Adams Corporation

CASE on PLANNING: The ADAMS CORPORATION I. Viewpoint. Price Millman, the new President & Chief Executive Officer of the Adams Corporation [“Adams”] II. Statement of the Problem: Despite continuously increasing sales in the past 20 years, Adams’ net profit has continuously dropped during the same period. The new controlling owner group wants a new corporate design that will improve effectiveness. III. Objectives: To formulate and implement a new corporate design that will improve effectiveness of Adams Corporation. IV. Areas of Consideration: 1. Formed in 1848, Adams had long been identified as a family firm both in name and in operating philosophy. In 1950s, over 50% of the corporation’s shares were sold by various family groups to the wider public. In 1970, all branches of the family owned or influenced less than 1/5th of the outstanding shares at Adams. 2. Adams led the industry in the development of unique production processed that produced quality product at a very low cost. Its strategy was to make a quality product, distribute it and sell it cheap. Competition was limited and production efficiency and raw material sources enabled it to outpace the industry in sales and profit. In the past 20 years, however, major competitors have outdistanced Adams in net profits and marketing techniques. 3. Adams was organized into 8 major divisions. Seven of these were regional sales divisions with responsibility for distribution and sales. Each sales division was governed by a corporate price list in the selling of company products, but each had some leeway to meet the local competitive price developments. Each sales division was also assigned a quota of salespeople it could hire and was given salary ranges within which these people could be employed. 4. A small central accounting office accumulated sales and expense information for each of the sales divisions on a quarterly basis and it