CASE 4-6 GRAND JEAN COMPANY

Grand Jean was founded in the mid-19th century and succesfully survived from the large crisis in 1929. The companys main products are pants and by 1989 as one of the worlds largest clothing manufacturers. The company owned 25 manufacturing plants with the average output capacity was about 20,000 pairs of pants per week. The firm augmented its own production capacity by employing with independent manufacturers. Last year, these 20 contractor making productions and produced one-third of total pants sold by Grand Jeans. Grand Jean sets the ceiling or maximum price for those who can produced both reliable and capable of making quality pants. Grand Jean is a functional organization and treats 25 plants as expense centers. The plants are wanted to produced certain amount of pants asked by marketing staff, every year. If possible, Grand Jean will put a plant to work for a whole year on one type of pants. It will reduce cost of start-up and changeover. But in the mid year, the marketing always release complicated production schedules with many changes in pant needs. It will impede the objectives to be met. The plant budgeting begins to determine amonthly plants quota for a year ahead based on past performance with add a little. If the quota has not been met yet, Grand Jean would analyze why it was happened and corrected the problem quickly. Grand Jean also determined the allowed number of standard labor hours, given the number of pants is actually being produced, and compared it with the actual labor hours to determine how a plant manager performed as an expense center. Grand Jean used an annual bonus as its reward system. It scaled 1 to 5, where 5 was the highest rate. By evaluating overall performance and profits in a year, Grand Jean can determined a bonus base. The managers bonus is determined by multiplying the bonus base and performance rating for each managers. The five marketing departments are treated as revenue centers, in which they have to meet the sales units and sales

dollars targets as performance measurements. Thus when necessary, marketing departments will do frequent changes in product mix to meet changing consumer demand. Mia Packard, a recent business school graduate, do not approve wit the system Mr Wicks (vice precidents for production operations) uses to evaluate hs plant managers. She found the plant managers were hoarding some of the pants produced over quota to protect them from lack of future productions. They are not really pushing them self to meet maximum production, because their quotas are tend to up without receiving monetary reward to compensate this responsibilities. Beside of that, Mr. Wicks has elevated the supervision ratio as 11 : 1 because of leadership efficiency reason. But the result is, all plant managers are usually understaff. Thus, other parties in the company are difficult to generate informations they need and when they need it. Beside of that, some plants have been built and have much newer equipment within the last five years, but there were no differences in standard hours between the new plants and the older ones.