New York University New Pricing and Purchasing Policy Business Memo Organizational Development is a planned change discipline which helps OD practitioners

New York University New Pricing and Purchasing Policy Business Memo Organizational Development is a planned change discipline which helps OD practitioners and change masters to manage and cope with the consequences of large scale change.

Our operating model for the case analysis will be from the perspective of the SVP of Change Delivery in partnership with other senior management leaders. The student will be assigned a business problem that will require a solution for implementation. The problem will be based on the course’s text readings, case studies and online in?class learning.

The assignment is to write a business memo for Sunflower Incorporated that provides a solution for implementation. The memo is to be directed to the CEO from you as his/her SVP of Change Delivery whom has to solve the problem. The memo must be practical, service oriented and business driven. The memo will be no longer than 3 pages, and is to include three integrated components

#1 Introduction and Problem Definition,

#2 Body which includes Key Facts and Need for Change,

#3 Your Solution Recommendations, Desired Outcome and Conclusions.

To succeed the writter must:

a. Clearly define the problem and the relevant issues;

b. Evaluate the issues, presenting key facts and the significant need for change;

c. Propose a recommended solution, clearly defining the desired outcomes.

Please do not exceed 3 pages, and please read the case study attached and then writing the essay 256/834
Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
232
PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT
SUNFLOWER INCORPORATED*
Selected Cases
unflower Incorporated is a large distribution purchasing practices. Agnes Albanese was
company with over 5,000 employees and hired from the finance department of a compet-
gross sales of over $700 million (1991). ing organization. Her new title was director of
The company purchases and distributes pricing and purchasing, and she reported to the
salty snack foods and liquor to independent vice president of finance, Mr. Mobley. Steelman
retail stores throughout the United States and and Mobley gave Albanese great latitude in
Canada. Salty snack foods include corn chips, organizing her job and encouraged her to estab-
potato chips, cheese curls, tortilla chips, and lish whatever rules and procedures were nec-
peanuts. The United States and Canada
essary. She was also encouraged to gather
are divided into 22 regions, each with its information from each region. Each region
own central warehouse, salespeople, finance was notified of her appointment by an official
department, and purchasing department. The memo sent to the regional managers. A copy
company distributes national as well as local of the memo was posted on each warehouse
brands and packages some items under private bulletin board. The announcement was also
labels. The head office encourages each region made in the company newspaper.
to be autonomous because of local tastes and After three weeks on the job, Albanese
practices. The northeast United States, for decided that pricing and purchasing decisions
example, consumes a greater percentage of should be standardized across regions. As a
Canadian whisky and American bourbon, first step, she wanted the financial executive in
while the West consumes more light liquors, each region to notify her of any change in local
such as vodka, gin, and rum. Snack foods in prices of more than 3%. She also decided that
the Southwest are often seasoned to reflect all new contracts for local purchases of more
Mexican tastes.
than $5,000 should be cleared through her
Early in 1989, Sunflower began using a office. (Approximately 60% of items distributed
financial reporting system that compared in the regions was purchased in large quantities
sales, costs, and profits across regions. Man- and supplied from the home office. The other
agement was surprised to learn that profits var- 40% was purchased and distributed within the
ied widely. By 1990, the differences were so region.) Albanese believed that the only way to
great that management decided some stan- standardize operations was for each region to
dardization was necessary. They believed that notify the home office in advance of any change
highly profitable regions were sometimes in prices or purchases. Albanese discussed the
using lower-quality items, even seconds, to proposed policy with Mobley. He agreed, so
boost profit margins. This practice could hurt they submitted a formal proposal to the presi-
Sunflower’s image. Other regions were facing dent and board of directors, who approved the
intense price competition in order to hold mar- plan. Sunflower was moving into the peak holi-
ket share. National distributors were pushing day season, so Albanese wanted to implement
hard to increase their market share. Frito-Lay, the new procedures right away. She decided to
Bordens, Nabisco, Procter & Gamble (Pringles), send an email to the financial and purchasing
and Standard Brands (Planter’s peanuts) were executives in each region notifying them of the
pushing hard to increase market share by cut- new procedures. The change would be inserted
ting prices and launching new products. in all policy and procedure manuals throughout
As these
problems accumulated, Sunflower within four months.
Mr. Steelman, president of Sunflower, decided Albanese showed a draft of the email to
to create a new position to monitor pricing and Mobley and invited his comments. Mobley said
the Internet was an excellent idea but wondered
if it was sufficient. The regions handle hundreds
*Adapted from R. Daft, Organization Theory and Design
of items and were used to decentralized decision
(St. Paul: West, 1983), pp. 334-36.
Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
SELECTED CASES
Sunflower’s image. Other regions were facing dent and board of directors, who approved the
intense price competition in order to hold mar- plan. Sunflower was moving into the peak holi-
ket share. National distributors were pushing day season, so Albanese wanted to implement
hard to increase their market share. Frito-Lay, the new procedures right away. She decided to
Bordens, Nabisco, Procter & Gamble (Pringles), send an email to the financial and purchasing
and Standard Brands (Planter’s peanuts) were executives in each region notifying them of the
pushing hard to increase market share by cut- new procedures. The change would be inserted
ting prices and launching new products. in all policy and procedure manuals throughout
As these problems accumulated, Sunflower within four months.
Mr. Steelman, president of Sunflower, decided Albanese showed a draft of the email to
to create a new position to monitor pricing and Mobley and invited his comments. Mobley said
the Internet was an excellent idea but wondered
if it was sufficient. The regions handle hundreds
*Adapted from R. Daft, Organization Theory and Design
of items and were used to decentralized decision
(St. Paul: West, 1983), pp. 334-36.
Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
SELECTED CASES
233
making. Mobley suggested that Albanese ought to Eight weeks later, Albanese had not received
visit the regions and discuss purchasing and pricing notices from any regions about local price or pur-
policies with the executives. Albanese refused, chase changes. Other executives who had visited
saying that the trips would be expensive and regional warehouses indicated to her that the
time-consuming. She had so many things to do at regions were busy as usual. Regional executives
headquarters that a trip was impossible. Mobley also seemed to be following usual procedures for that
suggested waiting to implement the procedures until time of year.
after the annual company meeting in three months.
Albanese said this would take too long because the
procedures would not take effect until after the peak
sales season. She believed the procedures were
needed now. The email went out the next day.
During the next few days, replies came in from
most of the regions. The executives were in agree-
ment with the email and said they would be happy
to cooperate.
Copyright 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
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PART 2 THE PROCESS OF ORGANIZATION DEVELOPMENT
KENWORTH MOTORS*
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