I need help to check my answer to make sure I am on the right track. Please answer How would you Characterize the structure of Fabulous Footwear and/or In what ways is the structure appropriate or inappropriate for frequent changes in shoe styles

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CASE FOR ANALYSIS Fabulous Footwear 139 sell in the lower-price market for $27.99 to $29.99 per Fabulous Footwear produces a line of women's shoes that advantage of the flexibility of a small organization to cre- pair. Profits averaged 30 cents to 50 cents per pair 10 years ate designs that appeal to customers. Thus, demand can labor and materials costs have risen so much in the inter ago, but according to the president and the controller, Allison, incidentally, appears to have an artistic talent in be created and a price set high enough to make a profit vening period that profits today average only 25 cents to styling and a record of successful judgments in approving 30 cents per pair Production at both the company's plants totals 12,500 large competitors, Allison has said: high-volume styles over the years. Regarding how Fabulous Footwear differs from its pairs per day. The two factories are located within a radius of 60 miles of Chicago: one at Centerville, which produces you see, Brown and International Shoe Company both pro 4,500 pairs per day, and the other at Meadowvale, which produces 8,000 pairs per day. Company headquarters is duce hundreds of thousands of the same pair of shoes. They located in a building adjacent to the Centerville plant. store them in inventory at their factories. Their customers, It is difficult to give an accurate picture of the num- the large wholesalers and retailers, simply know their line ber of items in the company's product line. Shoes change and send in orders. They do not have to change styles nearly as often as we do. Sometimes I wish we could do that, too. in style perhaps more rapidly than any other style prod- It makes for a much more stable and orderly system. There uct, including garments. This is chiefly because it is possi- is also less friction between people inside the company. The ble to change production processes quickly and because, salespeople always know what they're selling the produc- historically, each company, in attempting to get ahead of tion people know what is expected of them. The plant per competitors, gradually made style changes more frequently. sonnel are not shook up so often by someone coming in one At present, including both major and minor style changes, schedules. The styling people are not shook up so often by morning and tampering with their machine lines or their Fabulous Footwear offers 100 to 120 different products to customers each year. the plant saying, "We can't do your new style the way you A partial organizational chart, showing the depart- want it." ments involved in this case, appears in Exhibit 12.9. To help Fabulous Footwear be more competitive against larger firms, Allison recently created an e-commerce and social media department. Although his main interest Competitive Structure of the was in marketing over the Internet, he also hoped new Industry technology would help reduce some of the internal fric- tion by giving people an casier way to communicate. He Very large general shoe houses, such as International and invested in sophisticated new information technology and Brown, carry a line of women's shoes and are able to hired consultants to set up a company intranet and pro- undercut prices charged by Fabulous Footwear, principally vide a few days' training to upper and middle managers. because of the policy in the big companies of producing Katherine Olsen came on board as director of e-commerce, charged primarily with coordinating Internet marketing large numbers of stable" shoes, such as the plain pump and sales. When she took the job, she had visions of one and the loafer. They do not attempt to change styles as rap- day offering consumers the option of customized shoe idly as their smaller competitors. Thus, without constant changes in production processes and sales presentations, designs. However, Olsen was somewhat surprised to learn that most employees still refused to use the intranet even they are able to keep costs substantially lower. Charles F. Allison, the president of Fabulous Footwear, for internal communication and coordination. The process for deciding on new styles, for example, had not changed feels that the only way for a small independent company to be competitive is to change styles frequently, taking since the 1980s. Part 5! Min e Dynamic Pro EXHIBIT 120 Partial Organization Chart of Fabulous Footwear President C. E Allison Styling Manager M. T. Lawson Controller M. M. Fraser Director of E-commerce K. T. Olsen Sales Manager L.K. Shipton Designer John Flynn Pattern Maker J. Richards Order Clerk R. Ferguson Statisticias M. Freeman Plant Superintendent Meadowvale Plant Superintendent Centerville 22 Salespeople Assistant Superintendent Paul Robbins Foreman, Cutting Foreman Bottoming Foreman, Prefitting Foreman Finishing Foreman Fitting Foreman, Packing and Shipping ore lielony W mou Tu 700 W 3-4 Chapter 12: Innovation and Change Major Style Changes in process to the foreman of the next department), the latter holds the inventory in storage and sends one pair cach to The decision about whether to put a certain style into pro Allison and Lawson, If they approve of the finished product, duction requires information from a number of different Allison instructs the shipping foreman to mail samples