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sItUatION 2

A few years after successfully launching a new outdoor

advertising business, Sean Richeson found himself

spending 16 hour days running from one appointment to

another, negotiating with customers, drumming up new

business, signing checks, and checking up as much as

possible on his six employees. The founder realized that

his own strength was in selling, but general managerial

responsibilities were very time consuming and interfered

with his sales eff orts. Richeson even slept in the offi ce one

or two nights a week just to try to keep up with his work.

Despite his diligence, however, Richeson knew that

his employees weren’t organized and that many problems

needed to be addressed. For example, he lacked the time

to set personnel policies or to draw up specifi c job descriptions

for his six employees. Just last week, he had been

warned that one employee would sometimes take advantage

of the lax supervision and skip work. Invoices often

were sent to customers late, and delivery schedules were

not always kept. Fortunately, the business is profi table, in

spite of the numerous problems.

Question 1 Is Richeson’s problem one of time management

or general managerial ability? Would it be feasible to

engage a management consultant to help solve the fi rm’s

problems?

Question 2 If Richeson asked you to recommend some

type of outside management assistance, would you

recommend a SCORE counselor, a student consulting team,

a CPA fi rm, a management consultant, or some other type

of assistance? Why?

Question 3 If you were asked to improve this company’s

management system, what steps would you take fi rst?

What would be your initial goal?

 

situatiOn 2

Jonathan Tandy, owner of a small furniture manufacturing

firm, is trying to deal with the firm’s thin working

capital situation by carefully managing payments

to the company’s major suppliers. These suppliers

extend credit for 30 days, and customers are expected

to pay within that time period. However, the suppliers

do not automatically refuse subsequent orders when a

payment is a few days late. Tandy’s strategy is to delay

payment of most invoices for 10 to 15 days beyond the

due date. Although he is not meeting the “letter of the

law” in his agreement, he believes that the suppliers

will go along with him rather than risk losing future

sales. This practice enables Tandy’s firm to operate

with sufficient inventory, avoid costly interruptions in

production, and reduce the likelihood of an overdraft

at the bank.

Question 1 What are the ethical issues raised by Tandy’s

payment practices?

Question 2 What impact, if any, might these practices

have on the fi rm’s supplier relationships? How serious

would this impact be?

Question 3 What changes in company culture, employee

behavior, or relationships with other business partners may

result from Tandy’s practices?