1. Evaluate the decision to use “minimum performance standard” (MPS) targets instead of “stretch” targets
HCC has changed from ‘stretch’ performance targets to ‘minimum performance standards’. This was because the stretch targets didn’t work very well. The ‘stretch’ targets are doing a good job in companies that have a great understanding of their markets and that can influence the market. HCC however is too small to do marketing and market research, so it hasn’t enough information about their market. Because of that HCC wasn’t achieving any growth.
The stretch targets didn’t perform well because only a couple of divisions reached their targets and so the company couldn’t grow, as it wanted to. An implication is that the people at …show more content…
As explained above, there is no real improvement in systems. This could be attributed to the fact that not enough information is known in the company about the divisions. Hermetic seal, Glasseal and Sealtron are 3 (out of 4) divisions where the market is fragmented and so they don’t have much information about market share, business possibilities etc. This makes it very difficult to make any presumptions about targets and actually implies that they just set the targets at good luck. The other division, Hermetite, is in a very turbulent market. They have no idea what can be expected so it is very difficult to set minimum performance targets as well.
As a conclusion, it is evident that a lack of appropriate and accurate information concerning the market is the main problem in the HCC Industries Case study.
A first evident solution is investing in market research. This, though, would mean high expenses regarding the dearth of readily available marketing information. Whether the company’s financial situation would have been enough to support this research or not, is not stated in the case but smaller improvements could seem also plausible. Some improvements:
* An improvement that could be made it that the managers could be even more involved. Involvement can encourage the managers to work even harder.