Pelican Instruments, Inc.
1. Prepare the Report that you feel Amy Shultz should present to Mr.Park.
2. Put yourself in the position of the following six managers: general manager(EM); marketing manager (EM); manufacturing manager (EM); general manager (EI); marketing manager (EI); manufacturing manager (EI). These six managers compete for a share in the company's bonus pool. For each of the six, how would you make a case for your obtaining a share of the bonus pool? Six managers, three from the EM division and three from the EI division compete for a share in the company’s bonus pool. For the purpose of this analysis, we take into account different variances within each division,
From the EM side, the General Manager could argue that his business unit must without a doubt follow the strategy of low cost, as he is dealing with a mature product. Because of this, he lowered his selling price compared to his competition by $ 10, resulting in a $ 1.4MM profit loss. However, he can strengthen his position by saying that thanks to his lower price, he was able to penetrate the market even more, achieving an additional $ 2.6MM in profit from changes in market share. Furthermore, he can argue that the lower price also got him an increase in volume, which earned him $ 679k more in profits. Clearly, the general manager’s decision to lower his selling price was more than beneficial for his business unit.
The Marketing Manager would argue that thanks to his efforts, he was able to go from a 10% market share to a 16% market share, becoming partially responsible for the additional $ 2.6MM in profits. Although industry demand affected the division negatively, losing the division $ 724k, the positive effects of the increased sales were advantageous for the division. Furthermore, the Marketing Manager can say he is partially responsible for the savings in marketing fixed costs for the company, amounting to $ 416k.
The Manufacturing Manager for the division must...
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