Although almost every business is unique in its own way, there are some universal lessons that apply to just about any kind of business. In these case studies, we'll take a look at employee performance and retention, supply chain management, growth, ad spending, and more. Although the following are focused on specific businesses, all business students can learn lessons from their triumphs and mistakes. Read on, and you'll find 20 classic case studies you'd do well to know as a business student.
Workplace Drug Abuse
Managers hope they'll never have to deal with employee drug abuse, but the fact is that it does happen. In this case, Amber, an administrative assistant started out well, but began to adopt strange and inconsistent behavior. Her work was maintained pretty well, but she began arriving late and calling in sick often, especially right around the time she got paid. She began borrowing and failing to repay money, and then started showing a short temper on the phone with customers. After being found in the ladies room sniffing white powder, she was confronted about a cocaine problem, and reacted by quitting immediately, leaving a hole in the organization for months before a replacement could be found and replaced. Experts believe the employer's actions were wrong, waiting too long to confront Amber, and focusing on accusations instead of criticizing behavior directly related to work, such as lateness and rudeness to clients. They also point out that Amber should have been sent in for a drug test before being outright accused of using cocaine, opening up the opportunity for rehabilitation instead of a severed tie.
Sometimes, doing the right thing is more important than profits, a lesson that Malden Mills learned firsthand. When the factory burned down in 1995 just two weeks before Christmas, production halted and employees assumed they'd be out of work until the factory was rebuilt. But CEO Aaron Feuerstein extended the employees 90 days at full pay, as well as 180 days with benefits at a cost of $25 million to Malden Mills. After the factory was rebuilt and all of the displaced workers were rehired, cooperation and productivity reached a new high, with 40% more business, 95% customer and employee retention, and a production increase from 130,000 to 200,000 yards per week. However, since then, Malden Mills has been to bankruptcy court three times, with much of the debt tied to the rebuild of the factory. Feuerstein made employees happy, to be sure, but business students should study this case to consider whether bold philanthropic actions will pay off in the end.
A Starbucks on Every Corner
In 2008, Starbucks announced that they would be closing 600 US stores. Up to that point, Starbucks stores had added new offerings, including wi-fi and music for sale, but started to lose its warm "neighborhood store" feeling in favor of a chain store persona. Harvard Business Review points out that in this situation, "Starbucks is a mass brand attempting to command a premium price for an experience that is no longer special." Meaning, in order to keep up, Starbucks would either have to cut prices, or cut down on stores to restore its brand exclusivity. HBR's case study shares three problems with the growth of Starbucks: alienating early adopters, too broad of an appeal, and superficial growth through new stores and products. Harvard recommends that Starbucks should have stayed private, growing at a controlled pace to maintain its status as a premium brand.
Small Customers, Big Profits
Big business is attractive, with huge profits for some. But there's something to be said about small business as well, with lower risk and the potential for creativity. Darren Robbins of Big D Custom Screen Printing in Austin, TX found success in his business by pursuing customers with orders both large and small. Although Big D started out catering only to large orders, the shop sat idle in between orders, and through effective scheduling and transparent pricing, was able to fill in dead times with smaller orders. Big D found a profit in a market segment that other local screen printers weren't clamoring to fill. Experts believe this was a smart strategy, allowing Big D to spread out risk in their business and offer customized products. But at least one person is critical of the offering, pointing out that the niche has little upside potential, and may hurt the company's efficiency.
Family businesses typically have the luxury of passing the torch down to children after parents retire, but in some cases, there are no candidates, or the candidates may not be right for the role. This presents a challenge when it's time to find a successor, especially if existing employees have assumed that top level promotions would come from within the family. So the Carlson companies had to put in great effort to find a replacement, looking both internally and outside of the company, ultimately finding an internal candidate who would work well with the family but also offered plenty of experience as an executive in different industries. According to Beverly Behan of Hay's Group, Carlson should be commended for not only making the right decision in not hiring the heir apparent, but for handling the job search in a calm, effective way.
