The case focuses on Bob Richards, CEO of Central Canadian Vehicle Association (CCVA), a
medium-sized company that makes vehicle accessories like small trailers, roof racks, cargo
boxes, and bumper guards. Richards has been running the company almost entirely on his
own for the past two decades along with the help of the production manager.
As the company grew, it became increasingly challenging for Richards to manage operations
alone. Over the past three years, Richards managed to build his own team to manage key
organizational functions like marketing, purchasing, and human resources. However,
Richards’s team has not been getting along as well as he expected.
Issuers/ Problems:
Coincidentally, over the three years, the organization has consistently struggled to meet its
targets. After a discussion with Richards, there were a couple of issues that came to light.
While loyalty being an important element for Richards, he is being biased against the new
members of the team. Since the production manager and the accountant have been working
with him for decades, Richards is convinced that they would never make a mistake and that
they are hard workers. However, this has led him to having a hard time trusting the new
members and not adapting to the new market conditions.
Even though the marketing manager tells him about the high market competition, he does not
investigate these claims and assumes that the industry is the same as two decades ago. He
strongly believes in traditional practices, would disregard Just-in-time inventory system for
keeping inventory, which is increasing his manufacturing costs and causing him to miss out
on many opportunities.
Furthermore, the incentive plan that he developed is clearly ineffective. The senior managers
are not communicating to each other before making decisions because everyone is looking
out for themselves to make big bonuses.
Recommendations:
Richards should eventually leave behind his traditional methods and adopt modern
techniques that have been tested and proven to yield better returns for the company. He
should not be biased against the production manager and the accountant.
Richards needs to do a better job at allocating costs across products to figure out the actual
cost per product. This will help him set better pricing strategies and bring in more revenue.
Additionally, this approach would help identify and eliminate unnecessary expenses,
improving overall efficiency. Implementing a flexible budget would give CCVA a chance to
adapt to any changes to the market as well as create a wiggle room for managers to navigate
errors without significant setbacks.
Revising the incentive plan is also crucial. Shifting the focus from individual departmental
targets to company-wide goals would encourage to work together towards a common
objective. Instead of pressuring managers to achieve their targets at all costs, have team
discussions on where managers are hanging back and how the team as a whole could help
achieve it.