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See the below case study and answer the questions at the end of this case.
SMELLING SWEET SUCCESS AT WASTE MANAGEMENT
By Martha Rogers, Ph.D.
Not long ago, it appeared that refuse giant Waste Management was headed for the recycle bin. Accounting troubles forced the company to pay shareholders $220 million in 1998 because of overstated earnings. In 1999, shareholders sued after learning executives sold shares prior to an earnings shortfall, and former President and COO Rodney Proto was subsequently fired. To top it off, the Securities and Exchange Commission is suing six former execs for accounting fraud from 1992 to 1997.
But times have changed. Since becoming CEO in November 1999, Maury Myers has made the business of waste beautiful again. And he's proven it to stockholders. Waste Management's share price has held steady despite the recent downturn, moving up almost 15 percent to $25 since Myers took over. Myers engineered the turnaround by focusing on the company's core competency, solid waste, and by selling its international businesses.
Myers also focused on strengthening the heart of Waste Management's business model: operational efficiency. By switching to a centralized purchasing and billing system, Waste Management saved $20 million in 2001, and expects $70 million in additional cost reductions this year.
--The customer component--
Another important move was to promote accountability to customers. With 27 million solid-waste customers, taking the time to respond to individual customers' needs may sound anywhere from a bit unorthodox to downright wacky. After all, how can picking up household trash possibly be one to one? And how can it translate into revenue for the $11.3 billion publicly-held company?
Most people don't give weekly trash pickup a second thought unless the bags are still on the curb after 10 a.m. But two years ago, a Waste Management survey revealed...
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