Case 1
The Recalcitrant Director at Byte, Inc.:
Corporate Legality Versus Corporate Responsibility
Abstract:
Mr. James Elliot, CEO and Chairman of Byte Products, Inc., presents his
recommendation to the Board of Directors to purchase an existing plant in Plainville as a
temporary plant until the new one is on line in three years. All on the Board except.
Kevin Williams from the eleven seem to favor the proposal.
Byte Products has three existing plants operating at full capacity (24 hours a day
and 7 days a week) these three plant are:
1. Electronic home components.
2. Sophisticated business components.
3. Engineering components.
The new plant of Arts manufacturing proposed to be built in the southwestern
United States will require three years before it is fully on line. This means that Byte
cannot meet the anticipated demand for its products. Alternative solutions have been
explored:
1. license Byte products and technology to other United States manufacturers, and
2. Overseas facilities and licensing.
Top management found an existing plant in Plainville, that would meet the
company’s immediate production needs until the new plant will be online in three years.
The Plainville facility had been closed for the last eight years. It would take about three
months to get the Plainville plant online.
The discussion between Elliott and Williams focuses on the impact on the town
and on the potential 1,200 employees of opening this temporary plant. The town and the
townspeople had gone through a catastrophic closing eight years ago when the plant in
question was closed. After a lengthy discussion between Elliot and Williams, a recess in
the meeting is called. When the board meeting is reconvened, a major shift has taken
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place. The vote could be 7–4, or 6—5 for the proposal, but Elliott desires a unanimous
vote. As the case ends, Williams is asked if a compromise can be reached, but Williams
said: Respectfully, "I have to say no."
Strategic Decisions Making Process at Byte, Inc.:
We have eight steps for strategic decision making process to improve the making of
strategic decision and theses steps are:
Strategy Formulation Strategy Evaluation and
Implementation Control
External Factors
Internal Factors
Strategic Factors
Performance
Mission, etc... Strategic vision,
GovernanceCorporate
AlternativesStrategic
& MissionReview Objectives
1A 1B 2 3 4 5A 5B 6 7 8
x o o x o x
o - Emphasized in Case x - Covered in Case
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The case covered the performance in term of profitability when Mr. James Elliot,
CEO and Chairman of Byte Products, Inc., presents his recommendation to the Board
of Directors to purchase an existing plant in Plainville as a temporary plant until the
new one is on line in three years. to reduce the cost as minimum as.
The case emphasized at the corporate governance, because all the Directors specially
William give his opinion about the purchase of existing plant in Plainville and this
performance about the social responsibility of local community both town and people.
The case emphasized external factors such as the competitors at the market and how
Byte Products, Inc. ever be at a market leader with 32% of the market share.
The case emphasized strategic factors such when the case talk about the Byte
Products, Inc. founder vision and mission that the manufacturing facilities would be
domestic.
The case emphasized strategic alternatives and pinpoint the problem area of
externally manufacturing facilities and this conflict with the vision and mission of
Byte Products, Inc. and gives the alternative by Mr. James Elliot, CEO and Chairman
of Byte Products, Inc., presents his recommendation to the Board of Directors to
purchase an existing plant in Plainville as a temporary plant until the new one is on
line in three years.
Finally the strategy implementation covered at this case, when all on the board except
Kevin Williams from the eleven seem to favor the proposal of Mr. James Elliot. but
the implementation of the proposal cut when Williams said: Respectfully, "I have to
say no." answering Mr. James Elliot. because there is an ethical and social
responsibility of local community.
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Recommendations:
Opening a new temporary plant may be an ideal answer to the lack of capacity,
but the new location is far from ideal. Elliott must weigh the problems associated with
the new plant to the benefits of increased capacity. If all forecasts confirm the need for
the increased capacity before the new state-of-the-art facility opens in three years, then
perhaps Elliott should seek an alternative location.
Since the new plant will be located in the southwest, perhaps temporary space can
be found there. Another alternative would be to plan production of the new plant to open
in stages. Perhaps that would forestall some of the demand requirements. A third
alternative would be to try to locate manufacturing space nearby one of the existing Byte
facilities. When the temporary plant would close, job opportunities could be found in the
permanent facilities. Production efficiency might increase production at the existing
facilities. If no other alternative is available, then Byte should be up front about the
temporary nature of the work. Byte might have to offer assistance to workers in the form
of housing or credit. Byte might also guarantee jobs in the new southwestern plant to any
worker willing to relocate. Byte must see the opening of the temporary plant as a means
to stop the erosion of the market share, but not as a way to increase profit margins.
Understanding that the facility would never boost the bottom line is necessary.
Sacrifices might, or must, be made by Byte if they go with the Plainville plant.
