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CASE STUDY
The Recalcitrant Director at Byte Products, Inc
Dan R. Dalton, Richard A.Cosier, and Cathy A. Enz
Byte Products, Inc has been the industry leader (more than 32% market share) in the field of manufacturing specialized computer components . However, this great success also brings a problem for the company. Byte cant meet the high quantity demand for its products; even though all Bytes manufacturing facilities already maximized their production capacity.
Worrying that the company will lose its market share and attract more competitors into the market, CEO James M. Elliott and Bytes Board of Directors authorized for a new manufacturing facility in the southwestern United States. Unfortunately, it will take three years to get the plant completed. Jim Elliott, hence, determines to find a more short-termed like solution for the problem. Several suggestions such as licensing Bytes products to other manufacturers or foreign licensing were all considered but rejected. The company doesnt want to risk losing its patents. Moreover, the cost involved with these outsourcing transactions will make Bytes product price increase.
Finally,
there was one recommemdation that could solve Bytes problem in the short run came to Jim Elliotts attention. Members of Jims staff notified him about an abandoned plant currently available in Plainville, a small town in the northeastern United States. However, due to the poor location and high labor costs, there was a lot of doubts that the plant would be efficient and profitable. The staff all agreed that the plant, then, would be used for three years or so until the new plan could be built.
When Jim Elliott presents the temporary plant proposal to the 11-member board (himself, 3 inside members, 7 outside members), all except one member are