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Case 12-2. Crow Point Cabinetry

1.What is the strategy of Crow Point Cabinetry?

Crow Point Cabinetry first strategy is that it got rid of the management layers in the
production department and formed a team-based management system to empower
employees. Then it implemented a gainsharing incentive system to its employees to
reduce labor costs and increase earnings of employees. To prevent backorders
from customers, a penalty/reward system was used and it worked bring in more
satisfied customers. And lastly, communication among employees, between the
employees and the management team and between the shareholders were kept
open because of the team-based structure implemented.

2.What is responsible for the companys turnaround?

Mr. Brian Stowells move to lay out the company vision and goals for the employees
started the companys turnaround and improve the performance of the company.
But it still took painstaking effort to change the existing systems and improve
processes. Eventually, the employees responded by being productive and return
the favor to the company

3.Is the Crown Point experience transferable to other business settings? Yes it is
transferrable, especially to growing companies that need management control
systems as they grow. It is important that the company will set its vision and goals
like what Mr. Stowell did and pursue changes to realize these vision. Management
will eventually encounter some resistance from these changes but will consistency,
the efforts will soon be rewarded as long as the employees will appreciate the
benefits to them.

The Transition In Companys Management Style Business Essay

At the beginning of the case, in 1993, what was Crown Point Cabinetrys strategy?
Describe that strategy using terminology we discussed in class. In particular you
should ensure that you mention the Critical Success Factors inherent in that
strategy.

Crown Point Cabinetry adopted a multiple level strategy specifically that of related
diversified firms, in 1993 when the managerial and operational activities were
operating below the expected standards. Despite the continual growth in revenues,
employees were suffering. This implied that financial management was problematic.
The same effect escalated absenteeism figures by day and in turn, a high employee
turnover was taking the lead. As a strategy, introduction of multiple level technique
improved employer-employee relationship through team-based management. The
efficiency of the remuneration methods improved, as the grievance system and
promotion of workers became a responsibility of the workers.

The major components of multiple level strategies entail creating a distinction

between corporate strategy and business unit strategy. The corporate strategy
identifies the overall organizational goals and their projected financial performance
and expenditures. Development of these activities occurs at strategic level
management but implemented by tactical and operational managers. These
managers have the sole responsibility of ensuring that the companys objectives are
in line with the priorities in the market industry. The business unit strategy meant to
enhance contact between managers and employees, which fastened problemsolving issues influencing employee performance and implementation of decisions.

When a company operates related but diversified firms, in terms of specialization,

the cost of operation reduces. This is attributed to the synergy that arises from
sharing of common inputs and competencies in the company. Multiple level
strategies at Crown Point Cabinetry have brought order in the production process by
synchronizing diverse activities and forecasting the future operational demands.

Who are Crown Point Cabinetrys most important 5 stakeholders? For each
stakeholder, identify and explain their interests and needs with respect to the
activities and performance of the company. Are there any particular stakeholder
needs or issues which will require particular attention in the design of the
management control system (be specific)

Various entities in Crown Point Cabinetry Company have direct interest to the
performance of the company from its inception to date. Regardless of the many
team players who ensures that the firms objectives are achieved (operational
managers and other employees); a few strategic entities are recognized as the
backbone of the entire company. Among them is Norm Stowell, the founder of the
company Crown Point Cabinetry. He is interested to see that the company succeeds

and the employees production is at their optimum best, but at a low or manageable
cost. Consequently, Norms interest in the security of the employees at work place
motivated him to institute a safety program under his stewardship. These implied
that employees become self-conscious of their workplace safety. Furthermore, his
complete withdrawal from the management position implies that he had trust on
the current management performance. Therefore, for the general welfare and in the
best interest of the company, his withdrawal led to a paradigm shift in organization
structure and employee management, which would otherwise be impossible in his
presence.

