Atchison Corp. case

Contents [hide] 1 Basic Information of Atchison Corp. 2 Case Summary of Atchison Corp. 3 Case Analysis of Atchison Corp. 4 External Link of Atchison Corp. 5 Relevent File Cabinet of Atchison Corp. 6 Article Purchase Link of Atchison Corp.

Basic Information of Atchison Corp.

Author: Joseph L. Bower
Publisher: HBR
Case Number: 301020-PDF-ENG
Publication Date: Aug 23, 2000
Course Category:

Case Summary of Atchison Corp.

• 1994 – board of directors announced highest sales in co. history, the lowest after tax profits (as % sales) in many decades, and retirement of CEO, Jerome Atchison (for personal reasons)
• Founded in 1948 – Atchison Brothers Co. identified as family firm in name and operating philosophy – the founders of the business wanted to lead a business org. with ethical standards. Stressed the importance of integrity.
• In the 1970’s two things happened: 1. Co. name changed to Atchison Corp. and 2. over 50% of corp. shares were sold by various family groups to the wider public.
• Mfr. and dist. of quality brand named consumer products for American, Canadian, and European export markets. Had 4 regional plants for product processing near raw material sources. Distribution centers in key cities.
  o Led industry in dev. of unique production processes that produced quality products at low cost and sell it cheap.
  o Competition limited
  o Relied on the name of Atchison – little advertising
• Last 20 years, fallen behind competition with respect to net profits and market aggressiveness.
• Atchison organized into 8 major divisions. 7 were regional sales divisions.
  o The company’s objective of being number 1 – the largest selling line in its field – directed group attention to sales as compared to budget. All knew that last year’s targets had to be exceeded no matter what (divisions had some leeway in pricing to meet local price competition).
• Trade reputation for being very conservative with its compensation program. All officers were straight salaried with modest salary increases regardless of divisional performance or company profit. No corp. bonus plan, limited stock option program, no compulsory retirement program.
• “We take care of our family” was the motto. Team spirit was key – no one could be terminated unless reviewed by Jerome Atchison. High percentage of long time employees. For over 45 years, a private family trust provided emergency assistance to all members of org. Led industry in educational scholarships and medical ins. for employees.
• Dec. 1993 at the annual management conference, announcement of new investing group, Investments Inc., had assumed control of the board. Price Millman would take over as president/CEO.
• Millman – MBA in 1985, 4 yrs. In control & marketing, youngest div. pres. in history of Tenny Corp.
  o Personal and org. philosophy is Fight and Win
  o New owner group wants results – each month must be better than the past.

Case Analysis of Atchison Corp.

1. Why is Atchison a widely admired company? What strategy are they attempting to follow?
#1 in terms of manufacturing and logistic efficiency. Family organization. Strategy – quality products produced at low cost and sell for cheap. 

2. What is going wrong as Jerome retires? Is it principally an external competitive problem, or a series of internal problems, or both?
Lower profits. Both – marketing by competition has increased market share and internally, Atchison does not have the culture to be competitive. Old employees.

3. What needs to be done to lead Atchison out of these problems? (2-3 different plans). What is wrong at Atchison? In what ways can the competitiveness of the organization be improved?
Shake-up of org. and get driven people who look for bottom line results rather than sales numbers. Wrong – old employees who aren’t scared of losing their job.

4. As Millman, which plan would be best for you to take? What strategic steps should Millman take? What organizational steps should he take?

5. What design variables would you use first if you were Millman (the general manager)?
Structure? Control? Incentives?

6. Assume you want to leverage your leadership strength and develop your area for improvement. Tactically, how would your approach to implementing the plan do these things?