Retiring Employees, Lost Knowledge
Another important retirement issue is one of lost knowledge. What happens when retirees leave the office, taking years of experience and know-how right along with them? Businesses lose all of that knowledge, but according to American Express, it doesn't have to be that way. Through a pilot program, AMEX created a workforce transformation group that would allow retiring participants to gradually give up some of their day to day responsibilities. In return, the employees would spend some of this time mentoring and teaching classes to successors. This resulted in a phased retirement, allowing employees to leave gradually and enjoy more time while still enjoying a portion of their previous salary, and regular benefits. This also meant that some employees stayed a year or more past traditional retirement age. AMEX believes this program is a success, allowing senior employees to enjoy their last years of work in a reduced capacity, as well as educating the existing workforce for future success. Consultant David DeLong agrees, citing this program as an example of how job handoffs should really work.
Strategic Ad Spending
Advertising costs money, which many businesses find themselves short of these days. But forgoing ad spending in favor of better profits can be a mistake. Experts say that in a slump, one of the best things you can do is adopt or increase your advertising strategy to attract customers. During a recession, this is especially true, as other businesses may be cutting back on their ad spending, making your voice even more prominent to customers. After seven years of growth, buliding from 30 to 300 locations, Firehouse Subs' growth fizzled, and company leaders realized they had to do something about it. So they returned local advertising fees collected from franchisees, not to put in their pockets, but to take hold of their own local marketing. Sales fell even more, revealing that this was not a good strategy at the time. Instead, Firehouse reclaimed their local marketing fee, and then gave franchisees the option to take part in a new marketing campaign, requiring them to pay double for local marketing, but in return, becoming part of an $8 million advertising campaign poised for success. Experts commend Firehouse for having the courage to ask franchisees for more money where it was needed, even when times were tough.
Tylenol's 1982 Scandal
In 1982, seven people in Chicago died after taking Tylenol due to an unknown suspect lacing the capsules with cyanide after the products reached the shelves. In the immediate aftermath, Tylenol's commanding 37% market share dropped to just 7% nationwide, despite the problem being contained to the Chicago area. Tylenol was not responsible for the tampering of the product, but to maintain the product's reputation, Johnson & Johnson pulled all of the Tylenol from the shelves, absorbing a loss of more than $100 million dollars. Tylenol was successfully reintroduced with tamper resistant packaging, discounts, and sales presentations to the medical community. The brand survived due to swift action and effective public relations from Johnson & Johnson.
David vs. Goliath
It's tough to be the little guy, especially when one of the big guys becomes your direct competition. But at Hangers Cleaners, an offbeat image and good customer service helped them pull through when P&G opened an eco-friendly dry cleaners in the same town. Hangers differentiated itself through van delivery service, funny t-shirts and hangers, as well as social networking. The company also spent time connecting with the community by partnering with local businesses and charities. Instead of out-pricing or out-spending P&G, Hangers embraced its personality and adopted a culture of excellent service that customers found value in. As a result, Hangers has experienced growth while other local dry cleaners have reported flat or declining revenues.
Market Expansion Through Partnership
To support new growth, businesses have to expand past their initial customer base, an often daunting task for small businesses. However, partnering with another successful company can help businesses reach a new level. Diagnostic Hybrids, specializing in medical diagnostics, did just that, partnering with Quidel, a market leader in rapid diagnostic tests. This partnership allowed Diagnostic Hybrids to enjoy a larger market presence, as well as take advantage of better research and development resources. Although Diagnostic Hybrids was acquired by Quidel, key elements of the organization remain, with the same company president, and operation as a separate subsidiary.
Tesco's International Expansion
Tesco's move into Korea offers a classic case study of building market share internationally. The company made some smart moves in their Korean expansion, most notably partnering with Samsung, the leading Korean conglomerate, and embracing the Korean way of life by operating stores as local businesses and community centers. Tesco also made a smart move by employing nearly 100% Koreans on staff, with only 4 British employees out of 23,000. Reports indicate that Tesco's intelligent strategy has won over shoppers in Seoul, with 25% of Koreans signed up for loyalty cards and sales in the billions, finding success in "crack[ing] the Asian tiger," where competitors such as Carrefour and Wal-Mart have failed.
