John, President of Plastic Packaging (a small bottle manufacturing company locat
ID: 433431 • Letter: J
Question
John, President of Plastic Packaging (a small bottle manufacturing company located in western Massachusetts), has decided that downsizing is the solution to the recent financial struggles that the company is experiencing as a result of a decrease in customer demand. Last Friday afternoon, John sent a mass e-mail to all of the employees at the facility to explain some of the disappointing financials and his decision to use a downsizing strategy to deal with the situation. The 75 employees of Plastic Packaging start to panic. During the afternoon break, the rumor mill is on overdrive in the breakroom. People are anxious, confused, surprised, and upset with this executive decision. Many of them wonder if there are better alternatives to the financial problems the company has recently experienced and they know that their president could have handled the situation at hand in a much more effective manner.
Please respond to the following questions in four distinct and labeled sections:
Identification: What are some of the main problems and related issues that you see within this scenario/case?
Analysis: What are the root causes and relevant factors contributing to the main problems that you identified?
Alternatives and Recommendations: What could John have done differently?
Action Plan: How should John carry out these alternatives that you recommended?
Explanation / Answer
Identification:
The problem at hand is with the decision taken unanimously as well as the manner in which it has been communicated to the employees. Downsizing should have been the last resort and there are other ways to cut down costs such as decreasing marketing or overhead spends, etc. Therefore, the quick and hasty decision to downsize is the problem that can be identified in the given scenario.
Analysis:
A thorough analysis of the case reveals that the president did not undergo a what-if analysis before deciding to go for downsizing. Employees are the core assets of any organization and he decided to let go of them without understanding the worth of their contribution. Moreover, the communication of the decision has been blatant and brutal which also created pandemonium. The communication could have been done in a more sensitive manner so that every employee would not have been left to guess about their future. Employees should have been given proper justification and support before going ahead with the downsizing.
Alternatives:
John could have looked at other avenues to cut down the costs. The decrease in customer demand could have been countered with innovative makrketing campaigns or certain discounts in order to lure more customers. The various administrative costs might have been cut down in order to reduce costs rather than going for downsizing.
Action Plan:
John should do a proper analysis of the costs involved in the entire manufacturing process. The bottlenecks in the process needs to be identified as well as the processes which lead to a higher conumption of funds need to be revamped. The processes which add value to the business needs to be retained and rest needs to be eliminated. This thorough analysis and steps taken accordingly can lead to a turnaround of the company without going for downsizing.
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