Pelican Instruments, Inc.
1. Prepare the Report that you feel Amy Shultz should present to Mr.Park.
2. Put yourself in the position of the following six managers: general manager(EM); marketing manager (EM); manufacturing manager (EM); general manager (EI); marketing manager (EI); manufacturing manager (EI). These six managers compete for a share in the company's bonus pool. For each of the six, how would you make a case for your obtaining a share of the bonus pool?
Six managers, three from the EM division and three from the EI division compete for a share in the company’s bonus pool. For the purpose of this analysis, we take into account different variances within each division,
From the EM side, the General Manager could argue that
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He can also say that he is partially responsible for saving the company $ 342k in fixed manufacturing costs. From the EI General Manager’s point of view, the fact was that he was able to sell his product at a much higher price, earning his division an additional $ 1.6MM in profits. Although unfortunately he lost $ 689k from a lower sales volume, he clearly made it up to his division by earning them $ 6.9MM from market share changes, and an extra $ 4.9MM from changes in industry demand. As opposed to the EM division, the EI Division strategy must be one that follows differentiation and that focuses on building and penetrating market share in a fast growing industry. EI’s Marketing Manager can argue that thanks to his efforts, he was able to end the year with a 9% market share. Despite the fact that this is a lower percentage than what was budgeted, the Marketing Manager can argue that the size of the market is growing by the minute, therefore defending his 9% and proving that he earned $ 6.9MM from being able to own a larger piece of the pie (or the market). Because industry demand for the product is also increasing, the product is hot, a factor that also allowed his division to sell above standard prices. Like the EM Marketing Manager, he can finally also argue he is partially responsible for the important savings in fixed marketing