Economics Research Paper: Sunflower (Research Paper Sample)

Sunflower Incorporated
Student’s Name:
Institutional Affiliation:
Sunflower Incorporated
Sunflower Incorporated is a distribution company that deals with snack foods and liquor. Some of the foods are chips, cheese curls, peanuts and tortilla chips. A variety of national and local liquor is available. Each brand’s distribution depends on the tastes and preferences of the locality. There are over 5000 employees working with the company over the 22 regions it has established in the USA and Canada. Every region is autonomous having separate salespeople, central warehouse, purchasing department and finance department. It has had an outstanding performance during its operations, apparently from the amount of $700 million sales in 1991. In addition, the direct diversification the company has had over various edible products indicates it has been determined to satisfy its customers (Brainmass 2012).
In an effort to enhance efficiency and transparency, a different financial reporting was adopted in 1989. It analyzed sales, costs and profits in all regions. There was established a large margin in the profit made by these regions. A standardization mechanism needed to be devised in order to have some common aspects in the regions. The management believed there could be low quality products being produced by the regions that made high profits. Consequently, they speculated this would tarnish the reputation Sunflower Incorporated had over the entire region. Some other regions require strategizing upon counteracting stiff competition offered by Bordens, Standard Brands, Frito-lay among other companies offering similar products (Brainmass 2012).
The company’s president later decided on creating a new position to implement this standardization under the title director of pricing and purchasing. The position holder was answerable to the vice president. Ms. Agnes Albanese was the first to hold this position. She was bestowed with powers to establish any rules that she deemed appropriate. She was to gather information from each region in order to help her make informed decisions. She decided on standardized price of products across all regions. She requested the regional financial executives to notify her on the local price changes over 3%. Moreover, she decided to have all new contracts of purchases exceeding $5000 cleared through her office. She felt the need to have the implementations done promptly before the peak season would approach. The vice president tried to induce her into taking her time and visit the regions herself and take her time, but she disagreed suggesting that visiting would take long and was expensive too. Although the financial executives in the regions agreed with the order, they did not heed to it despite normal activities going on in the regions (Brainmass 2012).
Director of pricing and purchasing is a senior position that requires complete coverage of the company’s operations. The sensitivity of decisions made and the implication of the same could result into extreme outcomes to Sunflower Incorporated. There are several mistakes observable in the actions taken by Ms. Albanese. To start with, she does not take time to analyze the company. She is new in the challenging she position, which requires that she does not comprehensively understand all the issues surrounding the entire company. Various aspects need to be analysed. Organizational behaviour is one of them. The company employees have not been used to a centralised form of administration. A sudden change could not be well embraced, and its implementation required gradual adoption into the system.
In addition, financial implications of her action need to be analysed, which requires time. Some price could be higher than most customers in a region can afford while it would be too low for a certain region that might be having an expensive access to raw materials operating at a loss. Moreover, the increased contact that will result from the regional executives consulting her for the price and notifying her of contracts exceeding $5000 will be an extra cost to the company. This is a role that possibly requires a change in the organizational structure, and possibly addition of extra employees and resources. Expenses increase would definitely lead to decreased profit especially if the expenses are not contributing directly to improvement of products.
She does not heed to any advice given by the company’s vice president. The vice president is relevant with the company’s operations, having been in the company for longer than she has been. He has worked in the position for some years, implying he can understand the company more than Ms. Albanese can. He gives his opinion on some matters including the time taken to fully apply the changes as well as the method she should use to reach the regional executives. However, she does not seriously consider what she is told. The vice president trusts her and leaves the decision for her to make.
Additionally, she does not evaluate any problem at a broad perspective. This starts with the main problem of ensuring the prices are standardised. She could use some other policy that could be adaptive and effective on the company’s attainment of objectives. She additionally has to make minor decisions as she implements the decision she makes. For instance, she uses emails as the way to communicate with finance and purchasing executives at the regional level. The vice president cautions her against this, but she does not seriously consider that. Moreover, she sets her implementation phase at a short timeframe. She has the only reason as wishing to implement this before the peak season so that sales will be optimised. It is hence evident that she does not evaluate other alternatives and considers her initial decision the best.
Another mistake that Ms. Albanese makes is the lack of incorporation of teamwork. She is observed to be making decisions and implementing them all by herself. Other employees, who are stakeholders in the company that will be adversely affected by the change of protocol, should be consulted in the plan to have the prices standardised. Customers should also be represented in the decision so that it is established the price that could be fair for them as well as the company. Developing teamwork could mean frequent meetings with other people, brainstorming ideas, assist in coming up with the most ideal decision, and collectively work towards achieving the realistic value of the decision (Allwood & Selart 2001).
She also takes the concept of opportunistic costs too far. She values ways that could save on time and spent. She decides not to visit the regions personally and also to have the information relayed to the executives through the internet based on this ideology. However, she does not consider the sensitivity of the matter. She is bound to make a long term decision, implying its effects could be widespread along a large time horizon. Saving on time and costs now could cost the company a big deal in the future. Therefore, this could be considered a mistake because the outcome is not clearly established (Marschan-Piekkari & Welch 2011).
There may possibly be a variety of reasons why she is not getting notices from branch executives. To start with, they could have not kept proper records. If there were available compiled reports, they could have just been forwarded to her. There is no information detailing if they were being periodically audited at the regional level, where the managers made final decisions. This could imply that they could give any figure so far as it meant profit to the entire organization.
Corruption could be another reason as to why she does not get feedback. The managers have been all along entrusted with the operations at their level. They could have been giving wrong information regarding their operations. Giving Ms. Albanese the records could reveal some of the deals they had that could lead them into problems. For instance, they could have been selling products higher than the organization recommended, or exaggerating costs only to record the amount of money expected by the organization and then embezzle the rest. Giving records would show that they have been selling the products expensively, which could make them be sacked. This further explains that they could have been manipulating records for the time she had not received them. They needed to get information right to avoid being caught. This could require writing new backdated records and having the relevant people sign them to justify credibility. Convincing all the people concerned could take time (Decision-making 2010).
Moreover, the managers had been used to making their own independent decisions without being monitored over some actions. Ms. Albanese comes in and immediately decides to order them. They would have felt the freedom they had enjoyed for long being denied. Giving records could mean they have given in to her authority. They would not tell what else they would be required to do from them, making them insecure over their freedom.
The managers could also have been contented with the trust the company had over them. They had never experienced that, which could mean they might have developed a mentality that the organization had confidence in them. Ms. Albanese seems not to be satisfied with this, from their point of view of the issue. Therefore, they could have worried why the procedure had changed, and whether their position will maintain its powers. The policy to have the contacts exceeding $5000 cleared through her office, for instance, could suggest to them that their position would have less power, and they had to keep consulting her for such deals.
Regional executives do not clearly understand the motive of her directive. As a result, they might have questioned among thems...