An American Tragedy: How a Good Company Died

This case study tells us the story of Burgmaster Corp which is a machine tool maker company.
Burgmaster was a thriving enterprise by 1965, when annual sales amounted to about $8 million.
Although it needed backing to expand, it sold out to Buffalo-based conglomerate Houdaille Industries
Inc. The case study also, inform us too many machine- tool and auto parts factories are silent, too
many U.S. industries still can’t hold their own. Holland uses Burgmaster’s demise to explore some
key issues of economic and trade policy.

The LBO chocked off Burgmaster’s investment funds when foreign competition made them most
necessary. Houdaille’s charge that a cartel led by the Japanese government had injured U.S. tool
makers. Holland offers plenty of ammunition by creating enormous pressure to generate cash.
Burgmaster pushed its products out as fast as possible. It shipped defective machines . It promised
customers features that engineers hadn’t yet designed.

The External Forces for Burgmaster Corp Demise :

1- The Government policies : tax laws and macroeconomics policies that encourage LBOs and
speculation instead of productive investment. 2- Pentagon procurement policies for favoring exotic,
custom machines over standard, low cost models. 3- The indusrial policy: Domestic tool makers were
too complacent when imports seized the lower end of the product line, the ill prepared for change and
struggling to restructure. 4- A cartel led by the Japanese government had injured U.S. tool makers. 5-
Foreign competition made.

The Internal Forces for Burgmaster Corp Demise :

1- The system for computerizing production scheduling was too crude . 2- High cost and much
expensive machines 3- Defective machines as a result of pushing products as fast as possible
without regarding to quality and customers’ needs 4- NO Cash to fund process and procedures to
face competition. 5- No formula was a substitute for management involvement on the shop floor . 6- A
dramatic depiction of supply snafus that resulted in delays and cost increases.

The role of the operations management in that demise:

Companies must be competitive to sell their goods and services in the marketplace. This company
didn’t follow the operations management principles or functions in its three major departments :
finance , operations and marketing. Burgmaster Corp didn’t identify customer needs. It didn’t follow
the policy of low price and high quality. It didn’t be able to reflect joint efforts of product snd service
design . No match between financial resources , operations capabilities , supply chains and consumer
needs. It didn’t follow inventory strategy to be competitive .
It neglected operations strategy.

It didn’t develop productivity measures for all operations. It didn’t develop methods for achieving
productivity improvements such as : soliciting ideas from workers and reexamining the way work is
done.

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