Handling Change at Ferguson: Credit Function Essay

1463 Words Oct 14th, 2011 6 Pages
Handing Change at Ferguson: The Credit Function

Executive Summary John Culbert is given the difficult task of selecting the best approach that will capitalize on opportunities to increase the performance efficiency of the credit function without disrupting its current customer-oriented culture. His main challenge is the lack of a comprehensive system to evaluate the gains from centralization and the problems it could potentially create vis-à-vis the current status quo. Hence, we suggest a basic framework for him to evaluate the costs and benefits associated with changing the structure of the credit function. Given that the change is mandated by his managers, there are high potential cost-savings, and low risks associated with
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Thus, it is clear that there is a strong organizational push to redefine Ferguson’s strategy in lieu of the changing competitive landscape and adapt all main functions to better serve the new company objectives. Secondly, the centralization of the credit function will lead to several immediate benefits. Implementing the Charlotte model in other markets will put a proven credit manager to guide decisions of local credit managers of the different KOBs. A local SMCM will also allow for greater information sharing between functions and branches in a given market, providing superior services as a centralized contact for large clients who buy from multiple KOBs. Furthermore, some redundancies could be eliminated. For example, if a branch has a few credit managers with overlapping coverage, the low-performing managers could be dismissed. The credit function appears to overlap across various business groups and there are clear synergies that could come from empowering few strong managers in a given geography with responsibilities for more than one business lines. At the same time, having fewer direct reports will reduce the number of distractions and allow senior regional credit managers to focus on more effectively managing their geographical areas. There will be more time for regional credit manager to train and develop other…