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Note: Details on the Assignment are at the end of the Case narrative. The
perspective with which you should read the case is that of a member of team
from an established management consulting firm. The key task if the
presentation of a pitch to Ashridge Automotive to understand a major
review, based on the situation in the Case. See the end for more details.
Case Study: Ashridge Automotive Parts Inc.
Geoff Hartwick’s heart sank as he quickly bundled the kids into the car for the
short trip across town to the day-care. Joshua seemed to be coming down with
something. With Elise, his wife, out of town on business, Geoff really should be
staying home to look after their son today. But today was going to require all his
attention at work.
He could feel his blood pressure rising as he contemplated the upcoming board
meeting. He had joined the venerable Ashridge Autoparts Manufacturing 15 years
ago, straight out of business school. His rise had been meteoric and now he was
CEO of the privately-held company. Life and business had certainly been hectic –
juggling a young family and a demanding career had not been easy. But it was
never more difficult than now. Competition was fierce and the automotive
industry was in disarray. Parts manufacturers like Ashridge were battered on all
sides. The issues Geoff now faced did not present the kind of clear picture he
liked. In fact, he felt overwhelmed with data, impressions but no real sense of the
underlying issues. And, to add to his stress, the new Chair of the Board, Rajiv
Aggarwal, seemed to be possessed of a sense of mission, a desire to fix all of
Ashridge’s problems. He was a real activist. Board meetings had become a
regular test of management’s grasp of the business and the issues it faced.
Monday morning’s Board meeting promised to be a tense face off between Geoff
and his nemesis, Rajiv. The primary issue was, of course, the labour unrest
throughout the company. Everyone knew the story – no pay increase for the last
three years for hourly paid plant workers while management bonuses continued
unabated , a point that the union made frequently to any media that would talk to
it. But, underneath that lay some pretty daunting performance questions, some of
them aimed squarely at Geoff himself.
Yet, Geoff’s Chief Financial Officer, Hilary Seguin, couldn’t seem to connect the
dots any more than Geoff had so far.. Why were we so far over budget on plant
payroll expense? Hilary seemed smart enough – a Queen’s MBA and a CA earned
at Deloitte - all the right qualifications for the job, and brainy too. But she hadn’t
been able to explain this one. It just didn’t add up – no pay increases for plant
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workers, falling demand for our product and yet the plant payroll expense was
way over budget. Hilary had embarked on a cost containment exercise and had
eliminated or frozen all non-essential expenditures. Gone was the free coffee,
executives had to travel economy class and all media and advertising was
stopped. But that still wasn’t enough to offset the labour cost issue. Geoff
wondered whether Hilary was really worth that bonus cheque she just received; it
just didn’t seem right that the company missed its objectives and yet senior
management staff received a fixed percentage of their salary as bonus (the
percentage increased with each year of service as the Ashridge family valued
loyalty above all else), with no linkage to performance.
Rajiv was similarly anxious as he drove into the office, anticipating yet another
tangled encounter with management. He was a person who always tried for clrity,
especially when running a company or on its board. Here he felt he had fallen into
a swamp. He needed a strong coffee, and his usual Starbucks brew gave him the
required lift. But he always resented the time spent in line waiting for the
unreasonably chirpy “And how are you doing this morning?” Still, it was a
business formula that seemed to work for Starbucks, everyone on their team
seemed really engaged. Rajiv always found it interesting to compare the
Starbucks experience to that offered by Tim Hortons – there was something about
their business model that seemed to justify the premium price; it was more than
just the coffee.
He had been asked to take on the role of Chairman by the Ashridge family who
controlled the company. His mandate was to get management on track and to
ensure the company dealt with the full range of issues it faced. The family could
see that something was wrong, but was reluctant to point fingers as they viewed
their senior people – and all their staff – as family themselves. Rajiv’s first few
months in the role had convinced him that the Board and management needed to
get a better understanding the risks they were now facing and get better control
over the business. The elusive key to success seems to be to get people on side, to
buy-in and commit to the strategy, but this was not happening so are. Geoff
seemed so defensive whenever legitimate questions were asked of him. And Rajiv
could not understand a word that Hilary said; “Typical accountant!” he thought,
“All jargon. She should get to the point.”. It wouldn’t have been so difficult if
they had an accountant on the Audit Committee. Come to think of it, the Audit
Committee hadn’t met in over a year - that needed attention, but Rajiv just had so
many priorities.