Brian Stowell, one of the Stowells children is the key stakeholder in the Crown Point
Cabinetry company. His role began earlier as a sales manager of the company. The
nature of unfolding events compelled him to think of restructuring the entire firm
but through a gradual process. To begin with, he thought of changing the
philosophy, purposely to influence the workers attitude positively. Despite instituting
evaluation criteria to justify remunerations and quality of their labour forces, the
company still experienced problems with its finances. Brian Stowell needed support
and acceptance from family members and other stakeholders like the customers.
The position of the chief executive in a production company like Crown Point
Cabinetry has tedious responsibilities. Gaining siblings approval and acceptable
public image accompanying sales, requires competence in managing public
relations; at that time, it was a crucial skill for the CEO. Brians most challenging
role was to balance the labour cost and the revenues for the Crown Point Cabinetry
as an entity. Collaboration among different stakeholders translates to improved
managerial activities, which acts as a motivational tool for the entire company to
embrace teamwork.

Becky Stowell: is not only part of the Stowells family (as Brians wife), but also a
crucial stakeholder in the operations of the Crown Point Cabinetry company. Her
interest on the performance of the company compelled her to propose devolution in
the system of employees management. That is, creating self-managed teams in
different departments who will be answerable for their performance. Restructuring
improved efficiency in implementing management decisions (Kolarik, 1995).
Consequently, Brians wife needed recommendation and support from the rest of
the executive to implement her proposals. The most important skill she requires to
convince other staff members is negotiation skills and be conversant with the
guiding principles of negotiation, for example developing a win-win situation for all
stakeholder.

Jeff Stowell, Brians brother: is one of the stakeholders in Crown Point Cabinetry
Company. His mandates influence him to develop interest in the employee safety
and security at work place. The company litigious issues could result to the
companying losing a lot of money on unnecessary compensations or on penalties
charged against the company.

The company, Crown Point Cabinetry: as an entity is legally one of the shareholders
optimistic to survive a lifetime. Therefore, revenue generating activities and the
source of resources has to be guaranteed. This will enable the Crown Point
Cabinetry to grow and develop franchises.

At the beginning of the case, in 1993, what key stakeholder needs are being met?
What key stakeholder needs is not being met? Describe and explain them, as
applicable in each case.
Norman Stowells need was to develop the safety program, meant to deter
employees from being careless when handling machines or generally in the working
environment. Its success was beneficial not only to the company but to the health of
the employees. This is because the number of claims and compensation declined
with time. In addition, Normans view to relinquishing his executive duties to Brian
was doubt because of their previous different opinion on certain issues. It is to his
surprise that Brian was right in his managerial styles and decisions than him. A few
financial issues, which Norman would wish settled, propagated further and time for
the permanent solution in his tenure, become infinite.

Becky Stowell, that is, Brians wife ambition was to change the management
structure and realize employee potential, which would otherwise have remained
latent and unexploited. As a goal, she had planned for; she needed support and
acknowledgement from other team players. The moral support and acceptance is
what Becky needed to materialize her desires.

Brian Stowell is the chief executive officer of the company. He needed to see
success in the policies implemented. Therefore, changes in philosophy that the
company took should enable ease on behaviour transition rather than being radical.
Majority of Brians plans worked not because he was the top executive officer but
due to his persistent and confidence in relevant change. Communication structure
in company became efficient or witnessed minimal or no clashes as the team
embraces team work and interpersonal skills (Kolarik, 1995). The idea of increasing
the salaries of employees succeeded in the first phases but challenges were

imminent. Other achievements that were realized during Brians leadership, is the
recognition of Crown Company and its award for being nominated for community
citizenships.

Describe the key components of Crown Point Cabinetrys value chain. At the
beginning of the case, in 1993, are there any of these components in the value
chain which are underperforming and/or at risk of doing so? Explain your
observations.

From the observations made, the major components of value chain Crown Point
Cabinetry Company include the following: improved customer satisfaction at a low
cost, splitting the firms activities that adds value to customers into distinctive
parts, and ensure that areas of great importance to customer satisfaction are
enhanced or costs associated with it be minimized. Lastly, the inputs, that is, raw
materials should reach the consumer on time (Niven, 2002). At the begging of 1993,
company Crown Point Cabinetry various components of the value chain were
performing far below the recommended levels. For example, the most neglected
value chain is the internal production linkages. The costs of operations were
escalating on daily basis through pilferages; unnecessary inefficiency and delays at
the inventory levels were inevitable.