Triumph in Niche Exports
Another excellent international case study comes from bike manufacturer Triumph, which lost steam in its British home base three decades ago, but found new life by heading overseas. In 2010, Triumph sold just 7,562 bikes in the UK, but 50,000 worldwide, indicating that an international interest paid off for the company. Triumph's famous factory in Warwickshire closed up shop in 1983, but the Indian factory remained, and these days, the motorcycles have become the country's Harley Davidson. The company struggles to meet demand in India, with a six month waiting list and a new factory being built. India's middle class has embraced the vehicle as an affordable commodity, even giving them as dowries in weddings.
Background Checks for Job Candidates
Background checks are an issue faced by many companies, as sensitive information is now more public than ever. OfficeDrop is no exception, as the company scans paper into digital files, including patient records and minister sermons, most of which require trustworthy employees who can handle documents discreetly. Many companies offer quick, superficial checks, but for OfficeDrop owner Prasad Thammineni, more information was required. He found a company that would allow research to delve into a number of different sources and perform a more comprehensive search. Other business owners offered somewhat critical opinions of Thammineni's choice, pointing out that instead of Googling to find a background check company, he should have asked his business network who they were using. They also recommended that he take advantage of free resources, including online searches and checking out social media sites to learn more about job candidates.
Employee Engagement in Tough Times
When Gamal Aziz stepped in as president of the MGM Grand Hotel & Casino, he didn't just take on a $400 million spruce up of the hotel, he worked on the employees as well. He asked rank and file employees to share their insight through a hotel, discovering that there was a disconnect between what was going on at the hotel and the knowledge of staff. He implemented an easy fix, creating short meetings at the start of every shift to inform employees of daily happenings so that staff could offer more to guests, improving customer loyalty, return visits, and spending. Experts laud Aziz for differentiating the MGM grand with top quality service from the employees.
Social Media Serves Up Creme Brulee
Marketing is key, whether you're a multibillion dollar company, or just a guy with a cart full of creme brulee. But just doing it isn't enough: you have to market effectively. Curtis Kimball, the man behind the Creme Brulee Cart, put Twitter to work for him amassing thousands of followers and growing his business by allowing people to follow the cart through the online service. Kimball engages with customers and develops a personal relationship with followers online, asking for suggestions on flavors and cart locations. Perhaps the most impressive part of this story is the fact that Kimball has no marketing budget (Twitter is a free service), yet enjoys an incredibly popular status and high ratings on Yelp.
Overreaching Products, Suffering Sales
You can't be everything to everyone, as Hickory Farms found out. A company that started out with holiday gift baskets including sausage, ham, and cheese at one point had an offering of 2,500 different products, sprawling the company and resulting in a loss of favor with customers. Recognizing this issue, Hickory Farms streamlined itself, slashing their number of products from 2,500 to 300 with more modern visuals, descriptions, and other features, including less packaging and more recycled content. The company also overhauled their website, making it easier to shop online. All of this streamlining resulted in a price reduction of 13% that Hickory Farms was able to pass on to their customers. Brand strategist Jennifer Woodbery believes that this was a smart move, making the most of Hickory Farms' trusted name and image with an effective rebranding of offerings.
Maintaining Consistently Good Employees
It happens all the time: good employees get a promotion, and suddenly, they're not so good anymore. Such is the case for cat shelter Paws Need Families, as Della, a cleaner turned assistant manager, then manager started arriving late, letting applications sit, and slipped on inoculations, all serious offenses. Instead of confronting Della directly, general meetings were held, and an assistant manager was hired to compensate for Della's shortcomings. Ultimately, Della never cleaned up her act, and was fired. Ken Blanchard, co-author of The One Minute Manager believes this situation could have been avoided with frequent meetings and support with a system of review, both of which can identify issues before they become real problems.
Recall Crisis Management
In 2009, Maclaren issued a recall for every stroller it had sold in the US for a decade, which came to 1 million units. The strollers were recalled so that a cover could be installed to prevent amputation of a baby's fingers, which could happen if the baby were to be in the stroller in the wrong spot. As a luxury brand, this incident was damaging even though it was a misuse of the product and not a defect. Experts believe that Maclaren did the right thing in the aftermath of the recall, asking for a fast track recall from the Consumer Product Safety Commission, and got out in front of the recall as it started spreading through the press, saving face and further embracing a mission of child safety.
