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Hanson Wessling Contribution

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Hanson Manufacturing Company Hanson Manufacturing Company In February 1993 Herbert Wessling was appointed general manager by Paul Hanson, president of Hanson Manufacturing Company. Wessling, age 56, had wide executive experience in manufacturing products similar to those of the Hanson Company. The appointment of Wessling results from management problems arising from the death of Richard Hanson, founder and, until his death in early 1992, president of the company. Paul Hanson had only four years’ experience with the company, and in early 1993 was 34 years old. His father had hoped to train Paul over a 10-year period, but the father’s untimely death had cut short this seasoning period. The younger Hanson became president after his …show more content…

from the 1992 profit and loss statement (Exhibit 2). These monthly statements were his basis for making minor marketing and production changes during the spring of 1993. Late in July 1993, Wessling received from the accounting department the six months’ statement of cumulative standard costs including variances of actual costs from standard (see Exhibit 4). They showed that the first half of 1993 was a profitable period. During the latter half of 1993, the sales of the entire industry weakened. Even though Hanson retained its share of the market, its profit for the last six months was small. In January 1994, Samra announced a price reduction on product 101 from $9.41 to $8.47 per cwt. This created an immediate pricing problem for its competitors. Wessling forecast that if Hanson Company held to the $9.41 price during the first six month of 1994, their unit sales would be 750,000 cwt. He felt that if they dropped their price to $8.47 per cwt., the six months’ volume would be 1,000,000 cwt. Wessling knew that competing management anticipated a further decline in activity. He thought a general decline in prices was quite probable. The accounting department reported that the standard costs in use would probably apply during the first half of 1994, with two exceptions: materials and supplies would be about 5 percent above standard, and light and heat would

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