2. Skill-Building Exercise 14-A: Costs Reduction through Information Technology. Page 535. (10e, Constructive and Destructive Cost cutting, page 451) Do exercise individually and use a work experience to support your answer. A contribution of this exercise is that it translates the wonders of information technology into concrete savings for a company. The cost savings from information technology have helped some companies and hurt others. For example, drastically fewer photocopies are made today because of the widespread dissemination of e-mail messages, and fewer letters are mailed. You might identify savings in your company due to the use of Infomation Technology.

Index 535 Grundig AM/FM/Shortwave radio, 116-117 GSI Commerce, 21 Nestle, 54 Northwest Airlines, 491-492 United Refining Company, 437 United Technologies Corp., 442 USB, 52 0.C.Tanner Maritz, 336 Hallmark Cards, 8 Harley-Davidson, 102-106, 405 Hewlett-Packard company split, 227 self-managed work teams at, 393 strategic thinking at, 109 Hilton Worldwide, 255-256 Home Depot, 271-272 Honda, 71, 277 Honeywell, 53 Hyundai Corp., 71, 426 Parker Hannifin Corp. 442 PayPal, 129 PepsiCo, 260 Pfizer, 199-200, 361 Philidor, 438 Phillips Healthcare, 231-232 Piaget, 108 Plante Moran, 457 Pleasant Valley HVAC, 143 Porsche, 231 Portland Events Planners, 284 Pratt Industries, 55 Prudential, 36 Valeant Pharmaceuticals, 438 Valmet Automotive, 231 Vault.com, 457 Vioxx, 305 Virgin America, 148 Virgin Records, 222 Volkswagen, 45, 242 Vroom, Victor H..338 Walmart, 4950, 74, 116 Warby Parker, 148 Waste Management, 55 Western Electric, 23 Women RidersNow.com, 104 Xerox Corp. 54,436 IBM acquisitions, 267 executive communication, 370 knowledge management at, 364 organizational structure of, 229-230 revenue per employee, 436 virtual teams at, 395 IKEA, 241 International Monetary Fund, 306 Intuit, 167 iPhone, 26 RAND Corporation, 442 Recycle America, 55 Rightpoint, 52 Royal Dutch Shell, 166-167 Yahoo, 114,353 Yammer, 359 Yum Brands, 336 Zappos, 241 Zygna, 52 JCPenney, 87 JetBlue Airways, 232 Johnson & Johnson (18]), 226-227, 238 Samsung, 116, 127-128 Schindler Group, 145 7-Eleven, 157 Shorewood Liquidators, 161-162 Sloan Kettering Cancer Institute, 107 SolarCity Corp, 129 Sony-Ericsson 71 Space Exploration Technologies (SpaceX). 129 Sprint, 107 Starbucks, 35, 454-455 Starfire Systems, 108/ Symantec, 302 Kellogg's, 10, 251 Kraft, 57 Lenovo, 127-128, 240 Lever, 101 Lockheed Martin, 56-57 Macy's, 116, 242-243 Marshall's, 19 Mary Kay customer relationships, 39 products for Chinese consumers, 81, 82 rewards program, 338 McDonald's, 73, 192-193 McKinsey & Company, 43,228,368 McKinsey Global Institute, 17 Mercedes-Benz, 71 Merck, 305 Merrill Lynch, 321 MGM Resorts, 88 Microsoft CEO salary, 44 Creativity space, 150 remote workforce options, 206 staffing excellence, 117 Monster 75 Morgan Stanley, 423-424 Mrs. Fields Cookies, 108 Tagboard, 147 Target, 74, 175 Task Rabbit, 191 Tata Group, 75 Tesla Motors Corp, 129-130, 138 Tim Hortons, 219 T.J. Maxx, 19 Toyota product safety problems, 242, 442 U.S. manufacturing facilities, 71 Trechouse Island. 3 Twitter, 359 Subject Index absenteeism'tardiness, 460 abusive ive supervision, 462 ACA (Affordable Care Act: 2010). 327 accommodative style of conflict resolution, 411 accountability. See control process accounting. 431 achievement need, 303.327 acquisition, cash flow as attraction for, 439 action plans for decisions, 133 for objectives, 122 from planning, 105 for substandard performers. 467-68, 471 active listening 372 activity-based reduction (downsizing: 230 ADA (Americans with Disabilities Act: 1990). 2594, 457 adaptability, 300, 311 add-backs, 438 addiction problems, 460 administrative management, 21-22 Uber, 216 Ulysse Nardin, 112-113 United Auto Workers (UAW). 