Beyond the concerns of meeting the current year’s budget and what that meant in
terms of risk exposure and future business plans, Rajiv was particularly troubled
by the company’s inability to attract and retain sufficient young engineering
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talent. His long-term vision for the company – one that he held dearly but had not
managed to get the owners and management, let along the rest of the Board on
side on - entailed shifting away from the price-sensitive business of component
stamping and getting into a higher value-added product mix that would
differentiate the company from its competition and allow for better margins. But
that vision depended on the company’s ability to innovate, which in turn required
young engineers. Two to three early career recruits were brought on annually,
usually poached from other auto parts manufacturers with the offer of growth
opportunities. Engineer attrition was inexplicably high, with most leaving within a
year or two of being recruited. No exit interviews were performed, but Rajiv
suspected that the company simply didn’t know how to engage Millennials.
However, there was no full analysis of the situation coming from HR, when was
swamped in constantly recruiting. No exit interviews. On-boarding, as we will
see, was more like sink or swim than joining in.
Meanwhile, the company’s growth strategy was failing miserably. This strategy
stressed leveraging the expertise and good service of the firm in its traditional
product areas. Production was down and sales were down even more. No one on
the shop floor seemed concerned “It’s management’s problem” being the standard
response to inquiries about falling productivity.
Caroline Brown was in charge of production. She faced increasing quality
problems with her key performance measure of “ppm (parts per million)
defective” steadily and uncontrollably increasing. In her darkest moments, she
even wondered if plant staff were deliberately sabotaging quality. Yesterday, she
had bumped into a recent new-hire from Frobishers – Daniel Smith - who had
complained that the Quality Control process was still manual – at Frobishers,
apparently, QC is facilitated by automated scanning equipment resulting in faster
through-put and fewer missed defects. Ashridge still relied on visual inspection by
a team of dedicated QC Inspectors. Visual inspection had been a bit of a
bottleneck and so Caroline had compensated by keeping finished parts inventory
levels higher than would otherwise be required – just so she could deliver to their
customers on a rush basis without having to deal with delays in QC. It seemed to
work and she had not thought that QC required any further management attention.
However, it was a work-around a problem, not the solution to it. Maybe QC
needed some QC.
Daniel Smith had indeed just joined from Frobishers. He thought he needed a
change but had no idea what lay in store for him at Ashridge. It’s been four weeks
already and still no induction program. No-one seems to know what’s expected of
them, morale is low and he’s never once heard anything about the company’s
goals and business plans. Quite a change from Frobishers. He did mention to that
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woman, Caroline Brown, that he thought a little investment in automation was
long overdue at the plant – but wished he’d never mentioned it as clearly she
didn’t appreciate any feedback from mere plant workers.
Daniel worked for foreman Sammy Medora. A nice guy but fairly high-strung.
Sammy had hired Daniel for a production job even though, clearly, there was
insufficient work to do. Sammy said he had to maintain headcount and even had
them working overtime on Saturdays (make-work projects, thought Daniel,
producing stampings for inventory – why bother producing inventory without a
specific customer order?). Sammy said if he didn’t maintain the headcount and
hours in his department, he’d have his budget cut; then what would happen to
Sammy’s job, how would he afford his wife’s frequent visits to her stylist, his
kids’ tuition? As a new Canadian, Sammy was particularly proud to tell his family
back in the Philippines that his two kids were attending Queen’s University, a
Canadian Ivy League school! But wow, the tuition was expensive.
Sure, Sammy said, things were slow, but they’d pick up soon. Management had a
growth strategy, whatever that was, so surely things would be growing soon. And
once that growth started, they’d be able to use up all that finished goods inventory
currently sitting in rented storage. Besides, no one in management seemed to be
tracking his work levels and output relative to sales or targets. In fact, Sammy,
who really is the linchpin in that link, was not aware of sales targets or sales
performance. He built the product. He didn’t sell it.
