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MOUNTAINSIDE INDUSTRIES

Mrs. R. K.Hill, owner of Mountainside Industries, has called you in as a consultant.  Believing that tighter coordination among the divisions of her company was necessary, she created the post of general manager a year ago and hired Don Henson, an experienced accountant, to fill it.  Things have not worked out well, however, and she is now seeking your advice.

After studying the situation, you have come up with the following information.  Write her a report -- accompanied by a letter of transmittal -- advising her about what to do now. 

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When Don Henson came to Mountainside Industries a year ago, he understood that his assignment was to bring about tighter coordination among its four divisions.  The company had earlier experienced great success, but in recent years competition has become much more serious, and now Mrs. Hill, the owner, recognizes that the company must make its operations more efficient if it is to survive.

Presently in its 37th year, Mountainside Industries is the result of mergers among four originally separate small cottage industries -- candy, toys, crafts, and furniture -- in four widely dispersed Appalachian mountain locations.  Using the philosophy of a “benevolent owner,” Mrs. Hill originally allowed each of them to continue to operate pretty much as it did before the merger.  Within the last few years, however, she has found that two of the divisions (crafts and furniture) have repeatedly placed large orders with the same supplier without each other’s knowledge and thereby failed to take advantage of quantity discounts, and that the candy and toy divisions have been duplicating their marketing efforts and failing to use some obvious opportunities for combining their products.  Mr. Henson’s job was to correct these and similar problems.

Mrs. Hill notified the divisions about Mr. Henson’s appointment but then left the work to him, without interference.  After making initial visits to each of the divisions, he communicated thereafter by letter and telephone.  Since he noticed, as Mrs. Hill had told him he would, that major purchases were being made without central coordination, he quickly instituted a policy requiring each divisional purchasing office to submit all purchase orders for $1,000 or more to him for approval before sending them to vendors.  His letter to the divisions explained the reasons for the new procedure.

At the end of the first year, however, his office had not received any purchase orders at all.  Investigation showed that many in excess of $1,000 had in fact been issued all along during the year. 

This is the point at which Mr. Henson came back to Mrs. Hill for advice about how to get cooperation from his subordinates.

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