Case Solution: The Dim Lighting Co.
1. Will Dim Lighting be reactive? 2. Will Dim Lighting be proactive?
1. Will Jim West be influenced by thoughts of what a second year of un-obtained targets will do to his career in making this budget decision? 2. West feels threatened every time Spinks does not receive his demands or “wish list.”
1. Previous unprofitable year. 2. Spinks’ past history of leaving a company that “lacked creativity and innovation”.
III. Systems affected:
1. Structural – the structure is a traditional functional structure. This may not encourage the development of new products and ideas. 2. Psychosocial – other departments feel threatened by Spinks. Also, Jim West feels he is under pressure to improve the profit margins immediately. 3. Technical – both the production manager and Spinks want money to upgrade technical aspects of the company. 4. Managerial – West feels caught between being innovative and trying to improve the bottom line immediately. 5. Goals and values – corporate headquarters does not seem to value risk taking and moving into new projects. If their rejection of the lighting proposal is indicative of their decisions, the company as a whole may become entrenched in old technology.
1. Before making a budget decision, West should contact corporate offices to see if additional funds are available for R&D. Spinks’ project would have a long-term effect on entire industry and possibly the parent company would contribute to the R&D project. 2. If additional funds are unavailable, the budget committee needs to make some compromises and come to a consensus-it should not be an all-or-nothing proposition. Funds should be allocated for both R&D and for upgrading essential equipment.
3. West should also ask the accountant, Preston, to make a three-tiered analysis of the project: (1) best-case scenario, (2) worst-case scenario, and (3)...
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