Divisions had minor sales forces and limited make efforts (due to nature of product) C] Focus on microelectronics and mechanical products with a strong emphasis on the importance of R&D (more $ as a % of sales than competition) Growth at an average of 10% due to unique technologies, capabilities, and strength In manufacturing CLC Limited competitive threats (SAM advantages: technical know-how, Invested capital, patents) D Micro-Electronic Products Division (MOPED) was one of eight divisions In SAM History of MOPED - Timeline 0 sass's saw demand Increase for highly reliable components (particularly with telecoms companies and postal agencies).Expanded one plant and opened another D Mid-sass's saw a shift In demand: 0 MOPED focused on serving the new commercial electronics make as well as other new markets Leveraged R&D and MFC abilities to enter markets quickly and establish strong positions 1987 - built plant in France 0 1988-1990 - Fierce competition among firms led to falling prices, pressure on costs and quality.Managers at MOPED felt they were now In a commodity business while having significant pressure to meet unique customer requirements 0 1989-1990 - Poor performance was a reflection of increased competition coupled with perceived rower future demand C] 1990 - half of Moped's sales were to Moms who bought the components in large volume for their products while the rest of the sales were to distributors who resold the components in smaller quantities MOPED Management pre-1990 CLC Pre-1988, MOPED was headed by Jacob Amman - been with dolls since Its Infancy CLC An entrepreneur who focused on experimentation, the desire to grow, and fostered an intense work pace Deemed almost all of the key decisions 0 Respected yet feared.Authoritarian manner 0 Mixed reviews of his style (unnatural group feel, lack cohesiveness in the group, etc) C] Jacob was very interested In the field of Org Behavior (after all, who isn't) - he effectiveness, improvement of international coordination, etc.
Program was supposed to last three years but Jacob died before full implementation 0 The new head of the division was Guide Spicily (seriously), a director in corporate R&D - he discontinued the B programs MOPED Management in 1990 0 Guide lacked line experience but had a relevant background in R&D for the entire company, which included projects for the MOPED division. His promotion to UP of the division was considered somewhat unusual. Reported directly to SAM president.Considered bright, articulate, quick-thinking, well-liked Every open in his decision- making, involved people in the process 0 Viewed as a poor listener, too soft on people, not involved enough, too wimpy (avoided conflict) 0 Ability of division to meet target goals was in question - high growth was expected of the division and people within MOPED looked to new products as a major source of both new volume and profits Moped's Organization Structure Under Guide 0 1200 employees, self-contained multi-functional organization Two differences /t MOPED and the other divisions: 1) Guide split out the marketing & sales functions and 2)MOPED had their own R in addition to the company-wide group 0 Guide also: 0 Moved division WHQL to Bennie, Switzerland with the other divisions 0 Consolidated the marketing groups - centralization 0 Replaced key managers and cut the marketing planning function Improved service to customers via MFC improvements and IT developments 1990 Functional Departments 0 Manufacturing: Three plants each with manager and full line and staff functions.Plants were responsible for gross margin and were thus profit centers. Plant managers wanted to be promoted to head a division.
Managers were focused on performance as this was openly discussed between plants. Mopeds plant managers were upset about poor growth in the division - they had to cut costs to even make declining margins. Plant managers felt a lack of objectives and direction and put the blame on Sales (too focused on volume), Marketing (lack of ability to provide direction, generally incompetent), and Product Development (products didn't run well on their lines) 0 Marketing: Most important function was market development (forecasting, leaning, formulating strategy).Many new people in the function, often they came from Sales. Marketing felt that SAM had unrealistic expectations of them, that Product Development wasn't responsive enough, and that MFC was too conservative and uncooperative 0 Sales: MOPED products were sold through a direct sales force of 250 people as well as through distributors.
The sales force served a large set of customers in several markets. Their performance was not commission-based rather it was evaluated on volume so they tended to cut price to drive this. Sales disliked Marketing b/c they felt they provided the sales force with poor information and neither function trusted the other.Sales had a terrible relationship with MFC due to Responsible for extensions of the product lines. Dislikes Marketing (provide group with unclear product specs and don't understand complexity of spec changes), Scam's R group (difficult to coordinate time with them) and Sales (lack of input into new products) All that summed up clearly: The functional areas are semi-autonomous and don't like one another! New Product Development Process 0 Focus on extensions of current line Significant overlap and complications in the process - difficult to manage 0 Functional areas overlapped responsibility and when one area failed to meet goals/ deadlines, the overall project timeline was influenced.General lack of coordination Problems Looking Forward - 1991 0 Need more growth in the division 0 Need to achieve budgeted operating margin 0 Improve moral, communication, and coordination Meriwether Basic overview of case: John Meriwether MM) becomes head of the arbitrage group at Salomon.
Makes tons of cash betting that prices would converge and had no problem putting up lots of Salmon's money to back up the bets. He was the first Wall Street guy to hire his team from outside of the Street - he hired a bunch of Pad's with new models and lots of calculators. His very nerdy group became incredibly exclusive, obsessive, and almost cult-like. JAM was well-liked in the company. Scandal occurred when someone outside the group (who indirectly reported to JAM) made a mistake and submitted a false bid to the US Treasury.
JAM defended him but instead of firing him, let him continue in his Job as a rouge trader (or something like that). Because of lawsuits, introverts, etc, JAM was eventually encouraged to quit. He did and while he was later offered a position with the firm he decided to take most of his team from Salomon and do his own thing. If you want all the details, read on.
... John Meriwether Background 0 Grew up on the South Side of Chicago. Middle class upbringing with strong religious ties and a focus on discipline both in the home and at school 0 Bright and popular, guided by a sense of restraint 0 Loved to gamble from a young age but only when odds were in his favor. Became passionate about golf and used this to network in college and beyond 0Internal psycho-babble analysis) 0 MBA from U of Chicago (a top 10 school) in 1973 and was hired by Salomon upon graduation Jam's Influence on the Bond Market 0 Until the mid sass's bond trading had been considered a dull sport.
Few investors actively traded bonds and the notion of managing a bond portfolio for competitive returns was totally foreign 0 Inflation in the sass's changed this and more risky trading was introduced By the end of the sass's new methods of trading had been established 0 The computer was introduced to Salomon in 1969 0 As we know from FIEF, bonds are traded on a spread. The riskier the bond, the wider the spread (see page 9 for more info on this).Basically, JAM formed an Arbitrage Group inside Salomon in 1977 which bet Salmon's capital that spreads would eventually converge, given enough time and capital to stay the course Jam's Team at Salomon 0 JAM decided that his edge in the market would be to develop a team of traders that were academic - they would build models and trade based on discipline and quantitative measures He initially hired five academics from lots of top 10 schools, including Lawrence Hildebrand Hildebrand was extremely confident and tended o redouble bets. The group eventually grew to 12 people 0 The group became somewhat exclusive - they sat together, ate together, socialized together formed a very strong bond under JAM.
Trading because all-encompassing for the group - they became addicted to gambling and work The Group viewed JAM as a protector from company politics and a champion for capital to trade - they basically worshipped him.JAM put faith in his group and took a hands-off approach to their deals Jam's Group and the Salomon Relationship 0 The group was extremely private and tension arose between the group and the est. of the Salomon bankers Various issues arose over compensation structures. Jam's team wanted to quit but JAM tried to persuade his team to have loyalty to the firm rather than Just the Group 0 JAM persuaded upper management to give his team a share of the team's profits.
Other employees of Salomon became angry The Fall of JAM 0 A poised off employee who used to work for the Group (Paul Moser) confessed that he had submitted a false bid to the US Treasury 0 JAM took the matter to his boss (Guttering).
