Vector Aeromotive Corporation (Case Study Sample)

MANAGEMENT CASE STUDY ASSIGNMENT: CASE OF: VECTOR AEROMOTIVE CORPORATION
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INTRODUCTION
Companies whether private or public need to incorporate the company. The incorporation process leads to separation of the company from its shareholders (Srinivasan, 2005). As such, the shareholders are reported to about the firms operation by the directors. The directors act as a bridge between shareholders and the company management (Mellahi, 2005). Vector Aeromotive Corporation follows the same steps and thus the director have a major role in company performance. The firm is involved in sale of exotic automotive and was incorporated in 1987. Thus, assessment into the Vector Aeromotive Corporation development and role of directors is important.
BODY
Directors are an important part of a company. In general they have different roles and undertakings in a firm. They are therefore, held with the responsibility of making decisions regarding the firms investments and undertakings (Hsu & Wu, 2014). In addition, they are to safeguard the assets of a firms, as well as guide on best firm directions. They are also supposed to maintain the firms registered office, as well as ensure all documents and statutory obligations are met (Chaganti et.al, 1995; Melis, 2005). They are held with the responsibility of calling for meetings, and they should report to the shareholders on the operations of the firm. The directors also manage the executive and ensure a firms resources are managed properly.
The board of Vector Aeromotive Corporation is not unique in it functions. The board is obliged to manage a firm’s executive. Thus their intent to have the president resign was in order and part of their responsibilities. The board needs to ensure that the firm is safeguarded and all assets are secure. The management style taken by the president was felt by the directors to be the cause of the problem. The main role of the board as set out by Vector Aeromotive Corporation, was to act on a fiduciary basis. They were to oversee all the operations of the firm, as well as safeguard the firm’s assets. Thus, they were to oversee the operations of the management and ensure shareholders’ interests are protected. They also ratifies policy decisions within the firm. They also held board meeting to discuss issues pertaining to the firm.
Due to this responsibilities and duties, the directors should agree, and especially ensure they safeguard the firm’s assets. In this role the president of Vector Aeromotive Corporation and the other directors have been in conflict. The main reason the president was to be removed was because Vector Aeromotive Corporation was in a crises. The crises was about the firm not being able to settle its expenses. The crises had earlier signs of trouble due to the management style employed by the president of the firm. There was little attention to the internal management and there was only concentration on outcome, thus dictatorship was a key leadership style. Through this style and limit of others, the president has fraud allegations as well as diversion of assets. Thus the conflict arose as the other directors called for his resignations against his will.
Due to the crises, it is important to evaluate the composition of the board. Vector Aeromotive Corporation in 1987 had 3 members in its board of directors. The three directors were consultants in finance, and real estate. Vector, 1 of the directors was on part-time basis and the other two were full-time directors. At around 1991, they added 1 more director and thus the directors were 4. In 1992, one more director was included, and thus they become five. Therefore at the time of the crises, the firm board was composed of five directors.
However, the board was not seen to function properly. For instance, the board was limited in its ability. They were not provided with information before meetings. Thus, they were not able to scrutinise decisions and operations around the firm. The president sabotaged all operations to fit his interest. Those who were able to scrutinise the company operations were not supported by the other directors which made their operations difficult.
The crises that occurred at the firm and the employees challenges were in the eye pick of directors. They were concerned about the management style employed. In addition, there was a lot of personal spending by the president of the company at the expense of the firm. Being a major responsibility of directors to manage assets and secure them, the board confrontation was important. The company had been getting into serious financial crises. They were not able to meet their obligations. And such they had disclosure issues. The board and the president were getting into major problems, as the president has fraudulent allegations on him. By 1993, the firm was in serious