Pay was not Daniel’s primary motivation. Just as well. No bonus plan. And, as
he’d discovered, no pay raises for 3 years. Some of the plant workers were quite
agitated about that and frequently asked why they should care about the success
of the company when clearly the company didn’t care about them.
On his way into the office, Geoff’s cell phone rang. He pulled over to take the call
and could see it was Hilary calling. Joshua did not look well at all and this added
an additional anxiety to Geoff’s voice. “What’s up Hilary? Everything OK for
this morning’s Board meeting?” Hilary advised that the bank was anxious about
the company’s poor current ratio and had been asking for it to be rectified for a
couple of months now. Today, the bank had called to say that it was cutting the
line of credit from $1 million to $750,000 and unless the current ratio was
improved from 0.9 to 1.25, would be looking to cut the line to $500,000 next
month. “The banks are always concerned about their own hides” she said
(demonstrating a little too much detachment for Geoff’s taste – he just wished
she’d bring a little more enthusiasm and drive to her role). So, this was going to
be the crisis this week, thought Geoff. What on earth will Rajiv say when he hears
that? And Joshua clearly has a fever, what kind of a father am I turning out to be?
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Having arrived early for the board meeting, Rajiv’s attention was caught by a
stack of old publications in the reception area. One dated three years prior, was an
Ashridge Staff Newsletter proudly proclaiming details of the business plan for
that year. Intrigued, Rajiv asked Jessie, the receptionist for a copy of a more
current edition. “Oh, that was stopped three years ago Mr. Aggarwal. We’re very
cost conscious, always looking for ways to cut costs here you know”. Just then,
Geoff arrived, having hastily dropped Joshua and his sister at the day care and
feeling drained already. The assembled members of management and the Board
walked along the hall to the boardroom.
The Board meeting followed the usual agenda, with a review of results to date and
outlook for the balance of the year. Given the rise in labour costs and reduction in
sales, one Board member commented, “This is a formula for a major problem.
What is happening to turn it around?” “Good question,” chimed in Rajiv. Geoff’s
response centered on sales efforts and the state of the market. “There is not a lot
we can do in these economic times. It is a storm to be weathered.” This time
Rajiv’s blood pressure shot up. As expected, much discussion was given over to
labour unrest at the plant, with concerns expressed about low employee morale
and high labour costs. Heated discussion followed over the company’s banking
woes. The Board was blind-sided on this, never having had it identified as a risk
factor in the past, or one that needed to be mitigated. Both Geoff and Hillary said
that they had had no prior warning, nor had they sat down with the bank to review
their current pressures. With considerable vitriol directed at the bankers “who just
do not understand our business”, the management team felt that the Board should
exert some pressure.
Under “Other business” Rajiv invited management to share competitive insights
gained since the last meeting and it was then that the Board learned of Frobisher’s
latest innovation, which entailed the off-shoring of their engineering function to
India. Rajiv wondered if this had merit for Ashridges and asked Geoff to develop
a decision support framework that would allow the Board to evaluate future offshoring proposals. Rajiv asked if there was anything else on the horizon that they
should be aware of. Geoff said that with the complex situation in the plant, it was
difficult to get any outside perspective. Rajiv wondered is this was something the
Board could and perhaps should help with.
Geoff left the meeting feeling more anxious than ever. The Company continues to
miss growth targets, is unable to recruit and retain the talent it needs to innovate
and is being assailed by competitors who are better at cost reduction. No one,
Geoff felt, had yet seen the big picture. In truth, Geoff had to count himself in
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here too. Was he at the end of good run? If so, what could he possibly do to shift
gears here. Something fundamental is wrong, but what is it?
At this point, Geoff decided to take the lead here and try to pull things together.
Otherwise, Rajiv would simply keep at him until he found the hook to dump him
and find his own CEO. Geoff could count on the loyalty of the Ashridges, but he
was fool. There was even a limit there. It was called the bottom line. As he was
still in the building, Geoff found Rajiv and asked if he could talk. “Look, I am
getting a strong sense of your frustration with me and my team. Your body
language alone speaks volumes. If I were absolutely certain we were on a
profitable and sustainable course, I would be more than ready to butt head with
you until we found a way to work together. But, I am not. I see issues but I have
yet to put it all together. I think you see problems too. I suggest we find a way to
break this impasse. Maybe we just need to bring in some help to lend us some
perspective and do that analysis we just don’t seem to ever get to. What do you
think?” Rajiv thought to himself, “Step one, finally.”
