Assignment:
In answering questions, you are not to use any information or data from any individual in any format or process.
Except as noted for a particular question, answers may be developed from material that is provided in any format for this course.
Instructions: you are required to write the question you are answering and follow with your answer for that question.
Background for Question 1
Many industrial distributors consider that existing customers are a major profit generator for their firm. However, Porter's Five Forces suggests that in certain situations customers (buyers) can be a competitive force that adversely affects a firm's profitability.
Question 1
How can an industrial distribution firm ensure that its customers are not a competitive force that adversely affects the profitability of their firm?
Background for Question 2
Use material from Robbins and Judge's text (Organizational Behavior, 17thedition) and from Grant's (Contemporary Strategy Analysis. 9th edition)- both pertaining to mechanistic and organic organizational forms to answer the following question.
Question 2
After receiving your MID degree, you have been recruited to assist the CEO of a general line industrial distribution firm with annual sales of $150 million to determining whether the firm should continue to utilize a mechanistic structure. Develop and explain the factors that should be considered by the CEO.
(Note) the definition of a general line distributor is depicted in the Glossary.
Background for Question 3
You are the CEO and principal owner of a privately owned Electrical Distributor, the Alamo Company, which is headquartered in Houston, Texas, and has 14 branches located in the Southwest with 2017 sales of $2.5 Billion. Alamo sells electrical parts and supplies to such customers as residential contractors, commercial contractors, and industrial firms. Suppliers include Rockwell (Allen Bradley), Square D, Eaton-Cutler Hammer and GE. Earlier last week, the Senior Vice President of Operations, the Senior Vice President of Sales, two experienced sales employees and two experienced operations employees resigned from Alamo.
You have learned that these six former employees are now working for a small industrial distributor, Baytown Supply that has a single branch in Houston with 2017 sales of $5 million. Also, none of these six employees had signed a non-competing agreement with Alamo.1 You have also learned that a Large European Conglomerate (LEC) had acquired Baytown Supply in September 2017. LEC did not have a presence in industrial distribution in the U.S. and acquired Baytown Supply as a means to enter the U.S. Distribution market. You have also learned the following information about the entry of LEC into the U.S. as follows:
• Baytown Supply will be renamed and will become the U.S. headquarters for LEC located in Houston;
• LEC will add future branches in the Southwest and Southeast;
• The renamed Baytown Branch in Houston will be enlarged and will become a general line distributor and a distributor of electrical parts and supplies to residential contractors, commercial suppliers, and industrial ?firms;
There is a misconception that non-compete agreements are not enforceable in Texas. However, Texas courts will enforce a Texas non-compete agreement as long as it is in agreement with the non-compete statute, Texas Business and Commerce Code, Section 15.51. There is abundant case law addressing the reasonableness of a non-compete agreement's scope, duration, and geography and the analysis is fact- driven and addressed on a case-by-case basis. Executing a Texas non-compete agreement can be tricky. However, when properly executed, a non-compete agreement can be an excellent tool for the preservation of a company's goodwill and trade secrets.
Suppliers to the renamed Baytown Operation will remain the same as those firms that supplied the "old" Baytown operations. Those suppliers are: Rockwell (Allen Bradley), Square D, Eaton-Cutler Hammer, and GE;
Question 3:
As Alamo's CEO, what action plan would you develop to deal with the departure of Alamo's six employees to LEC? How would you implement that plan?