Covington Corrugated Parts & Services is a Virginia based company providing precision machine parts and services to the domestic corrugated box and paperboard industry. The business is owned by Larisa Harrison and operates from a 50,000 square foot factory in the rural Shenandoah Valley with 150 employees, many of them now nearing retirement. Due to changes in the economy and new competition their dominant 70 percent of the market share is rapidly declining. While management was focused on building the business, the box and paperboard industry was changing; plastics and reusable containers were becoming more prevalent. Management is now faced with the task …show more content…
Economic and industry changes have caused a decrease in customers and increase in competition. Surviving industry manufactures are investing in technology and moving their operations overseas. If Covington is going to continue to be successful, the company needs a strategy for interacting with this competitive environment.
Communication problems among Covington’s management team stem from the lack of structural dimensions and established operating goals. The company has been operating organically in a mechanistic environment. The company would benefit more from standard rules, procedures, and a clear hierarchy of authority. The loose and haphazard structure to which it has grown accustomed has resulted in managers and directors wasting valuable time and resources by needlessly overlapping responsibilities.
The 50,000 square foot factory Covington operates from is located in a very rural area. A majority of the original employees were neighbors to the area and are now preparing for retirement. Larisa realizes she can’t expect their replacements to have the same values and work ethic. The pool of potential employees grows smaller every day as the area’s younger generation moves further and further away in search of more lucrative employment opportunities.
Covington’s managers cannot agree on the future direction of the company. The marketing manager recommends moving into new products and services, the director of finance believes the