Balance Sheet and Blue Rhino

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Case questions

1. What is Blue Rhino’s business strategy?
How well was the strategy supported by information systems?
Blue Rhino’s business strategy is:
1. Increasing its relationships and customers by providing a more efficient and safer way for supplying its customers with propane cylinders. Instead of refilling the same cylinder over and over again, which is a waste of time and dangerous, Blue Rhino offers an approach for exchanging empty ones with ones that are already filled. 2. Increasing the demand for, and awareness of cylinder exchange, to increase its sales. Blue Rhino’s business strategy was not supported by information systems at first. They avoided micromanagement and bureaucracy, working in a decentralized environment. This type of implementation was an integral part in the company’s success.

2. Why did Blue Rhino have to revamp its systems and business processes?

Because of Blue Rhino’s vast success, it reached a capitalization above $75 million. Therefore they were forced to meet the requirements of the Sarbanes-Oxley Act which “requires upper-level executives of companies with market capitalization above $ 75 million to take greater responsibility for the income statements and balance sheets of their business.” However, Blue Rhino was already planning on revamping its processes since they were having difficulty with the control over its inventory, financial operations, and with the human resources department; this act only motivated them.

3. What management, organization, and technology issues did the company have to deal with as it built its new systems?

Blue Rhino faced several difficulties as it built its new systems. Blue Rhino employees were used to a management with no bureaucracy, now every decision has to pass through several procedures. While implementing a system for the inventory, “revamping data and retraining employees to get the system to work properly took months.” Documentation for the financial operations was...
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