GROWING PAINS

GROUP 5:
ANKIT GUPTA
SHWETA MALLICK SRISHTI HARNE SUNANDITA THOUSIF MOHAMMED VAMSY KRISHNA
18 March 2013 Indian Institute of Management Raipur

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AGENDA
Case Summary Issues Five Forces Analysis Alternatives

Evaluation of Alternatives
Proposed Best Solution

Indian Institute of Management Raipur

18 March 2013

CASE SUMMARY
Waterway Industries, established in the year 1963, is in the business of manufacturing canoe. Until 1990, Waterways sales and revenues had increased with the market. By the end of 1992,company had begun selling its own line of compact inexpensive , high impact plastic kayaks. In order to grow in the new market, company should gear up its marketing efforts. So the CEO of the Waterway Industries, Cyrus Maher, hired Lee Carter. Lee Carter had been extremely successful in opening new sales channels, and she was personally responsible for 40% of the companys sales for the last two years. Increase in sale for the last two years have also led to high operating expenses. Company is spending huge amount in marketing expenses and pays more commission to reps and distributors. .

Indian Institute of Management Raipur

18 March 2013

ISSUES
Waterway Industries doesnt have schemes like retirement packages, golden handcuffs, stock options, deferred compensation arrangements for their top performers where as its competitor provide these schemes. Company has a reputation of tight wallet. CFO has left the company as Maher was not willing to redesign his compensation package to include equity.

Lee Carter was paid bonus only once in a year and she was not paid any commission for the sales.
Lee Carter is now planning to leave Waterway Industries as another company is willing to offer her a good compensation policy in the form of salary and equity position. Maher is now in a dilemma whether to redesign the Carters compensation policy or not.

Indian Institute of Management Raipur

18 March 2013

THE FIVE FORCES

Threat of Potential Entry (low) Manufacturing Department (increasing Capacity) New product development

PRODUCT : SALES AND MARKETING SKILLS

Threat of New Entry
Competitive Rivalry (high) Marketing skills are transferrable

Supplier Power

Competitive Rivalry

Buyer Power

Supplier Power (high) Lee Carter The second Designer New Marketing manager

Threat of
Substitution

Buyer Power (low) Cyrus Maher Looking for Expansion Competitors working on marketing department

Indian Institute of Management Raipur

18 March 2013

Threat of substitution (low) Outsourcing of sales and marketing

POSSIBLE ALTERNATIVES
1. No star rewards 2. Give star rewards

3. Revise Compensation: Conditional rewards

Incentives link to sales Establishing marketing department Equity based on grade and performance

Indian Institute of Management Raipur

18 March 2013

STRENGTHS AND WEAKNESS ANALYSISSTRENGTH OPTION WEAKNESS

No star rewards Cost saving Strategy formulation under control & organization culture remains intact No division of equity Best as long as companys future plans are not decided High morale Retaining of star performer Company will be able to hold employees from competitors. Employee morale will suffer Risk of leaving

Give star rewards

Cost incurred Raising the expectations of the employees Support the idea that employees were paid inadequate earlier Cost incurred May create disparity

Conditional rewards- Cafeteria approach

Growth and expansion of organization as a whole Suitable performance will be rewarded-high morale Company will be able to hold employees from competitors

Indian Institute of Management Raipur

18 March 2013

BEST SOLUTION SHORT RUN IMPLICATIONS

Revise Compensation of Lee Carter on a Short Term as the company needs to hold her as if for now.

Compensation could be revised by either of the following ways: A commission arrangement Or a stay-put bonus Or phantom shares in the business. This will lead to CartersSkill retention

High morale and productivity

Indian Institute of Management Raipur

18 March 2013

BEST SOLUTION LONG RUN IMPLICATIONS

In long run, Maher has to Define his new business goals clearly like where does he wants to position his company Define a compensation philosophy Strategy that explicitly supports those goals Develop marketing department. Which skills must be retained internally and which can be outsourced?

Indian Institute of Management Raipur

18 March 2013

BEST SOLUTION EFFECT ON COMPANY

Since its a small company Maher should go for ownership sharing only to old and trusted employees as They could contribute in shaping future strategies of the company

If Maher decides to pursue an aggressive growth strategy,

He could offer Carter a three-to-five-year performancebased cash incentive plan (based on her sales volume and on her ability to control marketing costs as a percentage of sales). He could offer Carter ownership sharing if she develops a marketing strategy suiting the future pursuits of the his.
18 March 2013 Indian Institute of Management Raipur

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THANK YOU

18 March 2013 Indian Institute of Management Raipur

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