to people. Here is what typically happens in the company, each of the company's twenty-two salespeople throughout it may be helpful to follow the organization chart (see the country. Olsen also receives samples, photos, and draw- Exhubit 12.9) tracing the procedure ings to post on the web page and gauge customer interest. M. T. Lawson, the styling manager, and his designer, Salespeople have instructions to take the samples John Flynn, originate most of the ideas about shape, size of immediately (within one week) to at least 10 customers. heel, use of flat sole or heels, and findings (the term used Orders for already established shoes are normally sent to for ornaments attached to, but not part of the shoes-- Ralph Ferguson, a clerk in Shipton's office, who records bows, straps, and so forth). They get their ideas principally them and forwards them to the plant superintendents for from reading style and trade magazines or by copying top- production. However, salespeople have found by expe- flight designers. Lawson corresponds with publications rience that Martin Freeman has a greater interest in the and friends in large stores in New York, Rome, and Paris success of new trials," so they rush these orders to him to obtain pictures and samples of up-to-the-minute style by overnight mail, and he in turn places the first orders for innovations. Although he uses e-mail occasionally, Lawson a new style in the interoffice mail to the plant superinten- prefers telephone contact and receiving drawings or sam- dents. He then sends off a duplicate of the order, mailed in ples by overnight mail. Then, he and Flynn discuss various by the salespeople, to Ferguson for entering in his statisti- ideas and come up with design options. cal record of all orders received by the company. When Lawson decides on a design, he takes a sketch Three weeks after the salespeople receive samples, to Allison, who either approves or disapproves it. If Allison Allison requires Ralph Ferguson to give him a tabulation approves, he (Allison) then passes the sketch on to LK of orders. that time, he decides whether the salespeople Shipton, the sales manager, to find out what lasts (widths) and the web page should push the item and the superinten- should be chosen. Shipton, in turn, forwards the design dents should produce large quantities, or whether he will to Martin Freeman, a statistician in the sales department, tell them that although existing orders will be produced, who maintains summary information on customer demand the item will be discontinued in a short time. for colors and lasts. According to Allison, the procedures outlined here To compile this information, Freeman visits salespeople have worked reasonably well. twice a year to get their opinions on the colors and lasts that The average time from where Lawson decides on a design an- are selling best, and he keeps records of shipments by color til we notify the Centerville plant to produce the pilot run is and by last. For these needs, he simply totals data that are two weeks to a month. Of course, if we could speed that wp. sent to him by the shipping foreman in each of the two plants, it would make the company just that much more secure in When Freeman has decided on the lasts and colors, he sends Allison a form that lists the colors and lasts in which staying in the game against the big companies, and in taking the shoe should be produced. Allison, if he approves this bickering among people around here involved in the styling sales away from our competitors. There seems to be endless list, forwards the information to Lawson, who passes it on to Jenna Richards, an expert pattern maker. Richards phase of the business. That's to be expected when you have move fast--there isn't much time to stop and observe all makes a paper pattern and then constructs a prototype in of the social amenities. I have never thought that a formal leather and paper. She sends this to Lawson, who in turn approves or disapproves it. He forwards any approved worked out a customary system here that functions well. organisation chart would be good in this company-we're prototype to Allison. Allison, if he, too, approves, notifies Lawson, who takes the prototype to Paul Robbins, assis- M. T. Lawson, manager of styling, said that within his tant to the superintendent of the Centerville plant. Only department all work seems to get out in minimum time; he this plant produces small quantities of new or experimen- also stated that both Flynn and Richards are good employ. tal shoe styles. This is referred to as a "pilor run" by exec- ces and skilled in their work. He mentioned that Flynn had been in to see him twice in the last year: Robbins then literally carries the prototype through to inquire about his (Flynn's future in the company. He is the six production departments of the plant-from cutting to finishing--discussing it with each foreman, who in turn 33 years old and has three childrent. I know that he is eager works with employees on the machines in having a sam to make money, and I assured him that over the years we can raise him right along from the $65,000 we are now Toe is delivered by the finishing foreman to the shipping ance we hired in from the design department of a fabric ple lot of several thousand paits made. When the finished paying. Actually, he has learned a lot about shoe styles foreman (because of the importance of styling, Allison has directed that each foreman personally deliver styling foods company six years ago. utives at the plant 51 Part 5. May The result of a second similar