Question 1. 1. (TCOs A and B) Writing a Management BoardMemo
Your Role
You are the manager of the Sales Department of The MedicalCorporation (TMC), a department that employs 25 salesrepresentatives. As the result of reduced revenues and increasedexpenses, TMC's Management Board has voted to implement a"right-size action" that could result in personnel reductions inyour department in the next two years. As the manager of the SalesDepartment, you are responsible for announcing the proposedright-size action to your employees.
Background
The Medical Corporation (TMC) is a worldwide marketer of medicalsupplies and services. Established in 1980, the company enjoyeddynamic growth during its first two decades as part of theflourishing pharmaceutical industry. TMC's revenues surpassed $1billion in just five years; its stock rose an average of 12 percenta year during its first decade, and per share earnings consistentlyexceeded industry averages.
However, despite revenue increases of over 10 percent each year forthe past twenty years, TMC's growth appears to be slowing down,partly because the pharmaceutical industry as a whole industry isnow being scrutinized for its excessive prices and decliningservice. Last year, for example, TMC revenue in the United Stateswas $5 billion, an increase of only 2.0 percent over the prioryear; non-U.S. operations generated $2 billion in revenues, a threepercent decrease over the prior year. Gross profit margins, drivenby extreme pricing pressures, have declined for the past threeyears.
In response to this declining performance, TMC's Management Boardrecently voted to "right-size" its worldwide business operations.The Management Board announced three areas of emphasis in thecompany's right-size action:
â¢increase responsiveness to customers through technology
â¢segment markets to pursue the best opportunities
â¢improve internal efficiency through a workforce "right-size"action
Right-size actions will include layoffs and reductions in thecompany's worldwide workforce, elimination of office space, andincreased use of technology and information systems to generate andmanage business. These actions are not only intended to bring TMC'scost and expense structure back in line with current industrylevels; they also will strengthen TMC's position as a global leaderin the pharmaceutical industry.
Expanded Online Presence
One of the ways TMC will increase responsiveness to its customersis to expand its online sales and marketing strategies. Theemphasis on an online presence will play a key role in widening thecustomer base and increasing sales without a significant increasein expense. The new online presence and strategies are expected todouble the number of online customers within 24 months of theplan's implementation.
When TMC made this decision, the company recognized that if the newonline strategies were successful, they would no longer need thesame sales force. Predictions are that if the new strategy issuccessful, the Sales Department could be reduced from 25 to about20 employees. Reductions in the Sales Department would not begin,however, until the Management Board is satisfied that the onlinesales expansion is successful, probably in the next 12 to 18months.
In the meantime, the manager of the Sales Department has been askedto identify five employees who could be terminated as a result ofthe right-size action. Terminated employees will receive a packagethat will include a $25,000 one-time cash settlement, medical anddental benefits for five years, and employment assistance fromDrake's Placement Service for six months. They will also be givenat least six months' notice of their termination.
YOUR ASSIGNMENT
Management Board Memo: Write a memo to the Management Board inwhich you describe how you, as the Sales Department Manager, willdetermine which sales representatives could be terminated as aresult of the company's right-size action, if this becomesnecessary, and how you will communicate the right-size plan, andits possible impact on the Sales Department, to the sales staff ina way that will minimize the morale problems that gossip about theplan could cause. You can communicate that you hope you will nothave to terminate anyone, but you should also communicate that youhave a clear, well-thought-out, and implementable plan ifdismissals are required. (Points : 60)
Question 1. 1. (TCOs A and B) Writing a Management BoardMemo
Your Role
You are the manager of the Sales Department of The MedicalCorporation (TMC), a department that employs 25 salesrepresentatives. As the result of reduced revenues and increasedexpenses, TMC's Management Board has voted to implement a"right-size action" that could result in personnel reductions inyour department in the next two years. As the manager of the SalesDepartment, you are responsible for announcing the proposedright-size action to your employees.
Background
The Medical Corporation (TMC) is a worldwide marketer of medicalsupplies and services. Established in 1980, the company enjoyeddynamic growth during its first two decades as part of theflourishing pharmaceutical industry. TMC's revenues surpassed $1billion in just five years; its stock rose an average of 12 percenta year during its first decade, and per share earnings consistentlyexceeded industry averages.
However, despite revenue increases of over 10 percent each year forthe past twenty years, TMC's growth appears to be slowing down,partly because the pharmaceutical industry as a whole industry isnow being scrutinized for its excessive prices and decliningservice. Last year, for example, TMC revenue in the United Stateswas $5 billion, an increase of only 2.0 percent over the prioryear; non-U.S. operations generated $2 billion in revenues, a threepercent decrease over the prior year. Gross profit margins, drivenby extreme pricing pressures, have declined for the past threeyears.
In response to this declining performance, TMC's Management Boardrecently voted to "right-size" its worldwide business operations.The Management Board announced three areas of emphasis in thecompany's right-size action:
â¢increase responsiveness to customers through technology
â¢segment markets to pursue the best opportunities
â¢improve internal efficiency through a workforce "right-size"action
Right-size actions will include layoffs and reductions in thecompany's worldwide workforce, elimination of office space, andincreased use of technology and information systems to generate andmanage business. These actions are not only intended to bring TMC'scost and expense structure back in line with current industrylevels; they also will strengthen TMC's position as a global leaderin the pharmaceutical industry.
Expanded Online Presence
One of the ways TMC will increase responsiveness to its customersis to expand its online sales and marketing strategies. Theemphasis on an online presence will play a key role in widening thecustomer base and increasing sales without a significant increasein expense. The new online presence and strategies are expected todouble the number of online customers within 24 months of theplan's implementation.
When TMC made this decision, the company recognized that if the newonline strategies were successful, they would no longer need thesame sales force. Predictions are that if the new strategy issuccessful, the Sales Department could be reduced from 25 to about20 employees. Reductions in the Sales Department would not begin,however, until the Management Board is satisfied that the onlinesales expansion is successful, probably in the next 12 to 18months.
In the meantime, the manager of the Sales Department has been askedto identify five employees who could be terminated as a result ofthe right-size action. Terminated employees will receive a packagethat will include a $25,000 one-time cash settlement, medical anddental benefits for five years, and employment assistance fromDrake's Placement Service for six months. They will also be givenat least six months' notice of their termination.
YOUR ASSIGNMENT
Management Board Memo: Write a memo to the Management Board inwhich you describe how you, as the Sales Department Manager, willdetermine which sales representatives could be terminated as aresult of the company's right-size action, if this becomesnecessary, and how you will communicate the right-size plan, andits possible impact on the Sales Department, to the sales staff ina way that will minimize the morale problems that gossip about theplan could cause. You can communicate that you hope you will nothave to terminate anyone, but you should also communicate that youhave a clear, well-thought-out, and implementable plan ifdismissals are required. (Points : 60)
