Why Did the Senior Managers Introduce a Vision and Belief Statement?

Case 4

1. Why did the senior managers introduce a vision and belief statement?

The senior managers introduce the vision and belief statement to address the warning letter that the company received from The Federal Drug Administration (FDA). It is an action that the company took to avoid the similar event to take place in the future. The vision and belief statement itself is an agreement of the company that they would be more emphasizing on the costomer satisfaction by improving the quality and performance.

1. Why did managers at ATH Technologies Inc. change their performance measures?

The managers at ATH Technologies Inc. change their performance measurements because the previous performance measurement is failed. It was only emphasizing on the profitability of the company so that the employees were only focused to sell more products and cutting more costs, but they were ignoring the importance of the quality of the products. Because of that, there were a lot of costumers who dissatisfied with the quality of the products and asked to be returned. Furthermore, the company also received a warning letter from The Federal Drug Administration (FDA) which listing over 150 quality and compliances irregularities. Since then, the company change their performance measurement to be more oriented on the customer satisfaction to avoid similar event to take place in the future.

-John Frost includes both process and output measures. Why? What is he trying to accomplish?

By including both process and output measures it is expected that the company could maintain the quality of the products delivered to customers while maintaining the effectivness of the production process, which in turn can also minimizing the cost of the production.

-He also includes ratio and ordinal measures. What are the advantages and problems of each type?

John Frost proposed four costumer measures. Three of them are ratio measures (Product defect, Costumer contact error and Backorder). The advantage of the ratio analysis is to measure how many percent of the products that do not meet costumer’s quality requirement; how many percent of the error happened during the order entry, shipping  and telephone responsivness; and how many percent of the costumers whom backorder the product.  The other measure is using the ordinal measure (New Product Delay). It measures how long the time needed to release new product/enhancement. The problem of each type of measures is difficult to gather the data.

• Why did John Frost includes departmental performance in the bonus scheme?

The advantage of including the departmental performance in the bonus scheme is to boost the employees performance to achieve or solve the projects that each departement assigned.

1. What are the risks for ATH Technologies going forward? How should these risks be monitored and controlled?

Because of the disaster that happened pervously to the company, the managers have become more careful to take actions to avoid similar events to happen again in the future. At a certain level, it could make the company lose their opportunity to grow in the market. To solve this risk, the managers of the company should not avoiding to make mistake but rather  trying to solve the problems.