47-48,211 United HomeCare, 206 United Parcel Service (UPS) Big Data use by, 137 horizontal structure of, 233 outsourcing to 231-232 administrators, 7 affiliation need, 327,329, 362 affirmat action, 259 Aftordable Care Act (ACA: 2010).227 African-Americans contributions of 22 Teen unemployment rates, 35 6. How might the use of, "revenue per employee" 7. In several companies, a performance standard for provide useful information to the owner of a pro- fessional sports team, such as hockey, football, or Chapter 14 Essentials of Control 451 maintenance technicians is to have relatively few demands for service from the manufacturing depart- ment. Explain the logic behind this performance standard. baseball? Skill-Building Exercise 14-A: Constructive and Destructive Cost Cutting Using in-person interviews, phone conversations, or include yourself as an interviewee for this exercise. Do emails, text messages, or social networking sites, do some the same for useless, or destructive, cost cutting. Look live research on cost cutting with several individuals. Ask for patterns. What type of cost-cutting measures is likely your respondents for examples of useful, or constructive, to be well accepted by workers? What type of cost-cut- cost cutting they have observed on the job. You might ting measures is likely to be resisted by workers? Financial Result $255,675 15,500 88,000 14,200 Skill-Building Exercise 14-B: Financial Ratios Cadence invested a $50,000 inheritance as equity in a franchise print and copy shop. Similar to well-estab- Item lished national franchises, the shop also offers desktop Revenues publishing, digital printing, and computer graphics ser- vices. Jessica's revenue-and-expense statement for her Beginning inventory first year of operation follows: Purchases Working individually or in small groups, compute End inventory the following ratios: gross profit margin, profit margin Cost of goods sold (return on sales), and return on equity. Groups may Gross profit compare answers. Discuss whether you think Jessica is Salaries expense operating a worthwhile business. Rents and utilities expense Miscellaneous expense Maintenance expense Total operating expenses Net income before taxes Taxes (40%) Net income 89,300 166,375 47,000 6,500 1,100 750 55,350 111,025 44,410 66,615 CASE PROBLEM 14-A "Let's Boost our Revenue per Employee" Cecilia is the CEO of Practical Design, a company that might be able to get by without replacing a few of the manufactures and sells low-priced furniture for the office employees who will quit or retire in the next year or so. and home. The company employees 98 employees, and Having fewer employees translates into more revenue has annual revenues of $16 million. Last week, Cecilia per employee." sent a message on a shared website expressing her con- cern about the relatively modest revenue per employee if we are focusing too much on revenue per employee. It Lia, the head of information systems, said, "I wonder of $163, 265. She wanted her top-management team to is somewhat of an arbitrary metric that detracts from prepare for a Tuesday morning meeting to discuss how the success of Practical Design in a highly competitive to enhance the revenue per employee at Practical Design. industry." Cecilia began the meeting by stating, "I am pleased Roman, the head of finance, offered this idea: with our company's financials in general, but it seems "Before we make a decision, I am going to review the our revenue per employee is on the low side. I under- company records for 10 years, and determine the pattern stand we are in a labor intensive industry, so we can't of our revenue per employee. I am also going to try to have revenue per employees similar to an investment dig up information on the revenue per employee of our bank or a software company. Any ideas, folks?" competitors." Dion, the manufacturing head offered this com- Cecilia concluded, "All your ideas have merit. I am ment: "I see room for automating a few of our man- going to carefully review your suggestion, and get back ufacturing processes, but that would take quite a big to you within 10 days." investment in new machines. Stacey, the head of sales and marketing said, "I think Case Questions we could improve our commission structure for our best 1. Explain which suggestion you think Cecilia should sales representatives. If the sales representatives generate implement more revenue, our revenue per employee would increase 2. What other suggestions might you offer Practical automatically." Design for boosting its revenue per employee? Mason, the head of office administration and 3. What do you think of Lia's suggestion to not worry human resources suggested, "We might be able to reduce about revenue per employee? our headcount a little. We could consolidate a few jobs, and dismiss a few of our worst performers. Also, we