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University of d

Faculty of Management
Business Management 3rd year
Performance Measurement

Authors:
Piotr Bartenbach
Bartomiej Staszczyk
Dominik Wolski

National Tractor and Equipment Company - Case


Study
1. Are analyses of this type within the proper scope of a controllers function?
The scope of controllers actions towards National Tractor and Equipment
company
in
the case study was described as quite shallow and out-dated. Range of analysis
applied could be enough for the older environments but not as it is in 21 century.
All the actions proposed after such investigation was only to ride down the
competitors and get the biggest market share. Organization following only that
kind of analysis and guidance would easily miss bigger opportunities, and get
to the point in which they could not jump over stronger competitor.

2. Can you suggest a better way of making the analysis?


When National Tractor and Equipment Company Inc. was not a leader its
goal was to surpass the current leader and if they were on the first position its
goal was to maintain it. This is absolutely correct and natural, unfortunately after
four years of being second to none National lost the first place. Before we can say
if there is a better way to make the analysis we have go through what National
actually did.
National made the first step very quickly, as soon as they found out that
they lost their position they admitted that they have a problem which has to
examine more thoroughly. Secondly, Mr. Lawrence, and his team consisting of
sales
and
product
development
representatives,
began
the research with a brainstorm during which they were coming up with possible
factors
that
lead
to such a situation. They picked one that according to their judgment was the
most
significant.
Then they were comparing results, production and overall condition of their
company, as well as, their two biggest competitors A and B. Referring to data
form past years they could analyze the sales patterns, examine relationships and
find out trends. Once they knew what had happened, they could figure out why
they lost their position. After that they were able to make a plan concerning
coming back to the top.
The next step of the analysis was to determine the trends among the
buyers. Results obtained by Mr. Lawrence could be used to adapt to clients
needs and improve their loyalty. Last but not least, point of the analysis was
comparison of the products and identifying the competitive advantage.

After having investigated the steps of National Tractors analysis we can say
that it would be hard to suggest a better way of making it. They followed the
rules
and
standard
procedures
used
in problem solving. They reacted quickly, they gathered and analyzed massive
amount of data, therefore, the only thing that was left to do was to draw proper
conclusions,
make
a
plan,
stick
to
it and get back the number 1 position.
Every step analysis:
According to the National Tractors we can see that their analysis despite
being thorough does not give a clear solution to their problems. They have to go
through
it
again,
they
have
to consider all factors that may have a potential influence on their performance
and then come up with possible solutions. After that they have to decide which
option would be the best for them and implement it.
Profits and returns analysis:
When we look at the exhibit showing the profits and returns of National
Tractor we can see great fluctuation. If we compare this table with Nationals
position
on
a
market
we
can
spot
an interesting phenomenon. In years 1970-1972 their profits were growing and
they
were
leaders,
in 1973 their profits suddenly dropped and in 1974 it even fell below 0. However,
National
was
still
a leader. In 1974 there was a serious fire in one of the Competitor As plants.
Even though, National Tractors profits rose sharply after that accident
unexpectedly they lost the 1st place on the market.
The analysis itself is more or less proper because they had enough data,
however,
they
should
be able to find out what was the reason of such situation. Probably they also
might have problems with drawing conclusions form it.
Sales portion table:
Sales portion table presents us the situation on the market in years 19731975. We can see that National was ahead of Competitor A until 1975, they had
bigger sales and market share. However, situation changed after 1974 when a
major fire occurred in Competitor As plant. It may seem strange that they took
over the 1st place after such accident but it really happened. On the basis of this
analysis it is hard to tell why National Tractor lost their position. They simply did
not take a chance to enlarge their advantage against Competitor A while they
had an accident. They simply neglected this situation.

3. What action, if any, should be taken on the basis of this study?


List of actions that should be performed after conducting the study:

Development of quality control system in order to improve quality of the


produced tractors and reduce fluctuations of clients

Problems with quality was mainly with the Type X tractor. We can see that
in
the
Table
3.
The expenses from 1970 to 1973 more than doubled. Those values shows
that there are major problems with quality of the tractors and there is a
need for developing a quality control system.

Upgrade facilities and introduction of concentrated product development in


order
to produce more types of tractors due to increasing expectations of clients
and
actions
of competitors.
Potential problems of introducing new types:
It is said in the report that National did not have a varied product line in
comparison
to competitor A and that is why National should upgrade their facilities to
minimize the differences between them and their competitors in case of
product differentiation.
Potential problems with introducing new types are:
Technical issues connected with new design and technology
used
Risk of the new type being rejected and considered worse
than older types
Cost optimization

Usage of historical data in order to avoid the same mistakes in the future.
Analyzing the historical data is essential for every company. Thus, National
should
use
the historical data of their own, find the mistakes (if they havent been
already discovered) and try not to let those mistakes happen again.

Development of research facility in order to become innovators in their


business.
Research is not crucial, however there are plenty of opportunities in
becoming an innovator in every market and sector. People are attracted to
new, either technologically or visually appealing things. As it was said
earlier, introduction of new types of tractors is connected with large dose
of risk, however, if guided properly, introduction of new machines is both
desired and needed by a company.
The reasons of buying a tractor might be following:

Attractive price
Quick, cheap and nearby service
Durability of tractor as a whole and its parts
Ergonomic interior
Responsiveness
Safety of usage
Appropriate suspension for uneven terrain
Capability of handling tasks it is supposed to do
Previous usage

There has to be place for thinking of competitive advantage building and


having broader view. Compering numbers with rivals like mentioned
controller did, should be enhanced with feedback concerning i.e. latest
technologies in branch that company is operating in, latest solutions on the
market, trends or changes in environment, etc.

4. Lessons learned.
National Tractors case shows us how hard it is to maintain a leading
position on the market. They were on the top and suddenly it changed, and the
worst
thing
is
that
they
did
not
know
why
it happened. They had a serious problem which had to be solved really fast. We
can learn that no matter how good we are at the moment, our competition is not
asleep and they are working to take over our position.
Also, nowadays quite a lot of companies tend to fight for bigger market
share without any farther goals to accomplish. Creating competitive advantage
which is going to set company only half a step ahead should not be the right path
to
follow.
Organizations
which
are
paying
their
attention
to the environmental changes and setting standards instead of re-creating
inventions already implied in the market are much more willing to be successful.
Too many companies are trying to have the biggest part of the cake instead of
baking their own one.