MANAGEMENT WITH UNCERTAINITY

You are a Senior V.P. , General Manager and Corporate Officer of 5 operational entities and two organizations which are legal entities (wholly owned subsidiaries of the parent company). These organizations are generating over $3 Billion dollars in operational revenue (10%) of the total revenue for the parent company and approximately 11% of the operational profit of the parent company. You have an office in the “Ivy Tower” at Corporate headquarters, (Chicago) (as well as an additional office in Dallas and one in Frankrupt, Germany) and have operational oversight for over 5000 employees worldwide. You have five junior Corporate Officers reporting to you.

On Tuesday you attend a rare and exceptional, and without a lot of prior notice Corporate Officers conference at the Corporate headquarters. All of the 267 Corporate Officers were in attendance. You had heard that a major announcement was “in the making” and knew that it was related to a “White paper” that had been presented to the Board of Directors summarizing the economic forecast for the next five years (1999-2004) and more specifically the projections for our industry within this same time period. You know, because of your attendance at the meeting (as you had presented your product/service projections for the next 5 years) that the “White paper” indicates that the company “is going to hit the wall” as far as growth and the company’s capacity will be greatly underutilized going forward. There was a large amount of dicussion of needing to take pro-active action before the company would be forced to “downscale” its operations. Part of this situation was due to technology enhancement. The company had loaded the communcations companies in the United States with third generation equipment. Thus, the communications companies were not interested in the new fourth generation enhancements as Europe due to they had not yet obtained their return on investment and probably would not be for the next 4 to 7 years. However, in Europe, the company had built manufacturing sites and introduced fourth generation equipment which was presently being “rolled out.” However, the company’s competitive advantage has been eroded by major manufacturers in Europe (they had forgone the first and second generation of equipment and began their offerings with the third generation. This had been very benefitical to the company over the last ten years but now the situation was presenting a different environment and climate.) Market share was not as great as it had been in the past and for that matter was beginning to reflect erosion. The Board had cleared the room other than only members of the Board. Therefore, the only operational individuals in the final part of the meeting had been the CEO, President and the CFO. The CFO is your mentor but even he could not discuss the outcome of the meeting other than to remark that a major announcement would be forthcoming that would have major implications on everyone within the company.

At the Tuesday meeting, the CEO announced, that the company would have to develop a huge reduction in capacity and size plan and each of the Corporate Officers would be involved in this development. But the biggest announcement was the Board of Directors had voted an early retirement program for its Corpoate officers. Since the company would be reducing its scope and breath to a large extend, it was apparent that the company had too many Corporate Officers. So as everyone exited the meeting a folder for each Corporate Officer filled with papers which outline the scope and extent of the early retirement which include parameters as to whether you were eligible. You had not opened the enevolpe and simply placed it in your bag as you were about to begin a “marthorn” trip to Western Europe after meeting with your two major customers the next day in New York.

The next day you met with the two major customers in New York. They confirmed your projections for the next 5 years. Although it was not an enjoyable meeting; they were still commited to the company for their future equipment needs. Afterwards, you, your wife and the two men and their wifes attended a play in New York. The evening went late as the group had a late dinner afterward. Early the next morning your wife departed for the airport to return to Dallas; which was the primary residence, although one was kept in Chicago. You had left a little earlier to fly to London to meet a major customer for a late lunch. After the lunch meeting you flew to Paris to have an early dinner with another major customer. Then, immediately flew to Brussels to meet a third major customer for drinks. The three European customers vertified that they were good for their “backlog” and future orders for fourth generation equipment from the company. You finally make it to bed around 11:00pm Belgium time.

The next morning with the wake up call, you had to take a few seconds to remember exactly where you were (and it did not have anything to do with the late drinks as you had only had one). The car picks you up for the flight and the driver indicates that the flight is scheduled to be on time and has some fresh brewed coffee. You are not hungry but know that the flight will be serving breakfast. During breakfast about an hour into the flight you begin evaluating life and your current situaiton and status. You know that lately you have been having thoughts that normally indicates that one has “burned out.” Also, recently a granddaughter has been borned and you begin remembering how much time had not been spend with your two boys as they were growing up. Both boys have completed their unviersity degrees, (one has completed an MBA), one is married, both own their own homes and both are well established in very good companies and appear to have rewarding careers ahead for them. You also begin thinking about your relationship with your wife; specifically how she has never questioned your drive and pre-occupation with your career. Oh, a few times, the two of you had a few thoughts about retirement but not anything of substance. Economically life had been great and from that standpoint had enjoyed the benefits that came with the status. After a few more thoughts reflecting on the past and trying to visionize the future, you reach for the bag and opened the envelope.

As you read the contents you note that the individual has to have had 10 years as a Corporate Officer (you meet this criteria) and be at least 50 years of age. You especially note the dates which are being offered as you are 49 but will turn 50 within this period of the offering. What especially gets your attention is the dollar amount as an incentive to retire; but what is most appealing is that the company will “bridge” both your Officer pension and your employee pension to age 55. (The company has a mandatory retirement for Corporate Officer upon reaching the age of 55 unless the person as obtained a “C” in their title as in Chief Financial Officer.) In effect this means that if you take early retirement prior to age 55 under this new offering your Corpoate Officer pension trust will be amended so that annunity payments begin at 50 and likewise with the basic employee pension plan.

You prepare a “plus and minus” sheet of retiring and begin a second page of emotional and mental issues to be discussed with your wife; and a third page of ideas of what life might be if retirment is taken and a fourth page of a pro-forma income and expenses including the input of the pensions. You work on this the rest of the flight as it is a 8 hour flight from Brussels to Dallas.

Upon landing and exiting the plane, you lean over and “kiss” the skin of the plane and pat it stating “It has been a nice ride.” The flight attendent remarks, “Well, thank you Mr. Basham.” (She does not have a clue as to the meaning of your remarks). You call your wife and suggest that the two of you go to dinner; and she states “oh, why don’t I just make us something here.” You state we need to go out as we are going to discuss retirement.” She replies, ” I guess I had better put on a nice dress.”

You also called your boss, an Executive V.P. and schedule a meeting with him tomorrow at 10:00am. You then call your administrative assistant in Dallas and ask her to make a reservation on the first flight to Chicago from Dallas for tomorrow morning.

Task and/or Project:

Prepare a “Summary” of your discussion with your boss the following days. You may want to include what type of questions that you might want clarified by him. NOW, SO NO ONE REALLY KNOWS WHICH DIRECTION THE DISCUSSION MAY TAKE: Prepare three pages with the discussion that you are going to retire. What are going to be your comments, rationization, and why. Then, prepare page four and five and hopefully more pages with a discussion that includes the statement you have read and reviewed your “packet” and have decided that you want to continue for the remaining 5 years of your contract and the discussion should evolve around what type of environment is the next 5 years going to be. Also, some thoughts need to be stated as to exactly what is expected of this “restructuring” and “downsizing” plan. Do not repeat any of the above Case situation statements or facts/circumstances within the minimum 5 pages of your statement.

Deduction of points will result if these statements/facts/circumstances are repeated within the minimum or complete text of pages for this assignment. To emphasize a twice made statement: “Tell me something that I do not know.”

Instructions:

• Read and analyze the above case.
• Provide the requested Summary which is like a narrative “soul searching implications from a decision”.
• Prepare response in APA format with a student developed Appendix (no cut or past of graphs)
• Minimum of five but no maximum limitations on page content. Responses must be ample text to directly answer the questions. No PowerPoint or Bullet dots or numbered outline structure- must be sentence structure and within paragraphs

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