Dealing with Late Paying Clients
We all hope that clients will pay on time, but the fact is that most businesses have to deal with lateness at some point or another. How you deal with it can make all the difference, and this case study reveals a smart strategy. When a client wrote to check in on the progress of work, a web developer replied that she was hesitant to work quickly for that client because she was still waiting on payments for month-old work. This immediately got the attention of the clients, who contacted her and discovered that their checks were not going to the right address. The problem was solved almost instantaneously, enforcing both leverage and rewarding positive behavior. However, it was risky, and the client criticized her for not sharing a warning before coming to a difficult point.
Supply chain disruption
In 2000, a fire at the Philips microchip plant affected phone manufacturers Nokia And Ericsson. The companies reacted in different ways, and ultimately, Ericsson did not do well, quitting the mobile phone business and allowing Nokia to win over the European market. While Ericsson had tied up all of its key components in a single source and planned to wait out the problem with the fire, Nokia worked to snatch up spare chips from other plants and suppliers, as well as re-engineered some of their phones to adapt to different chips from new suppliers. It's not hard to imagine what happened after that. Nokia kept trucking along, while Ericsson suffered from months of lost production and sales, allowing the market to be dominated by Nokia. This incident and fallout is a classic lesson in supply chain risk management.
Boise Automation Canada Ltd. Case Study
ENSR International Case Study
Medical Equipment Inc. in Saudi Arabia
Heidi Roizen Case Study
Boise Automation Canada Ltd. Case Study
Version 2015-06-11 (2012, Richard Ivey School of Business Foundation).
Official Link: https://hbr.org/product/boise-automation-canada-ltd-the-lost-order-at-northern-paper/W12785-PDF-ENG
- 1) Price with which Boise could have won the order.
- Thoughts and bullet points:
- According Jenny DeBour: 1.3 – 1.4m “we will likely be 25 to 50 per cent higher on price compared to“ the competition.
- According Dieter Haase: 1.4m “It is clearly worth at least a 20 to 25 per cent premium”.
- According Jason Li: 1.35m is “over 30 per cent [too] high”.
- Budget is most probably around 1m (often in full integer, not 0.9 or 1.1).
- Price at which Boise breaks even (lowest price possible): Between 1.12 and 1.17m.
- Lowest price of competition could be 0.7.
- Boise could at maximum claim a price of 1.04m, then they could get the order (according to Jennings).
=> For winning the order, Boise must take losses into account (worst case: also a negative contribution margin), but via supplements.
- Supplements (“Nachträge”) in Germany : Because the price is the most important criteria, many companies claim for a very low price (maybe even too low, but still with a positive contribution margin) to get the order. After that they tell the contractor that something needs to be changed on his/her elaborated specifications, what will lead to additional costs and the needed profits of the company.
- There are no concrete statements according the price of the competitors, only some vague evidence. This could be one red flag indicating that this order may be already assigned to JBT since Boise doesn't have any insider connections (mentor) within the company. According some statements of people from the buying center, the optimal price to win the contract would be 1.04m. The competition is way lower (in the worst case they only claim for 0.7m), but regarding Mr. Jennings, the higher quality will turn the page in this case. The problem is that Boise needs to charge a price ranging from 1.12 to 1.17m to break even. We don't know the cost structure of Boise, but if their contribution margin is still positive, they should charge the low price for future benefit. They maybe win Northern Paper as a future customer and benchmark for other orders in that area. Even if the contribution margin is (slightly) negative, via supplements, Boise could also prevent (huge) losses and benefit in the long-run.
- 2) How could Boise win this order despite their high price?
- Thoughts and bullet points.
- Members of the buying center (= decision committee) and their functions.
- Derrick Rogers (engineering staff) : Determine demand for updates, investments, etc. and work out specifications.
- Jason Li (engineering manager) : set up a cost-benefit assessment as starting point for the RFQ.
