Debra Miller
Bus 434 003
Oct. 2, 1995
Foods Plus has several problems, but I think that its two most major problems are company structure and price control management.
The company was overly centralized but decentralization did not totally serve its purpose. Initiating and maintaining separate entities increased costs and is also duplication of administrative functions and operating and capital expenditures.
Short-term profitability is also emphasized and places a lot of pressure on the General Managers to meet short-term ROI targets, which in turn fosters the lack of concern for expenditures such as investments in research and development and marketing research.
These pressures, in turn, cause the companies to focus more energy on competing with each other instead of their rivals in the marketplace, thereby causing communication problems and controversy over the quality or pricing of byproducts exchanged between the companies.
Intra-group pricing was also a problem at Foods Plus. The lack of a policy on price control allowed the General Managers to set "preferential prices" that were not agreed on by others. Since most of sales were at preferential prices, Foods Plus had a difficult time in accurately accessing the financial performance of the varying companies, not to mention the waste of time spent in special meetings to settle the price disputes.
Copyright © Marilyn Shaw and Merri Incitti
(With permission from the author)
This page last updated November 1995
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