The value chain that was at the verge of collapsing was the outward linkage to the
customers. It is arguably that since the costs of operations were increasing, it was
highly probable that either quality of the products will be compromised or the prices
of the products to be increased by a certain percentage, in the quest of balancing
revenues with expenses. A deficit in resources will affect directly the timing and
distribution, which in turn compels the sales of the same product to reduce
tremendously (Savasaneril, 2004). Vendor management costs was bound to
escalate beyond control, because reduced production scales, which reduces the
companys economic bargain to negotiate for favourable prices, due to supplier
power.

Develop a suitable corporate level Balanced Scorecard for Crown Point Cabinetry in
2002. Ensure that you describe the scope of each perspective used in the Balanced
Scorecard. Each perspective must then have between one and five goals. Each goal
must have at least one key measure which the company will employ in assessing its
performance. (Where you do not have specific quantitative data for the formulation
of a target and/or measure, you should describe what data would be used and the

nature of the target. Assumptions or illustrations used in that process should be

identified clearly.)

The balanced scorecard is a performance management strategy, which plays the

role of monitoring the activities executed and noting the consequences they have
on the companys growth and development. In 2002, Crown Point Cabinetrys
scorecard could appear as follows according to Kaplan, & Norton, (2006):

a) Financial perspective- the objectives of financial perspectives are:

1). to enhance sustainability cash flow

2). to increase the sales volume by 40 %, thereby enhancing project profitability

3). to control the market share and consequently stimulate sales growth (sales
backlog)

4). to have a forecast reliable profit

The measure of achievements of financial investment in the business will be

depicted by the level of satisfaction of the stakeholders, and increasing ROE,
implying achievement of the set financial perspective.

b) Customer perspective- the set objective on the customer perspective includes:

1). to assess whether another market segment can be developed for another
business unit

2). to ascertain the level of customer satisfaction by developing customer

satisfaction index

3). to establish the effects of competition (by substitute products) on customer

loyalty

4). to be the product leader in sales and distribution on customer ranking survey

The measure for customer satisfaction will be evaluating the degree of repeated
sales made by residents of a certain market segment in comparison to the number
of household in existence.

c) Internal process perspective- the main goals are:

1). To select and hire competent personnel with relevant technologies

2). To support operational staffs in the event of creating better products to meet
customer expectations

3). To develop and monitor a safe incident index

The measure employed to ascertain achievements of these goals is the employee

rate of turnover in the company.

d) Innovation and learning process perspective- the goals set at innovation and
learning process areas follows according to Kolarik, (1995):

1). to ensures employees learn and develop their entrepreneurial skills and practise
it at corporate level.

2). to improve the quality of products and efficiency of various processes

3). to offer effective training and development on areas where employees excel

The indicator for measuring these achievements will relate directly with the
employees morale and level of motivation. The degree of innovation will also
determine whether innovative and learning perspective, as one of the key
component on a scorecard, is achieved (Niven, 2006).

At the conclusion of the case timeline (i.e. 2002) the company has transitioned to a
management approach which is significantly different from that employed in 1993.
Are there any important issues or risks remaining in 2002 which are unresolved or
which you remain concerned with? Describe and explain them

The transition in companys management style is a success to all stakeholders.

Operational mechanisms instituted have worked best for some people rather than
for the benefit of the whole team and work force. For example, the retirement plan
was not all-inclusive, it lack general appeal to workers in general, and as a result,
ninety-five percent of employees participated in the retirement benefit plan.
Consequently, the company capitalized on advertising and these led to an increase
in the budget on advertising fourfold. The budget was constraint yet some activities
continued to record an upward trend. It could be prudent to cut expenditure on
high-level advertisement (since the companys products were commanding a bigger
proportion of the market) and save the money to cater for send-off packages for
retired workers whose energies were depleted during their tenure in the company
(Kaplan & Norton, 2006).

Though employee turnover has greatly reduced, absenteeism could be a potential

threat to withstand looming competition from strong emerging firms, bearing in
mind, the employees morale is high and an ingredient to motivate them will be
problematic to figure-out, may be draw them back to the situation in 1993, because
the source of motivation is depleted. The only weapon to salvage the company from
the verge of collapsing is a great mystery.
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