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Question

Balancing Stakeholder Interest and Corporate Values: A Cummins Strategic Decision

style="color:#000000;">Case questions include:

 

  1. How well do Cummins' vision, mission, and value statements provide a framework for Cummins' decision to follow to the requirements of the EPA consent decree?
  2. Considering Cummins strategic decision whether to follow the consent agreement, build a table identifying:

a.       The key stakeholders interested in this Cummins strategic decision.

b.      The general claims the stakeholders place on Cummins.

c.       If the stakeholder wants or does not want Cummins to follow the consent decree.

d.      The reason for the stakeholder decision.

3.      What will be the total cost of ownership for the first year of ownership for (1) a truck purchased in October 2002 with a Caterpillar bridge engine and (2) a truck with a Cummins EGR engine? Present a table comparing the Caterpillar bridge engine and the Cummins EGR engine for increase in the initial purchase of the engine, increase in maintenance cost per repair (assume three per year), penalty per truck, and fuel consumption. For the Caterpillar bridge engine consider a 1.5 percent increase in fuel costs and for the Cummins EGR engine a 4 percent increase in fuel cost. Use $3.50/gallon as an estimate of the price of diesel fuel.

4.      Let's assume that Cummins complies with the consent decree and launches the EGR engine. What would be the impact of the total cost of ownership for Cummins' EGR engine on Cummins market share? Consider the effects in the short-term and long-term.

5.      How does engine technology development impact Cummins decision to comply with the EPA consent decree?

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