inc. has not experienced a downturn in sales despite the recent economic downturn in construction. Instead, they have parlayed the middle-class flight from tourism to encourage the "staycation" and the upgrade of the home as the new spa of the 21st Century. Profits last year were up 15% and everyone is feeling cautiously optimistic. Nevertheless, the CEO is concerned with market analysis reports that despite the staycation mentality, growth over the next two years is predicted to be stagnant to declining. Last week, as per the original exit strategy of the founding investors, the company will be restructured into a limited partnership of three people from an incorporation model of 15 shareholders. 12 of the shareholders will be paid a return of 8% on their investment, and the remaining 3 shareholders will form a limited partnership. As a result, the CEO has received word from the new partners that they want to change the operations model as follows, effective in three months:

A. Discontinue the line of designer fixtures and focus solely on hot tubs and bathtubs. (This will mean eliminating two lines of 30 employees each.)

B. Move the entire operation from the city of Atlanta, GA to a town 25 miles south of Atlanta called McDonough, where all 3 of the partners reside. No relocation packages will be offered, but those employees who choose to "retire" at the time of the move will receive a 4 weeks' severance package. A new building which was originally intended to be a "HottubsRUs" factory is sitting vacant and the partners bought it for a steal. They already have a buyer for the old factory in Atlanta.

C. For the first time, include a sales office right in the new production building where a showcase with sales staff will be located. Along with supplying retail stores, the company will now also sell directly, both in the office and online. Initially, 5 sales people and one sales manager will be hired.