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Blaze Manufacturing: A Costly Decision

Department of Business, University of the People

BUS 5910: Management Capstone

Instructor: Dr. Tamu Browne

July 14, 2021

Introduction

In this case study, two companies are involved: Blaze Manufacturing (BM) and Omega

Consulting Services (OCS). Blaze Manufacturing is a New York based, privately held textile

company that has been in business for twenty years despite the many obstacles it has faced due

to foreign competition and strict domestic regulations. Instead of following a traditional route of

mass-producing items through the retail chain, they instead accept individual job orders for

bedspreads and curtains with customizable options for customers (Causseaux & Caster, 2016).

Although the company has managed to stay afloat longer than many of their U.S.

counterparts, they are facing the discouraging situation of losing many customers to foreign

markets where costs of goods and labor are much lower. George, a large shareholder of BM and

owner of OCS, decides to help by sending Wendy, a highly qualified consultant and financial

advisor for OCS, to fill in as a controller for BM. George is hoping that Wendy’s expertise will

guide Joe, president of BM since its creation, and Bill, the lead salesman, in turning the company

around to start making more profits and reducing losses (Causseaux & Caster, 2016).

Step I: Identify the problem

Blaze Manufacturing is pursuing an unsustainable business plan. Based on Wendy’s

calculations of both gross profit margin and contribution margin, the company will be losing

either $1.25 or $1.08 per product sold at $77 each respectively (Causseaux & Caster, 2016).

Now we do not know the number of products needed to complete the order, but two issues arise

from its acceptance: 1) The company will sustain losses which will hurt their bottom line,

preventing them from being able to purchase the materials and labor needed for future orders. 2)

Accepting this order on these terms sets up a negative precedent with this new big customer
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because they will assume that BM will continue to complete orders based on a cheap product

price, which is unsustainable for the textile company.

Step II: Diagnose the causes

From a managerial perspective, the main employees in charge of making the necessary

changes and decisions do not seem motivated to listen to sound financial advice. Instead, Bill

and Joe argumentative and shortsighted. Knowles (2011) relates that a process is often unable to

fixed if key mangers are not on board with the changes. This mindset from both employees is

greatly hindering the operational success of BM and causes concern that their reluctance is

coming from a desire to gain commission or bonuses, instead of pursuing the company’s interest.

Additionally, not only is the managerial process inefficient, the manufacturing process is also

not optimal. Bill has to spend a major part of his time sorting out the issues with the quilting

machine instead of managing the factory (Causseaux & Caster, 2016). Investing in better

technology is an effective move for many companies (Laegaard & Bindslev, 2006). By investing

in better equipment, Bill will have the opportunity to improve operations at the company.

Step III: Prescribe possible alternatives

The proposed solutions in the case study do not seem highly plausible without intervention

from George. The recommendation is to not accept the order because of the anticipated losses.

However, since Joe is the company’s president, Wendy does not have the authority to decline the

order. Also, the case study mentions that “No, further analysis is needed” (Causseaux & Caster,

2016, p. 16). Although this may be true from an accounting mindset, Bill and Joe both seem to

be operating under the assumption that the analysis is wrong. Therefore, further analysis could be

useful to clarify the information. Also, the suggestion for Wendy to get her attorney involved or
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to consult an Ethics Counselor sound both costly and timely. Overall, the prescribed alternatives

do not seem practical or particularly effective based on the information provided about the case.

Step IV: Recommend a plan of action (decision/implementation)

According to Knowles (2011), processes that lose sight of the end goal need to refocus.

Therefore, Wendy should hold a meeting with Bill, Joe and George present so that everyone has

a chance to strategize together. According to Heisinger & Hoyle (2012), “Five ratios used to

evaluate profitability are the gross margin ratio, the profit margin ratio, return on assets, return

on common shareholders’ equity, and earnings per share” (p. 1093). Wendy could run through

all of these ratios during the meeting to show Joe and Bill in no uncertain terms where the

company stands financially and how much damage accepting an order at a loss will do to the

company. Then, she could run a cost analysis to show them that by increasing the price per

product, their commissions will increase as well. This move could appeal to their pecuniary

nature and would possibly incentivize them to agree to her strategy. Finally, she could talk to the

potential client herself to ask what other price offers they had received so that she could

determine if raising the product price was even a feasible option for BM.

Step V: Identify the Case Study’s Relevance to the Study of Business

The case study is relevant to the study of business because it shows the limitations placed

upon an employee when people refuse to listen to reason. According to Introduction to Business

(2012), “Analyzing, interpreting, and communicating information—and doing so clearly while

effectively interacting with people from all business disciplines” is the challenging part of

accounting (p. 594). Wendy is facing this situation firsthand because even though she has clear

data, the people in the case are not willing to take her data seriously. Additionally, this case

showcases the predicament that can be experienced when there is not a good chain of command
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and power is too centralized for change to be effective. Analyzing this scenario will help a

student strategize for facing this kind of situation in the future since employees’ personal

interests or information bias can prevent them from listening to good ideas and suggestions.

Conclusion

Although helpful strategies and insight can be drawn from Wendy’s situation and the eventual

outcome of Blaze Manufacturing, certain crucial details are not provided. For instance, the case

study is based on an actual company, but the name has been changed, thereby limiting the

student from conducting independent research on the company or using an analysis tool such as

the PESTLE for evaluation. It would be helpful to know what the market share is for the

company, whom their main competitors were on a national level, whether or not any efforts had

been made in the past to merge with the foreign competition and how professional is the

marketing team. The limited information gives a myopic view of the case; therefore, although the

case is helpful, the reader is prevented from completing a more thorough overall evaluation and

analysis of the business.

Reference Page

Causseaux, W., & Caster, B. (2016). Blaze manufacturing: An ethical analysis. Journal of
Business Case Studies, 12(1), 13-18.
Heisinger, K., & Hoyle, J. B. (2012). Accounting for managers. Saylor Foundation. Licensed by
Creative Commons by-nc-sa 3.0.
Introduction to business (2012). Lardbucket.org. Licensed by Creative Commons by-nc-sa 3.0.
Knowles, G. (2011). Quality management. Bookboon.com.
Laegaard, J., & Bindslev, M. (2006). Organizational theory. Bookboon.com