CASE # 1 - THE WOLVERINE FASTENER CO.
The Wolverine Fastener Co. was founded 20 years ago by Roger Gordon and Edwin Andrews in Detroit. Wolverine’s early years were relatively unstable, and the company was on the verge of bankruptcy on more than one occasion. By 1983, however, Wolverine has blossomed into one of Michigan’s most prosperous manufacturers’ representative firms; in addition to many smaller product lines, Wolverine represented a major fastener corporation based in Chicago., The majority of Wolverine’s annual orders of $10 Million come from Detroit’s auto industry, where the manufacture of every automobile requires hundreds of fasteners (screws, bolts, clips, latches, and customized metal and/or plastic connectors).
Both Roger Gordon and Edwin Andrews came from well-to-do Michigan families. Each had attended a Big Ten university, from which he graduated with honors. Soon after their graduation, both men were married in the same year to women who were sisters. Thus, their relationship began as brothers-in-law. About a year later, the two men, both manufacturers’ representatives, decided to form a partnership, which they called the Wolverine Fastener Co.
Roger Gordon gave the impression of being a dynamic businessman. Always in a hurry, he consistently tried to squeeze 14 hours of work out of his 10 hour days. This often created a frantic sense of disorganization in the office. He had an uncanny ability to get things done “just under the wire”. He was what is often called a “doer”, never refusing a potential money-making venture because he lacked the time to give it attention it deserved. Somehow, he managed to get everything done.
Edwin Andrews was Roger’s working partner, and they shared equally in its annual profits. The two men made all corporate decisions together, yet each was responsible for his own accounts. Thus, in their day-to-day work, they went their own way and seemed quite independent of each other.
Just as the company reached its most prosperous point in 1976, the automobile market began to drop off rapidly. Wolverine soon followed the downward track. After about two years of steadily declining profits, Roger Gordon realized that he must somehow get an edge on the many other vendors competing for the automotive industry’s limited business if his company was to survive. Because one the Big Three automakers (which we will call Genchryfor or GCF) accounted for most of the company’s orders, he decided to concentrate on gaining an advantage with them.
Roger examined the process by which he obtained orders from the individual fastener buyer at GCF, Robert Jacobs. It had long been GCF’s practice to accept only closed quotations (i.e., all quotes were privately submitted and the lowest group got a percentage of the order for that part.) Roger knew that if he could find out the exact price, or even the range of the quotations, he would have the advantage he desired. He was sure that the fastener buyer himself would not disclose this type of information. However, Jacob’s secretary, Mary Swoboda, who was responsible for opening all the quotes, seemed a possible source of help. During 1979, Roger began to get to know her better.
Mary Swoboda was a pleasant woman in her mid 20’s, unmarried, but with a steady boyfriend. She was very sharp and always eager to take care of any problems that might arise in her area. She was rather plain in appearance, very quiet, and seemed somewhat awed by the size and reputation of GCF. She was from a lower middle class suburb of Detroit.
Roger Gordon began an extensive but subtle implementation of his “plan”, as he told it to me. He started by taking Mary to lunch at frequent intervals. After this became an accepted practice, Roger began to take her out to dinner at posh Detroit establishments. Next he offered her various presents such as paintings and plane rides. (Roger flew his own plane.) The relationship, however,...
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