Module code and name

Business Report: An American Tragedy: How a Good Company Died

Zachary Schiller

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11th April, 2016
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Table of Contents
Business Report: An American Tragedy: How a Good Company Died Zachary Schiller ......................... 1
Executive Summary:................................................................................................................................ 3
Introduction: ........................................................................................................................................... 4
Competitive factors those are important to customers: ........................................................................ 4
Performance objectives: ......................................................................................................................... 5
The performance differences between expectations and reality: ......................................................... 7
Strength and Weaknesses about Operations: ........................................................................................ 8
Recommendations: ................................................................................................................................. 9
Conclusions: ............................................................................................................................................ 9
References: ........................................................................................................................................... 11
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Executive Summary

Burgmaster is an American Corporation. It is a tool making company. It was flourished in

1965 when its sales reached almost $8 million. The business was conglomerate with

Houdaille Industries Inc. Later the business has to face some crises due to relevant internal

and external factors. Some of the internal factors for business demise were poor management,

lack of proper and effective operation management strategies. Also there were several

external factors which were influencing the business including the greater influence of cartel

led by Japanese government, foreign competition in the market and other United States

government policies encouraging LBO rather than productive investments. At this time the

business has to adopt business practices and operational strategies leading to the survival of

the business. Burgmaster has to make its manufacturing processes automated. It has to

replace the employees by machines in order to enhance the business efficiency. The business

also needs to merge with large organizations as it did in the past. These mergers will give the

business financial support. Therefore effective operational management can lead to business

survival and success.

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Introduction:

The case study is about the American organization Burgmaster Corporation. The case study

tells the story of this organization. It is a machine tool maker company. It used to make tools

for different complex machines. Burgmaster was a flourishing enterprise. In 1965 its annual

sales was near about $8 million marking its success in the industry. After some period of time

the business required support for expanding the business, therefore it was sold out to Buffalo-

based conglomerate Houdaille Industries Inc. Burgmaster required this conglomeration for

survival and expansion of its operations. As an enterprise it was not able to gain revenues so

large finance can be utilized as retained earnings.

Holland the new owner of the company, son of the entrepreneur of the business used the

demise of Burgmaster for exploring some of the key issues of economic and trade policies

relevant to this business. The LBO (leveraged buyout) blocked investment funds for

Burgmaster when they were very essential for this business as the foreign competition was

increasing in the industry. Houdaille charged that a lobby which is being led by the

government of Japanese has damaged the tool maker industry of United States.

Plenty of ammunition was offered by Holland in order to create pressure for generating cash.

Burgmaster moved away the defective machines as soon as possible. Also Burgmaster

promised its customers to offer the features that have not been designed by engineers as yet.

Competitive factors those are important to customers:

Some of the important factors of Burgmaster which are significant for its customers are

discussed as following:

• The customers require products developed on the basis of advanced business

technologies i.e. automated manufacturing processes. The business requires this

because this technology has been adopted by worldwide businesses. The automated
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process will reduce the cost therefore the price of the products is also reduced

providing benefit to the customers.

• The customer does not require defective machines. It is known in the market that

Burgmaster is in crisis therefore customers can expect defective machines. In this case

Burgmaster shipped the defective machines as soon as possible. Burgmaster has to

remove this image of its defective product pieces. For this the business has to

immediately remove the defective pieces from its premises.

• The business has to give new vision and goal to the customers according to their

expectations. Burgmaster has promised its customers to produce the products with

innovative features which yet not have been designed by the engineers in the market.

The customers now expect innovative products from Burgmaster. Also for business

survival it is important that Burgmaster should change its product strategy.

• Business merger with different large companies is also important for the business as

the customers will be satisfied with the financial position of the company.

Performance objectives:

The expected performance objectives currently for Burgmaster could be:

Customer-Focused Objectives:

• The employees should be given proper training for providing quality and efficient

products to the customers. Also the employees should be given training to design

innovative products for the customers.

• Another performance objective related to complaints and complements. According to

this objective the number of complaints and compliments received from the customers

should be recorded in order to evaluate the business performance.

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• Returning customers is also a measurable performance objective. This performance

objective record the number of repeat customers this will help the business to measure

the level of customer satisfaction.

