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Crisis at Wrentham Corporation Essay Paper
Question: Crisis at Wrentham Corporation A Case of Executive…
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Crisis at Wrentham Corporation
A Case of Executive Selection after Merger
On the morning of August 1, 2001, Hal Benning, chief executive officer of Wrentham Corporation, a large
diversified manufacturing company located in Houston, Texas, picked up the phone and punched in the number
of Frank Powell, chairman of the board and longtime friend and associate. The news would not be good.
“What’s up, Hal?” Frank asked. “You sound troubled.”
“The quarterly numbers are in and Computerstat is going to show another net loss, about $2.5 million. What’s
more, I’ve just learned that George Steele will be stepping down as division head at the end of the month to take
a position with one of our competitors. He wants to move on while he is still marketable. George feels that if he
stays and the division’s merger with Microstat fails, his career will be damaged”.
“I’m sorry to hear that, but I can’t say I altogether blame him,” said Frank. “This merger has been an
awfully messy business.”
“It’s been rough for all of us,” interjected Hal, “but we told the stockholders when we decided on the
acquisition that we could make the new combined division profitable.”
“That we did, Hal,” agreed Frank. “Obviously, we have quite a task in front of us. Where do we stand
today?”
“We are still well behind the planned integration schedule and our costs are way over budget. I know both
the Microstat people and our folks from Home Computer are trying to work together, but they just don’t share a
common vision for the business.” Hal continued, “For example, no one seems to agree about our international
strategy. The Home Computer managers view the domestic market as our bread and butter and see foreign
markets as only an incremental opportunity. On the other hand, Microstat’s position is that penetrating foreign
markets is the key to our future growth, profitability, and even survival. Operationally, we have the same sorts of
problems. R&D has not made significant headway on any project requiring cooperation between Wrentham and
Microstat people. My feeling is that we are to a large extent still managing two separate organizations.”
“I noticed that many of the manufacturing and financial reports are still segregated,” stated Frank.
“Integrating MIS remains a problem,” acknowledged Hal, “but what concerns me most is a lack of unity
and trust that extends all the way down to the factory floor. Out at the Santa Clara plant, Microstat people won’t
follow the advice of our process engineers because they don’t trust our knowledge of their products and markets,
and some of the Home Computer managers are blaming Microstat for our performance problems. This type of
divisiveness has to go. If it continues, we’ll never achieve greater economies of scale or improve our product
line.”
“The competition is getting ferocious,” observed Frank. “The low-end marketers are beating us on price
and the market leaders have superior products. If that isn’t bad enough, getting access to distribution channels
has never been tougher and some of our costumers believe we may not be around much longer. Our dealers are
getting nervous. If we don’t take some action soon we’ll be in trouble.”
“True enough, but the real problem is here at home, Frank. People are getting burnt out on the integration
program; all those task forces and meetings divert their attention from the problems facing the business in the
marketplace. We have to find someone who is strong enough to turn this division around.”
“You’re quite right, Hal. I think we need to bring in someone to help us with this one. Why don’t you see if
Bill is available?”
“Agreed. I’ll take care of it right away.”
BACKGROUND
Wrentham Corporation was founded in 1936 by William Wrentham as an office equipment firm. In 1978, it
entered the microcomputer industry and two years later was restructured into three autonomous divisions:
Wrentham Office Supply, Wrentham Communications, and Home Computer, now called Computerstat. Before
the merger, Home Computer, with its headquarters and manufacturing facilities located in Houston, Texas,
designed and produced relatively unsophisticated, low-priced microcomputers for both the home user and
business market segments. Its key strength was in the home user market, a segment that represented nearly 80
percent of Computerstat’s total sales. It also sold machines to small and medium-sized businesses. With annual
sales of $214 million per year, Home Computer was one of the larger microcomputer manufacturers in the United
States. The division survived an industry shakeout in the mid ‘90s but had been unable to establish a leadership
position in the PC industry.
Starting in 1998, Home Computer made some tentative attempts to sell PCs in Europe, particularly in
France, Italy, and the United Kingdom, but had not been particularly successful. The great majority of its sales
were still concentrated in the continental United States and distributed through mass market channels.
Crisis at Wrentham Corporation Essay Paper
RUBRIC |
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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