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Walden's success metrics

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Walden International, the proposed new parent company of Able, is a large multinational conglomerate. It is an extremely financially well-run company, with an emphasis on short-term, quarterly results. In fact, it is Walden's key value proposition to its stockholders that each quarter's sales and pretax profits will be greater than the prior year's corresponding quarter. Walden has a 35-year record of consecutive quarterly increases and absolutely every other corporate objective is subordinate to extending this streak indefinitely. Walden works very quickly re-engineering and consolidating the common functions of its acquisitions into its own administrative services. These functions include accounting, legal, engineering, and customer service. The savings that are realized through the elimination of these common services are usually passed on to the bottom line. Sometimes, if a good case can be made, those funds are reinvested in the new subsidiary.

One of the biggest obstacles to the implementation of a successful business strategy is the clash of value systems between a parent and subsidiary. These differences often manifest themselves in conflicts between the various levels of strategy: corporate, business, functional, and operating. Below are a number of the sticking points between Able and Walden. Discuss the steps you would take to address the issues.

How would you reconcile Able's need for building market share (long-term strategic business objective) with Walden's drive for year-to year quarterly increases in sales and pretax profit (short-term, corporate objective)?

Walden's success metrics of head count control, inventory management, inventory turnover, and days sales outstanding can be inhibitors to growth vitally needed by Able. What would you do to moderate these functional objectives and make them work for Able?

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How would you reconcile Able's need for building market share (long-term strategic business objective) with Walden's drive for year-to year quarterly increases in sales and pretax profit (short-term, corporate objective)?

In order to reconcile the conflicting objectives of Able and Walden, the first step will be to sit with the management of both the companies in order to reach a win-win solution for both the organization. IF management of both the companies will meet together and discuss their viewpoints, they could develop a midcourse action which will satisfy most of the objectives of both the organization, be it Able's need for market share or Walden's drive for YOY quarterly increase in sales and pretax profits. A common solution and strategic plan can be developed which will synergize Able's longer term objectives with those of Walden's shorter term goals.

Walden's leadership and management need to formulate their short term goals of sales and profitability in such a manner that it does not conflict with the longer term objectives of Walden. In other words, the shorter term goals should be formulated in such a manner so that it provides strong platform for Able to achieve its longer term goals. Walden's objectives of making Able's acquisition a successful one will not be achievable if its shorter term objectives would conflict with the Able's longer term goals. Therefore, Walden's top brass will need to sit with Able's management and find out how Able's longer term objectives will pave way for achieving Walden's shorter term goals as well. In other words, it will need to find win-win course ...

Solution Summary

Walden's success metrics of head count control, inventory management, inventory turnover, and days sales outstanding can be inhibitors to growth vitally needed by Able. What would you do to moderate these functional objectives and make them work for Able?

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