- Member of Corporate Finance : Assess the economic feasibility of this investment, weight against capital hurdle and priority of other projects, raise funds and determine the (maximum) budget.
- Bob Muma (mill manager) : responsible for the whole plant, every update, improvement or even change requires his approval.
- Dan Reynolds (Purchasing Department) : Work on specifications, send request for quotation to potential suppliers.
- Mister Jennings (Corporate Standards) : Evaluation of suppliers regarding subjective factors like reliability.
- Wood Chip Representative : ??? (no information about him/her).
- Contrary arguments and possible solutions.
- Jason Li: Doesn't want to justify a premium towards Corporate Finance.
- Convey the TCO (total cost of ownership).
- Only 10% of costs regarding any bigger investment are related to acquisition, 90% are subsequent costs which can be lowered by higher quality requiring a bigger initial investment.
- Common Law of Business Balance: Only buy things with the highest value for the lowest price. Since Boise is highest quality and lowered their price, they are the best for the order.
- Boise can connect the system with other systems of Northern and increase operative efficiency.
- Less production faults & production rejects, increased quality of goods.
→ Increase of customer satisfaction and CSR (very important for strategy of Northern).
=> Convey the higher (emotional) value for Northern.
- Jason Li: Elaborated specifications are exactly those Northern needs.
- Boise's offer included some characteristics Jason didn't know.
→ Questionable if he already made the best decision.
- Further increase in efficiency is needed for Northern to survive in this times of global, low-cost competition from Asia.
- Bob Muma: Best engineers already made their best decision.
- Don't underestimate the importance of new, future-oriented characteristics of Boise's systems.
- Importance of alternative points of view.
- “Fresh breeze” within the production process, estrangement from JBT.
- Offer some special services like maintenance or free and regular staff training.
- Bob Muma: Operators prefer uncomplicated, familiar systems.
- Unique help functions integrated in the Boise system enable an easy walk-through.
- Experience of former clients are very well.
- Individual customizable user interface ensures safe and easy handling.
- Knowledge of Boise staff useful for instruction of operators.
- Boise should offer demonstrations, show the interface to Muma and maybe some operators, prove that it is easy to handle.
- Advantages of Boise (in direct comparison to competition).
- Sticks out of the mass through an USP (high quality and best service).
- Connection with the systems (→ future technology), worldwide experience, already worked out a detailed plan for implementation (reduced time for completion.
- Disadvantages of Boise (possible improvements).
- Boise is known for exact implementation of customer needs, but can't meet them of Northern.
→ Supposes to know the needs of them better then they do.
- Trade-off between rapprochement with the “corporate guys” (Mr. Jennings) and the persons in charge for the production process (Jason Li, Bob Muma) who are much more important in the buying center than Corporate Standards.
- Allison could have tried to bring the buying center together and discuss any issues to take away uncertainties and convey the benefits of his systems.
- Top-level door opening: Connect with the customer on every level (Finance staff of Boise should be connected with finance staff of Northern, so the engineers, etc.).
→ Diamond relationships.
- 3) When did Boise lost the order?
- (a) Questionable if ever had a chance.
- Detailed specifications are already elaborated, only a request for quotation RFQ is sent to Boise, no request for proposal RFP.
- Specifications didn't fit with Boise's offer.
- Missed the chance to influence the specifications.
- Via top-level door opening, conveying the TCO or other benefits.
- Will justify the price, reduce the competition and align the hard budget plans.
- Jason Li and Bob Muma not willing to change the situation, just agreed on the predetermined specifications and Allison didn't try to convince them (enough).
- Price seems to be the crucial criterion, Boise can't hold up with competition.
- Only supporter, mentor, sympathizer is Mr. Jennings from Corporate Standards, no great influence, fixed on him and neglected the others.
- (b) Lost after the 9th May.
- Search for backing from the Corporate Standards leads to anger between him and Jason Li.
- Budget seems to be unchangeable and Allison didn't talk to Corporate Finance to convey the long-term benefits.
- Calls with Mr. Jennings are shorter → Searches for distance, maybe want to hide the bad news.
- (c) Doubts from Allison at 15th April.
- Allison is interpreting the statement of Jason Li.
