Reference no: EM132879609
COSCO STALEMATE CASE ANALYSIS
CosCo Ltd. is a medium sized distribution firm that imports a wide range of canned foods and distributes to retail outlets throughout the Island. CosCo received the Jamaica Stock Exchange Most Profitable Wholesale Company Award every year between 2008 and 2010. In January 2014 when the Chief Accountant (LeeAnn King) completed the balance sheet for 2013 there was a decline in profits by 20%. This is not surprising since the previous two years (2011 and 2012) saw profits falling by 20% and 14% respectively.
A few new companies had entered the market. Those companies were bringing in goods from China instead of South America from where CosCo imports the majority of its products. The General Manager (John Foot) called an emergency meeting of all senior managers. His aim was for them, together to put forward proposals for bring back the company to its former profitable status. He also wanted all managers to support the decision that was taken so that there would be a greater chance that the new programmes would be successful.
At the meeting, there was general disagreement among the managers as to how to solve the falling profits problem. The marketing manager (John Paul) wanted to increase advertising and hire more sales agents. He suggested radio and television advertising. The new sales agents would go into all the little communities across Jamaica and persuade shop owners and supermarket chains to purchase CosCo's line of products.
The production manager (Mary Marks) disagreed and wanted instead the company to take over its own distribution of its products. She claimed that advertising is expensive and would not result in any significant increase in sales.
"The company was already loosing revenue why should we be spending more money when there is a better way to approach the problem? She also said that, "distribution was the only way to pull the company out of its losses."
The HR manager (Peter Palmer) reminded the team of managers that over the past two years the workers job satisfaction scores had fallen and that there was widespread demoralization and de-motivation among the rank and file staff. The discontinuation of overtime payments had negatively impacted workers' morale. Workers were not happy about the cut in the additional earnings that they were accustomed to getting. Workers argued that the pay was small and they depended on the overtime pay to help pay their children's school expenses and generally help them survive during the harsh economic times.
Palmer pointed out that he had informed the meeting about this over six months ago. King had said at the time that she was not going to reverse the decision. As far as King was concerned, workers could more than finish all their tasks within the 8-hour work day. King told Palmer that many of the workers were idle during the work day and only worked hard during the overtime period. She did not want the company to support slackness.
Palmer pleaded with King and explained that if workers were motivated they would give greater output and the customer service reps would give better service to the customers. When the relationship between workers and customers was good, customers were more likely to purchase larger quantities of the products.
The meeting of the managers lasted for four hours. Mostly all that was achieved was that each manager argued his/her points. At the end of the meeting no decision was reached as to how to stem the falling revenues and profits.
Foot pleaded with the managers to stop quarrelling and be more cooperative so that a good decision could be arrived at. The managers all picked up their portfolios and walked out of the board room without responding to the Managing Director. Foot stood with his hands on his head wondering how he would ever bring the company to financial health.
Required
- Discuss What are the likely consequences if the recommendations are not implemented.