Pelican Instruments Inc

1. Discuss whether the structure of the executive compensation program is consistent with the corporate strategy for each company. At a minimum, consider the mix of compensation (i.e., fixed vs. contingent, short-term vs. long-term, accounting or stock price-based vs. non-financial-based). In your opinion, does the compensation program motivate executives to achieve strategic success?

We evaluated our company’s position in the industry, and found ourselves in an excellent starting position to further develop our products and match them to the industry’s needs. Our market share is adequate and we can advance further with our strategy improve and reposition our products in the coming years. We have underutilized capacity, which we intend to improve, while increasing automation to reduce costs. We have plans to improve our promotion to improve product awareness and with the appropriate product lines we will increase price to improve margins and better align our high-end product image. Our current financial position is optimistic, showing our leverage (Assets/Equity) at 2.0, when our goal is to maintain 1.5-2.0 overall. By utilizing the analysis tools we are learning what elements are driving demand, how to effectively tailor our products through R&D, how best to adjust our marketing and pricing, while lowering input costs, in order to improve margins and to ensure our stakeholders are all satisfied.

JJ has complained on behalf of the performance measurement system because currently his bonus is based off of production cost being less than 43 percent of sales. JJ believes that the production facility is operating as efficiently as, if not better, than it has before the expansion. Due to this performance measurement JJ’s ownership when from 25 percent to 8 percent and he is losing bonuses and annual dividends.

1. Given the background information about Howe 2 Ski Stores, discuss the feasibility of implementing lump sum bonus, pay for knowledge, profit sharing, and gainsharing plans. What plan or plans would you recommend that Howe look at most closely and why?

Kudler is planning to have an annual revenue increase by 5% within 12 months breaking it down to four categories. A quarter percent gain is anticipated in the projects launch as well as the training of employees’. Profits will increase by a half of a percent during the assessment and alteration of the project with the promotion of the Frequent Shopper Program taking place at this time as well. In each phase of the development customer satisfaction will increase so will revenue, which will lead to an overall increase of 4.75% (Kudler Fine Foods. (2004). Apollo.).

Value creation can lead to higher sales. In terms of competitive advantage, a product could offer more value to the customer for the same or lower cost. There are two ways this can be broken down: 1. Lower prices to generate demand in the market or 2. Increasing price to reflect higher value.

* Least expensive of the three strategies due to the lack of excess inventory and employee overtime

As we can see from the figures and the information given in the present case, the company is very profitable due to the ambition and well management done by its owner Mr. Jones. In this regard, we can see in “Table 2 in the spreadsheet”, that the company is taking advantage of the 2% discount offered by suppliers saving around $75,000.00 per year.

4. Differentiation is under loose results control. Managers are given freedom for decision-making at their department, they can decide on design of the products, marketing methods, raw materials, etc. as long as they provide high quality environmental friendly products and quality customer services. However, they have the 3-5% growth limitations that prevent them from behaving “too well”. They are rewarded for the same percentage as employees if the company makes profits.

1. What is the competitive situation faced by Wilkerson? The critical product in term of market competition is the pumps of Wilkerson Company. The pumps are Wilkersons major product line with a production of about 12,500 units per month. Pumps currently have the lowest gross margin among all products, because competitors had been reducing prices on pumps and Wilkerson adopted its prices in order to remain competitive and to maintain the volume. 2. Given some apparent problems with Wilkersons cost system, should executives abandon overhead assignment to products entirely by adopting a contribution margin approach in which manufacturing overhead is treated as a period expense? Our conclusion is, that they should not adopt

Also, according to break-even analysis operating with the single mold and excluding warehousing costs, a minimum of 12,035 units must be sold to break even. Under a similar situation with the double mold, 15,507 units must be sold to break even, which is about half of the optimistic sales projection. Also under the optimistic sales projection, a positive return on investment is expected. Because the company is turning profit,less additional investment is required. Additionally under the pessimistic and expected situation, the company turns losses, and under the optimistic projections, Chef’s Toolkit only has a net income of 13% of its revenues. Selecting Preferred alternative According to the above information and the projected pro-forma statements, Dale Reid should not invest his money in the company. The company’s lack of current assets, high expenses and low per-unit revenue create an unfortunate and unprofitable investment in pessimistic and expected situations. Only in the optimistic production and sales does the company begin to turn profit, but this profit is low. Chef’s Toolkit needs desperate restructuring and additional revenue sources before Dale Reid should invest. Developing

1. What is your evaluation of each of the three businesses? What is your evaluation of the managers who run them?

In differentiation strategies, the emphasis is on creating value through sustainable uniqueness. This can be achieved through product innovations, superior quality, or superior service, which is then sustained and leveraged through creative advertising; brand-building and strong supply chain relationships. Another requirement for a successful differentiation strategy is that customers must be willing to pay more for the uniqueness of a product or service than the firm paid to create it. A differentiation strategy will lead to higher firm performance only if buyers value the attributes that make a product or service unique enough to pay a higher price for it or if they choose to buy from that firm preferentially. If

* Since management compensation is tied to firm performance, managers are incentivized to keep costs under control and maintain profitability. However, it is important to balance cost-controls with

This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value-added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products.