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Mnh306 k101 25 assignment 02 first semester this

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MNH306-K/101 25 ASSIGNMENT 02 (FIRST SEMESTER) This assignment is based on study units 3, 4, 5, 6 and 8. Read the following paragraph and then answer the questions. SCOTT PAPER – A MIRACLE OR A HOAX? After acting for less than two years as the CEO of Scott Paper in Cape Town, Jack Munroe walked away with nearly R10 million in salary, stock options and other perks. Kimberly-Clark (which recently purchased Scott Paper) had agreed to pay Munroe and his loyal management team an extraordinary R7 million in the most lucrative agreement ever crafted in South African business. Munroe alone received R2 million in exchange for his agreement not to work for a rival company for five years, while five senior executives pocketed R1 million each. However, critics argue that Munroe and other former Scott Paper executives were being rewarded for doing all the wrong things. Soon after taking over, critics say Munroe’s team began making moves that suggested their time horizons were not very long. In late 1994 they slashed Scott’s R & D budget in half, to about R35 million, and eliminated 60 percent of the R & D programme. At the request of Munroe’s team, the marketing department began to generate weekly volume forecasts rather than monthly reports. The cost cutters not only went after R & D, they also forbade managers to get involved in any community activities because these activities would take them away from their business duties. They banned membership of industry organisations that had allowed managers to network with competitors. They also scrapped a yearly event at which Scott Paper met with its leading suppliers to improve relationships and thus get better prices. As a result of these policies, several communities lost generous corporate citizens, especially in the Cape Town area. More than 1 000 of Scott Paper’s employees lost their jobs during Munroe’s brief tenure. Scott Paper’s earnings more than doubled during Munroe’s tenure as CEO, but critics claim that Munroe engineered these illusory gains to maximise his pay and that of his close colleagues. They argue that Munroe cut plenty of muscle along with the fat, pumping up short-term results at the expense of long-term healthy growth and destroying employees’ commitment to the firm. To bolster their claim, Munroe’s critics point out that Scott Paper actually lost market share in the three major product markets (paper towels, bathroom tissue and facial tissue) during Munroe’s tenure. QUESTIONS 1 Does Scott Paper’s pay-for-performance plan support its corporate objectives of increasing profits and competitiveness in an increasingly competitive market? Substantiate your discussion with examples from the c a s e s t u d y . ( 6 ) 2 Explain the steps Scott Paper must follow to ensure that the pay mix for executive managers is internally aligned. (19) 3 Briefly explain the organisational factors that may influence Scott Paper’s decisions about pay level and pay mix. (12) 4 Describe the concept “pay policy” and discuss the different pay policy alternatives that are available to Scott Paper. (13) Total [50]
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MNH306 K101 25 ASSIGNMENT 02 FIRST SEMESTER This assignment...

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