- Possibility that buying center has already rejected Boise's offer at the first meeting.
- BUT: Assertion of Mr. Jennings from the 9th May indicate that Boise is still an opportunity.
→ Possible, but not very likely.
ENSR International Case Study
Version: May 27, 2004
Official Link: https://hbr.org/product/ensr-international/an/503075-HCB-ENG
- The overall problem of ENSR International.
- The effectively solve the existing problems, set up a problem statement to better understand the problems and find a solution easier.
- ENSR is offering services, Consultative Selling problem, provide information before the clients have to pay for it → Higher losses in case of lost clients.
- Financial trouble of the company is recognized, key drivers of success are analyzed.
- Behavior of Clients: Influenced by legal framework and externalities.
- Behavior of Sales Department: Influenced by performance of seller doer and by organizational structure.
- No incentives for 30 seller-does who aren't CSC managers to generate profits.
- Introvert behavior, only concentrating on own CSC.
→ Too few cross-CSC projects.
- 1) What are the advantages and disadvantages of organizing around geographies?
- Advantages .
- The near to the clients and industries or close contact to regional culture.
- Clear hierarchy, everyone knows whom to contact and superiors can support projects better.
- Working in a team to fulfill a certain project in a certain region leads to specialization.
- This special culture increases moral, motivation and indirectly efficiency.
- With own VP the CSCs have greater influence, more support and will receive requested resources faster (in the best case).
- VPs are accountable for the performance of their CSCs, have strong incentive to control them, (but can easily become overstrained).
→ Faster response on changing circumstances and quicker decision making process.
- Opportunity to spin-off single regions or even sell them (regarding the idea of Bob Petersen).
- Evaluate the performance of the CSCs in each region to assess whether some regions should be abandoned or supported more.
- Disadvantages .
- Many projects need comprehensive knowledge and support from other CSCs, therefore high travel and administration costs to send consultants into other regions.
→ Synergies can't be used effectively.
- Structure is less flexible and less dynamic than others.
- COO (and even CEO) must coordinate the actions of all VPs and control the CSCs (burnout).
- Single CSCs can lose the overview of the company and follow only goals they estimate to be useful for the company (but they don't know it better).
→ CSCs could act introvertedly and cause disputes.
→ Increased competition among the single CSCs (can also be positive if CEO wants to improve operate efficiency).
- Problems of under-utilization of capacity; every CSC is equipped in the same way to face the same problems with the best preparation, but in some areas (Camarillo, CA CSC) there are less projects and therefore too many people for to few work.
→ Maybe misallocation of capacity even worse.
- 2) How does the BDO solution look like in detail and what are the (dis-)advantages?
- Bob Weber suggested to establish a group of Business Development Officers (BDOs) to develop relationships with former, current and new customers instead of the “seller-doers”, who are primarily consultants (waste of potential).
- Hunter-Farmer discussion: Are consultants only hunters (capture clients) or also farmers (customer care)?
→ If not, problem of hand-over arises: Client is acquired by one person and has to deal with a different one after signing the contract.
- Company doesn't invest much time in acquisition of new customers, therefore some specialists could enhance growth.
- “Seller-doers” are paid a salary based on billed hours rather than on success rate.
→ BDOs are networking experts and would be paid by success rate and therefore invest more time and attention in customer acquisition, they are not distracted by consultant tasks, can focus only on networking and interaction with clients.
=> Limit the downside risk (in case of failure no / lower compensation).
- Company made bad experience with BDOs in the past, therefore abolished this system.
- Sending BDOs to clients failed to bring credibility, but competitors will probably do the same.
→ Kind of inconsistent corporate behavior, ENSR states to be very close with its clients, but on the other side sends BDOs.
→ New times, technological progress, changes circumstances may lead to a different result.
Fig. 1: BDO Solution Organization Chart
illustration not visible in this excerpt
- It seems to be a good choice to turn 25 to 50 of the actual “seller-doers” into BDOs, the others can focus on their consultancy tasks or, unfortunately, have to be made redundant.
- One very effective possibility could be to divide the BDOs into three categories:
- Premium Sale Officers deal with the most valuable clients and projects.
