Toro Company S No Risk Program: Case Study
Case Study Review of The S’No Risk Program
Argosy University
Abstract
This paper is a review the case study “The Toro Company S’No Risk Program” by David E. Bell (1994). The company had specialized in outdoor machines since 1914, starting with tractor engines then later adding lawn mowers and eventually snowthrowers, of which accounted for 10-15% of sales. Toro sold product to many dealers such as hardware stores and Marshall Field, typically selling about two-thirds of yearly snowthrower sales during November, December, and January. After years of exceptionally high sales, winters became milder and sales plummeted and Toro needed to rethink their sales approach. After consideration, Toro made the decision to work with an insurance company, …show more content…
Management writer, Peter Drucker (1974) said:
To try to eliminate risk in business enterprise is futile. Risk is inherent in the commitment of present resources to future expectations. Indeed, economic progress can be defined as the ability to take greater risks. The attempt to eliminate risks, even the attempt to minimize them, can only make them irrational and unbearable. It can only result in the greatest risk of all: rigidity. (p. 374)
Risk does not single any one out, all parties typically accrue some amount of risk and Toro’s S’No Risk program was no different. The insurance company, the consumers and Toro itself all took on some risk.
American Home Assurance Company offered to “meet all claims resulting from the [S’no risk] campaign in exchange for a premium equal to 2.1% of the retail value of snowthrowers covered” (Bell, 1994). They were taking the risk on the weather; if it snowed they would have to pay a lot of money according to the agreement. Another thing they did not anticipate was the success of the program and therefore extended an offer to Toro in 1983 at too low of a
Argosy University
Abstract
This paper is a review the case study “The Toro Company S’No Risk Program” by David E. Bell (1994). The company had specialized in outdoor machines since 1914, starting with tractor engines then later adding lawn mowers and eventually snowthrowers, of which accounted for 10-15% of sales. Toro sold product to many dealers such as hardware stores and Marshall Field, typically selling about two-thirds of yearly snowthrower sales during November, December, and January. After years of exceptionally high sales, winters became milder and sales plummeted and Toro needed to rethink their sales approach. After consideration, Toro made the decision to work with an insurance company, …show more content…
Management writer, Peter Drucker (1974) said:
To try to eliminate risk in business enterprise is futile. Risk is inherent in the commitment of present resources to future expectations. Indeed, economic progress can be defined as the ability to take greater risks. The attempt to eliminate risks, even the attempt to minimize them, can only make them irrational and unbearable. It can only result in the greatest risk of all: rigidity. (p. 374)
Risk does not single any one out, all parties typically accrue some amount of risk and Toro’s S’No Risk program was no different. The insurance company, the consumers and Toro itself all took on some risk.
American Home Assurance Company offered to “meet all claims resulting from the [S’no risk] campaign in exchange for a premium equal to 2.1% of the retail value of snowthrowers covered” (Bell, 1994). They were taking the risk on the weather; if it snowed they would have to pay a lot of money according to the agreement. Another thing they did not anticipate was the success of the program and therefore extended an offer to Toro in 1983 at too low of a