What are two key organizational behavior issues in the following case? What can be done to remedy them?
The Anderson Corporation was started in 1962 as a small consumer products company.
During the first 20 years the company's R&D staff developed a series of new products that
proved to be very popular in the marketplace. Things went so well that the company had to
add a second production shift just to keep up with the demand. During this time period the
firm expanded its plant on three separate occasions. During an interview with a national
magazine, the firm's founder, Paul Anderson, said, "We don't sell our products. We allocate
them." This comment was in reference to the fact that the firm had only 24 salespeople and
was able to garner annual revenues in excess of $62 million.
Three years ago Anderson suffered its first financial setback. The company had a net
operating loss of $1.2 million. Two years ago the loss was $2.8 million, and last year it was
$4.7 million. The accountant estimates that this year the firm will lose approximately $10
Alarmed by this information, Citizen's Bank, the company's largest creditor, insisted that
the firm make some changes and start turning things around. In response to this request, Paul
Anderson agreed to step aside. The board of directors replaced him with Mary Hartmann,
head of the marketing division of one of the country's largest consumer products firms.
After making an analysis of the situation, Mary has come to the conclusion that there are a
number of changes that must be made if the firm is to be turned around. The three most
important are as follows:
More attention must be given to the marketing side of the business. The most vital
factor for success in the sale of the consumer goods produced by Anderson is an
effective sales force.
There must be an improvement in product quality. Currently, 2% of Anderson's output
is defective, as against 0.5% for the average firm in the industry. In the past the
demand for Anderson's output was so great that quality control was not an important
factor. Now it is proving to be a very costly area.
There must be a reduction in the number of people in the operation. Anderson can get
by with two-thirds of its current production personnel and only half of its
Mary has not shared these ideas with the board of directors, but she intends to do so. For
the moment she is considering the steps that will have to be taken in making these changes
and the effect that all of this might have on the employees and the overall operation.