Formosa Plastic Group Case Study

The Royal Bank of Scotland - just like many other banks and businesses - paid out its managers considerable bonuses for their performances. Managers at RBS started maximising their bonuses by aggressive actions such as take overs and investing in complex financial products. These actions caused the profits of RBS to grow rapidly, which meant high bonuses for the managers. These actions, however, also meant the stability and financial safety of RBS on the long-term got worse and worse. This was not a problem for the managers as they had already earned their bonuses. A different bonus structure probably would have prevented the reckless actions of the RBS managers.

This communication process had a rocky start. Built originally on a time-expense model, partnerships between divisions were strained due to conflicts over time and resource allocations. The company ultimately placed the head of P&C as the new leader of IS. This helped create a user orientation within IS and established good relationships with other divisions.

I would argue that the unlimited upside and downside of a manager’s bonus potential based on a single business unit’s performance causes great chaos because it may be driven by factors beyond one’s control and not necessarily as the result of “true” strong performance. Yes, the upside is great! In 2000, the Dermatology group stands to pocket 200+% of their target bonus due to a competitive exit. However, Dermatology’s favorable EVA was driven by unsustainable share gains, a fluke in the market.

The second issue, a lack of effort to reach the company’s stated goals could possible a two-fold issue. It is possible that these goals must be measured both in production count and in production quality. Management may be able to address the second issue and the third issue (no reward for achieving the company’s stated goals) through creating a recognition program and evaluating the level of bonuses given to employees.

The products limited company does not understand the importance of goal oriented production. Each employee has a different goal in mind and in return none are getting reached. The president wants a quality product with efficient production; while the managers want mass production in a short amount of time. The laborer’s are getting over worked because they try and produce a quality product, but is impossible with the push they receive. In return the president is angry at the managers for the poor quality, while the managers are angry with laborers. It is a big circle of arguments that does not get solved.

The problem with most financial incentive plans is that they become an expectation, which means they are no longer motivating better performance but merely maintaining the status quo. Staff may come to view the additional cash as part of their normal compensation. They may even start depending on it. After the plan expires, morale (and results) can suffer as staff perceive that you took something away from them.

“In order to be successful in that case Mr.Dees manages the conflict constructively. He generated the current solutions and searched fort he common acceptable solution. Also asking to the team members shows that he triedto figure out what they have learned. In addition to this, he gave importance on Rational Goal Model and to its analysis. He focused on providing a vision that inspires followers and justifies the organization. To achieve this vision, the steps needed to be taken were clarified fort he optimum effectiveness.”

worldwide to serve the customers and is famous for the variety of products that it provides in the

The company formed a joint venture with Li & Fung Retailing in 1999 to expand its presence in Thailand, the Philippines, and China.In early 2000 the company hired John Eyler away from FAO Schwarz as president

b. Heterogeneous goals and priorities. Each function’s different goal and subunit orientation causes it toview problems differently. Subunits have become competitive as the attempts of one to achieve goalsthwart the attempts of another.c. Bureaucratic factors. Rondell’s structure has evolved historically and status inconsistencies havedeveloped among different groups and managers—between the heads of R&D and engineering. Althoughthe head of R&D, “Doc” Reeves, formally reports to Frank Forbus, the director of engineering,informally Reeves has more status and power. The manufacturing manager is concerned about his lack of a degree, which he believes lowers his status, so he deliberately causes problems for other managers toincrease his power and status.d. Incompatible performance criteria. Each function is evaluated according to its goals, so when slowengineering design raises manufacturing costs or results in lost customers or penalty clauses in customer contracts, functions come into conflict.e. Competition for scarce resources. Some functions, such as R&D, can command whatever resourcesthey want. Engineering services is running very lean, its engineers stretched thin, and no resources for aneffective preproduction unit. Given that profits have fallen, competition for resources might increase,which will worsen the

In observing the Franklin Company, it is evident that there is a need for change to help the company with its present problems. The managers’ perception is that the organization is in a state of volatility. Which has resulted from a lack of growth in sales and a competitive advantage. There is a felt need to ascertain new ways of doing things. In the Franklin Company situation, it was revealed that every department has its own ideas and feel they have the right answers to overcome their problems. They all want to play an important role in the company growth, however they have different perspectives on how to fix things. No matter what level of professionalism is involved, conflict is inevitable. For example, there are several issues that hinders the departments communication, collaboration and trust. In order to implement change, all three key element need to be present but they are often hidden. After the meeting with the management team, a OD practitioner decision was made to plan and implement structural, technological and behavioral strategies to improve the condition and functioning of the Franklin Co.

Jim Shine’s business model was excellent as per the business’s requirement. He took up the opportunity of Chinese products having very low cost and a high margin of profit. The 80-20 profit model was formed where only 20 percent of the products sold had a 80 percent profit margin. His business model was designed with excellence with a vision very well stated. Jim Shine had his business running with a sales force for a distribution channel. He believed his sales commission structure was well to do till one of his employees Nicole Landis maximized her sales productivity and cracks started being visible in Jim’s commission structure. It was seen, while making the structure Jim put up lucrative commission percentages on high quantity of products sold as he never thought any employee would outperform those sales targets. Jim Shine never realized a sales manager’s role stands very effective if there is an unbalance in the sales force. He found Nicole’s extravagant performance very superb as

In reverse, P&G promoted the continuous improvement of logistics services of Paogong which has been the today's leading third-party logistics company.

Bonuses under the stretch method are based on annual performances, but payments are made every quarter. And each quarterly bonus payment is only at 80% actual in order to save management from paying out bonuses that may not be actual. Opponents to this budgeting technique cited that targets were too optimistic, and that rewards were based on complex and subjective measures. And because managers could still receive a small bonus at 60% of budget, bad habits started to form.

This case is about implementation of a new “shared vision” concept within The Analog Division of Motorola Company. In 1993 Analog division was a major manufacturer of analog products in the world and had its divisions in many different countries. In other words the division had strong global presence. In order to create more efficient global company, Alison and John have decided to develop new shared vision within The Analog Division where managers would be involved directly and indirectly in the decision making process. Before the new vision development, Analog Division and its managers was very limited in decision making. Because they had such a strong global presence their