case digital equipmentcorporation case 2-4 Essay

710 Words3 Pages
1. As a potential product line manager at DS, what is your reaction to the memo in Exhibit 2?
For the product line managers the new system brings clarity and makes us more responsible. Specific goals for profit contribution, providing us with measurable assessment of performance, allow us to track and improve processes. What’s more with individual measurement of financial positions such as sales, revenues, costs etc. we can influence on each of them by increased level of responsibility for making profit. Similarly, each product line will have individually measured costs for each product which will contribute to cost control.
We would also explain the new system to our employees, its rules and the reason for implementing it.
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measurements, 2. transfer pricing and 3. the organizational structure?
The product line concept seems to be an appropriate choice for DS mostly because of the size of the market it is operating on and its complicated character which also has a reflection in variety of the products DS offers. This approach allows each product line to focus on its own goals, find problems occurring within the product line and undertake steps in order to solve them. As we mentioned before, the product line structure has a many positive aspects beneficial for the company. First of all specific, measurable goals, as mentioned before allow to quickly undertake proper actions and asses the performance. What’s more, it encourages managers to look more often into a finance practices and enhance cooperation between line managers and financial managers. Secondly, increased ability of the product and process development to work together support both manufacturing and development. Of course everything has its disadvantages, product line concept divide product lines into more independent and separate entities which may lead to the competition between each product line. It can increase the amount of disputes between business units and headquarters, especially about the transfer pricing.
5. Will the product line concept change the behavior of the division? Is there anything else DS can do to change the culture?
As mentioned in the previous question the competition may increase. The change from

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