The two agreed that they would talk to the Ashridge family together to suggest a
major corporate review. They would argue that the expense of brining a top flight
firm with its brightest and best would perhaps help restructure the issues and give
them a way forward. The Ashridges readily agreed, relieved that they did not
have to go down the route of a managerial blood-bath, at least for the present.
Your Assignment
Each team identified by the instructors represents a leading management
consulting firm invited to give a proposal to work with Ashridges (“the
company”) to address the needs that have emerged from this case. As this is a
proposal, your objective is not present solutions to the problems, but to convince
the review panel (made up of Geoff and Rajiv) that you have
 developed an understanding of the situation,
 have a plan for review and
 have the talent and experience to deliver a final set of usable
recommendations.
The company has specified that the winning proposal must contain the following
elements:

An executive summary containing your understanding of the company’s
needs and a succinct case for appointing your firm.
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899 Financial Literacy for Non-Financial Managers 2014

An assessment of the risks the company faces to achieving its goal of
sustained growth in its business, and specifically an assessment of the
finance and HR issues faced by the company. It is understood that this
assessment will be of a preliminary nature and the successful bidder will
be required to undertake a comprehensive issues assessment exercise after
appointment. The assessment will also determine what further analysis or
information not presented above would have to be gathered to make the
recommendations useful.

A preliminary workplan identifying potential recommendations that the
bidder anticipates will most likely address and resolve the issues
identified. The preliminary workplan will assign a priority to each issue
and related recommendations. In addition to the identification of potential
recommendations, the bidder will briefly identify what further work is
required to confirm or change the preliminary assessment and
recommendations.

A staff budget showing level of staff to be assigned, relative roles and
anticipated time to be committed to the project. A description of level of
effort by team member should accompany the budget.

A description of the methodology you will employ in conducting your
work.
The content element that the company will consider most influential in making its
decision to award the contract is the identification of issues and the development of a
preliminary work plan.
Bidding firms will present their report using PowerPoint on November 26th and will be
afforded 20 minutes to present to the selection team, comprising the CEO and Chairman
of Ashridges. Time over-runs will not be permitted and material not presented in the 20
minute timeframe will not be considered by the selection team. Each team will present
the selection team members (2) with a copy of their presentation as well as forward an
electronic copy – in advance – to Len Anderson and Andrew Graham.
To facilitate preparation, bidding teams will be afforded the opportunity to ask questions
of the selection team on Wednesday November 19th. One week will be allowed for teams
to develop a proposal.
Marks will be awarded based on the rubric established and attached to the course outline.
The decision of the selection team as to contract award is final.
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In order to avoid competing teams overlapping in the lobby and waiting around to make
their presentation, each team will present according to the following timetable. No other
class attendance is required that day.
Team Deloitte:
Presentation Time:
0830-0855
Paul Armelin
Mary Theresa Davis
Lauren Flewelling
Michael LeJeune
Laura Pickard
Team McKinsey &
Company: Presentation
Time: 1000-1025
Sean Cavanagh
Tristan Difrancesco
Nicollette Huang
William McMillan
Aleksandra Whistle
Team KPMG:
Presentation Time:
0900-0925
Alissa Bryers
Rachel Davis
Abbey Goodine
Jie Li
Christopher Simon
Team: PWC:
Presentation Time:
0930-0955
Alexander Carroll
Daniel DiCroce
Theresa Hillis
Morgan MacKay
Caleb Stennzl
Team Boston
Consulting Group:
Presentation Time:
1030-1055
Michael Cunninghom
Marina Eckert
Anchel Kumar
Ernest Kevin Mistica
Team Ernst & Young:
Presentation Time:
1100-1125
Morgan Oddie
Kaleigh Pinto
Daniel Spadafora
Apostole Christos
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