Financially-Focused Objectives:

• Cost Savings: this measurable performance objective can be applied to purchasing of

equipment or other supplies. Burgmaster could save the long term cost by adopting

automated manufacturing processes.

• Increased Sales: this is the most measurable goal for evaluating the business

performance. Burgmaster should focus on increasing its sales within a certain period

of time. Increased sales will lead to business profits for both the shareholders and the

retained earnings (Kanigel, 1999).


The performance differences between expectations and reality:
Reality
Expectations
•Companies should be
competitive for selling their
goods and services in the
market.
•The business should produce the
products or services according to
the needs and demands of the
customers.
•Every business specifically in
manufacturing industry should
adopt the operations strategy.
This strategy includes the
inventory management and also
developing methods for
achieving productivity
improvements (Galloway, 1998).
•There should be a balance
between financial resources,
operational capabilities, supplies
and consumer needs.
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•Burgmaster didn’t follow the
operations management
principles for operating the
business effectively. The
business lacks these functions in
three major departments
including finance, operations
and marketing.
•Burgmaster Corporation was not
able to identify the customers’
requirements. It also did not
follow the strategy that business
should make the prices lower
and enhance the product quality
so initially more customers are
attracted towards the business
products.
•Burgmaster neglected the
operations strategy. The
business was not adapting to the
inventory strategy for being
competitive. The business was
not developing the productivity
measures for all its operations
and also it did not develop the
methods through which the
business could achieve
improvements in its
productivity.
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Strength and Weaknesses about Operations:

Strengths:

The strengths of operations of Burgmaster are as following:

1. The business is merging with large companies. This will enhance the business capital

and Burgmaster would be able to expand its operations. This capital investment will

facilitate the business to use latest technology for production processes.

2. Burgermaster promised its customers to provide innovative designed products for

them. Burgmaster adopted this strategy in order to survive and rebuild its business in

the market.

3. As the business is going to produce the innovative products this shows that

Burgmaster is showing concern for customer satisfaction. This would increase its

sales in near future.

Weaknesses:

Following are the weaknesses of the business:

1. The computerized system of scheduling was not very sophisticated. The business

needs to change this system.

2. The business is using expensive machines which lead to high cost and then high

prices for the customers.

3. The business was producing defective machines without considering the quality and

customer demands. This can lead to bad business reputation.

4. Currently as the business has demised therefore it has not cash to fund the process and

procedures and also to be competitive in the market.

5. Management involvement is very important during the operations. This was missing

on the production floor.

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Recommendations:

It is recommended for the survival of the business it has to adapt itself according to the

changing market trends. If the latest trends are to get automation in the business processes

then the business has to adopt this methodology. The business has to use mechanized tools

for manufacturing. The automation in business processes will reduce the long term cost and

will also improve the business efficiency. The business efficiency will be improved as

machines do not require breaks during the work; they don’t need any vacations or sick leaves.

They don’t arrive late or in short they don’t have issues which the human beings usually

have. Obviously they can malfunction during their performance. But it requires few people to

run it and fix the machines therefore the cost is reduced (Kidd, 1994).

Another strategic decision might be that the company can merge with another company. The

company should merge with more successful company. In this way the business can regain its

success and is able to gain correct figures for sales.

The business has to compare and contrast the quality and time strategies in operations

management. Quality based strategies are those strategies which consider the quality of the

product during different phases of the production. On the other hand the time strategies

focuses on reducing the time required for accomplishing tasks. Both strategies improve the

overall production efficiency. Burgmaster has to compare the implications of both the

strategies and have to decide which strategy is more effective for current business situation.

In my opinion as the business has demised and also have the image of developing defective

products at this stage Burgmaster should following the quality strategies. Once the business

reputation is developed then business can focus on time strategy.

Conclusions:

Burgmaster business is in crises. It is influenced by internal and external factors. The

business environment in tool-making industry is very competitive. Especially the foreign

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competition and cartel led by Japanese government has damaged tool makers in United

States. The business needs to rebuild its image in the market and has to make efforts to

survive in the market.

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References:

Galloway, L. (1998). Principles of Operations Management. UAE: ITP Publishing Company

Kanigel, R. (1999). The One Best Way: Frederick Winslow Taylor and the Enigma of

Efficiency. New York: Viking.

Kidd , P. T. (1994). Agile Manufacturing: Forging New Frontiers. United States: Addison-

Wesley.