continued battered Burgmaster badly, Houdaile went to Washington with a pei cost
ID: 347964 • Letter: C
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continued battered Burgmaster badly, Houdaile went to Washington with a pei cost increases gives a dramatic depiction of supply snafus that resulted in delays and tion to withhold the investment tax credit for certain Japanese-made As an independent company, "Burgmaster thrived because the machine tools. Burgs knew their business."Holland writes Their departure under Hou- Thanks to deft lobbying, the Senate passed a resolution supporting daile was followed by an "endless and uitimately futile search for a Houdalilie's position, but President Reagan relused to go along. Houdai- better formula But, he conchudes: "No formula was a substitute for le's subsequent attempt to link Burgmaster up with a Japanese rival management involvement on the shop floo. also failed, and Burgmaster was closed In the end, however, Holland puts most of the blame for the indus- Holland uses Burgmaster's demise to explore some key issues try's decline on government policy. He targets tax laws and macro- of economic and trade policy. Houdaille's charge that a cartel led by economic policies that encourage LB0s and speculation instead of the Japanese government had injured U.S. toolmakers, for example, productive investment.He also criticizes Pentagon procurement policies became a rallying point for those who would blame a fearsome Japan for favoring exotic, custom machines over standard, low-cost models. Inc. for the problems of U.S. industry. This adds up to an industrial policy, Holland writes-a bad one. Holland describes the Washington wrangling over Houdaille in The point is well taken, but Holand gives it excessive weight. Like painful detail. But he does show that such government decisions are their brethren in Detroit and Pittsburgh, domestic tool-makers in the often made without much knowledge of what's going on in industry, He 1970s were too complacent when imports seized the lower end of the shows, too, that Japanese producers succeeded less because of gov- product line. The conservatism that had for years served them in their emment help than because they made better, cheaper machines. cydical industry left them ill prepared for change. Even now some of For those who see LBOs as a symptom of what ails the U.S econ the largest U.S. tool-makers are struggling to restructure. Blame the omy. Holland offers plenty of ammunition. He argues persuasively that government,yes. But blame the industry, too. the LBO crippled Burgmaster by creating enormous pressure to gener ate cash. As Burgmaster pushed its products out as fast as possible, he Questions writes, it routinely shipped defective machines. It promised customers 1. Wite a briet report that outlines the reasons (both internal and features that engineers hadn't yet designed And although KKR disputes external) for Burgmaster's demise, and whether operations man- the claim, Holland concludes that the LB0 choked off Burgmasters agement played a significant role in the demise. investment funds just when foreign competition made them most nec 2 Do you think that inadequate strategic planning was a factor that essary. As for Houdaille, it was recapitaized and sold to Britain's Tube resulted in the company's asking for trade protection? Investments Group 3 Can you think of a strategy that could have increased Burgmaster's But Burgmaster's problems had started even before the LB0. Hol- chance of survival? Explain why you think that strategy would have land's history of the company under Houdalle is a veritable catalog been etfective of moden management techniques that flopped. One of the most Was from April 17, 1989, issue that was too crude for complex machine-tool manufacturing. Holland mission, copyright O 1989 by The McGraw-Hill CompaniesExplanation / Answer
1. Numerous factors can be claimed for the demise of the organization. For Burgmaster, some reasons are mentioned in the case study and the rest can be inferred. The primary thing that may affect the organization may be the economy. Considering the face manufacturing organizations need to buy substantial amounts of material to manufacture their item, the costs of these supplies may have gone up since the last time they were obtained in this way expanding the amount the organization needs to spend to get them. Another external factor that assumes a part for the demise of Burgmaster may be the competitors. As the competitors were able to manufacture the product at lower cost, they can bear to offer them at a lower cost too. Therefore either constraining Burgmaster to bring down their costs, cut costs (which could lessen quality), or leave business. The last factor that was specified in the reading material was the way that the business had a declining pace against their government policy. The primary point here that influenced the business was the tax laws and strategies in the macroeconomic perspective that supported activities against business. These elements won't have happened at the same time, but rather after some time the accumulation of them both could have assumed a noteworthy part in the destruction of the organization. Also, it has been mentioned that the Managers were doing the work of regular employees and were not doing the work for which they were responsible. Also, they were looking for a better formula and so they deviated their energy in discovering the new formula and didn't focus on their primary work. These external and internal factors were seen responsible for the demise of the company.
2. Yes, because trade secret is something which gives a competitive edge to the company but that was not protected by the managers and so that was also the core reason for the demise of the organization.
3. The primary thing that should be done to improve the situation in this organization is to adjust with the changing market dynamics. In the event that this implies utilizing more automated devices rather than manpower, so be it. This would decrease the long-term costs and enhance the productivity of the whole line. This is on the grounds that machines don't require breaks, vacation days, they don't become ill, and they don't arrive late or anything to those methods. Truly, they may glitch from time to time, but with a couple of technicians to run and fix the machines expenses will enormously be decreased. Another strategy that might save their organization may be to merge with another, more successful organization. Along these lines, they can work off their success and correct things to raise the figures.
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