Reference no: EM13502226

CASE - Kare-Full Katering Inc.

Harrison T. Wenk III is a 43 year-old married man with two children, ages 10 and 14. Harrison, who has a masters degree in education, teaches junior high school music in a small town in Ohio. Harrison's father passed away two months ago, leaving his only child with an unusual business opportunity. According to his father's will, Harrison has 12 months to become active in the family food-catering business, Kare-Full Katering, Inc., or it will be sold to two key employees for a reasonable and fair price. If Harrison becomes involved, two employees have the option to purchase a significant, but less than majority, interst in the firm.

Harrison's only involvement with this business, which his grandfather established, was as an hourly employee during high school and college summers. He is confident that he could learn and perhaps enjoy the marketing side of the business, and that he could retain the long-time head of accounting/finance. But he would never really enjoy day-to-day operations. In fact, he doesn't understand what operations management really involves.

In 1988 Kare-Full Katering, Inc. had $3.75 million in sales in central Ohio. Net profit after taxes was $105,000, the eleventh consecutive year of profitable operations and the seventeenth in the last 20 years. There are 210 employees in this labour-intense business. Institutional contracts account for over 70 percent of sales and include partial food services of three colleges, six captive commercial establishments (primarily manufacturing plants and banks), two long-term care facilities, and five grade schools. Some customer locations employ a permanent operations manager; others are served from the main kitchens of Kare-Full Katering. Harrison believes that if he becomes active in the business, one of the key employees, the vice president of operations, will leave the firm.

Harrison has decided to complete the final two months of this school year and then spend the summer around Kare-Full Katering - as well as institutions with their own food services - to assess whether he wants to become involved in the business. He is particularly interested in finding out as much as possible about operations. Harrison believes he owes it to his wife and children to fairly evaluate this opportunity.

Questions:

If you were Harrison, what would you do? Why?