- Client Acquisition Officers meet and network with companies in the field of action of the CSCs to acquire new clients.
- SaleOfficers will deal with all other clients and projects.
- BDOs should be at the same level as the regional managers because they should work together (or at least stay in contact).
- Regional managers should know the concerns and performance of their CSCs and direct these information to the BDOs to improve the situation.
- Simultaneously the BDOs should inform the regional managers (and CSCs) about their actions and maybe about plans for the client acquisition (to see whether it is demanded, needed, intended etc.).
- 3) How could the compensation solution look like and what are the (dis-)advantages?
- Bob Kelleher suggested that a new incentive system would increase profitability.
- Now, only objective, measurable targets are taken into account and generate a percentage bonus based on basis compensation.
- Only motivation was a challenging work and a sense of societal contribution.
- New incentive system should take subjective things like effort or customer satisfaction into account.
- This will encourage seller-doers to take more risk and maybe come back to acquisition of potential clients and boost motivation of consultants.
- Consultants will focus more on customer value and sales growth will increase.
- But measuring such subjective factors becomes very hard and increases the afford (and costs) of the HR Department.
- This is also a monetary reward, maybe better to offer some fringe benefits (free access to a gym, own cheap canteen, company cars for private use) or other perks (maternity leave).
- Sometimes (as Anderson indicated) motivation is not the problem, but the huge workload and stress; maybe relief by hiring trainees or supportive workers for the “simpler” tasks.
→ Enhance the information provided by the research Department to enable consultants to know their clients and their situation better.
- 4) How does the key account program look like in detail & what are the (dis-)advantages?
- Kathy Anderson suggested that a key account program would boost sales.
- Teams of people (lets say 8 – 15 people each) should be created and assigned to the most valuable clients like Northfork Inc, the US government and American Aviation.
- Anderson indicated to create teams for the biggest 10, 20 or even 50 clients, but this will exceed all costs.
- After this three clients, there is a gap in gross revenue, therefore 3 teams should be implemented and be assigned to them.
- These teams are more flexible, staffed in an adequate way and have the demanded expertise.
→ Reduction of time delay, costs and administrative burden.
- Furthermore they specialize to the client, which makes a customer migration less likely and increases the total amount of sole source contracts.
- But this is very costly, especially because one client doesn't need services all the time.
- Problems can arise with the ratio of revenue and expenses.
- Also the company has no experience for such an approach, yet.
=> Assign a team to two big clients or one big one and two to three small ones located close to each other, but make sure these companies aren't competing.
- Positive (side-)effects of a strong relationships / a strong network are contact to new potential clients, influence on specifications or even shaping of projects.
→ “Big” clients are less likely to fall, therefore its a business relation for long time.
illustration not visible in this excerpt
Fig. 2: Key Account Program Organization Chart
- Anderson suggested that for each “bigger” client a single team was composed, therefore one (big) team will be assigned to all other clients.
- Would turn the company's organization from multi-divisional (regional) into more formal structures.
- 5) Which option should the company choose?
- A hybrid form of both, the BDO and the key account program solution.
- As indicated before, the idea of key account teams is very useful, but only for the biggest three clients; for all other clients the regional concept could be held.
- The BDOs should take care about the relationship to the current and potential customers and relieve all other consultants.
- This re-structuring may be very expensive and time-consuming, but this will increase operate efficiency and total revenue.
- Problems of the geographical approach still be there, but reduced and not for the biggest clients.
- For every client an individual cost-benefit calculation should be done to determine whether one project is profitable and should be followed or not.
→ Maybe losing some projects by this, but the BDOs take care about the acquisition of new clients, market is growing and demand increasing.
- Also considerable.
- Reduce the total amount of CSCs to minimize fixed costs and let more consultants work from home. Via Skype / Lynch contact between the active consultant visiting the client and the other experts can be established and knowledge be exchanged.
- If some research has to be done, if federal departments have to be contacted or something
 Further Reading: http://www.lifeofanarchitect.com/john-ruskin-common-law-of-business-balance/
 Image Source: https://salesbenchmarkindex.com/wp-content/uploads/2011/06/capturewiz025.jpg