pro Fabio Robbins, assistant to the superintendent of the John Flynn revealed was actually becoming dissatisfied with this posts. All abowe production the next year, but this time sales were time companies copy sales a generally accepted practice within the industry. But the picked up a real feel for de ses, and on eral times I've cuerested that the company Problem Between Lawson and all its w Rootwear a style tonder and also increase caer volume. When Robbins I ask Lawson about this, he says it takes too much time for the designer to create onginals--that we have all we can Frequently, perhaps 10 to 12 times a year, die gerne hundle to do research in trade magazines and maintanco ames between Melawon manager at han Tracts feeding was the results of experts. Besides, he ser styles are standing the test of the marketplace. plant Robbins said The styling people don't understand what duce a shoe in the quantities that we do no Projects X and Y changes in production that was the me style quickly at of thon Thay de mitralie Flynn also said that he and Martin Freeman had frequently has a lot of reaches that has to be dete talked about the styling problem. They felt that: some things they dream w take much from Alison is really a great president, and the companys machines than others, the creating de ly wuld be lost without lim. How we seen times production line. If they put a bor strap when he lost a lot of money on bad pudgments in style. Not rather than then, it may have to be marty tomes-perhaps six or se tumes in the last eightom dile or later machines while there wa pilap morths. Also, he is, of course, extremely busy as president ing machines on which this complicated line of the corporation. He must look after everything from fo- performed. This cost the plant the nanemg from the banks to bargaining with the union. The are times where they get the proper la result is that he is sometimes alable to do his styling the formen and work time or the frames appronals for several days, or een two weeks. In a business through time to have new production like this, that kind of delay can eat mone It also makes to take the plant capacity thenated by or stop bim slightly edgy. It tends, at times when he has many other duction on old style Lawson dere know much things to do, to make him look quickly at the styles se sub- production and sales and the whole companhia mit, or the prototypes Richards makes, or even the finished does as to bring shoes down here to the plants shoes that are sent for approval by the shipping foreman a messenger boy Why should be be ne burd ter set Sometimes I worry that he makes two kinds of errors. He with He and getting pand any more than om simply rubberstamps what we're done, which makes send position in the plant is just as important as his ing these things to from a waste of time. At other times he makes snap judgments of his otun, overruing those of us Lawson, in turn, said that he has a difficile time ting along with Robbins who have spent somach tune and expertise on the shoe We do think he has good judgment, but he homself has said There are many times when Robbons is just at times that he meashes he had more time to concentrate on take prototypes to him asortimes a month and styling and approval of prototypes and final products, menor style changes tonur eight time Flynn further explained and this was corroborated by Ty time that we have problems in wetting there but he knows only about the plant and telling mo Freeman that the two had worked out two plans, which som to do anyol. When we first joined the they referred to as "project X" and "project Y" In the first got along all reght, but he has gotten harder and hard Flynn created an original design that was not copied from get along with existing styles. Freeman then gave special attention to color and last research for the shoe and recommended a color line that didn't exactly fit past records on consumer Other Problems purchases--but one he and Flynn thought would have "great consumer appeal. This design and color recom- Ralph Ferguson, the clerk in the sales department she mendation was accepted by Lawson and Allison, the shoe receives orders from salespeople and forwards totals for went into production and was one of the three top sellers production schedules to the two plant superintendents. during the calendar year. The latter two men did not know complained that the salespeople and Freeman are by that the shoe was styled in a different way from the usual him in their practice of sending experimental shoes procedure Freeman. He insisted that his job description one of Chapter 12: Innovation and Change 519 we written descriptions in the company) gives him respon ability for receiving all orders throughout the company and approached Charles Allison several times about the need for maintaining historical statistics on shipments. to make greater use of the expensive and sophisticated Both the salespeople and Freeman, on the other hand, computer information systems he had installed. Although said that before they started the new practice that is, when Allison always agrees with her, he has so far done nothing Ferguson still received the experimental shoe orders). to help solve the problem. Olsen thinks the new tochnol there were at least 8 or 10 instances a year when these ogy could dramatically improve coordination at Fabulous Footwear were delayed from 1 to 3 days on Ferguson's desk. They reported that Ferguson just wasn't interested in new styles, Everyone needs to be tworking from the same data at so the salespeople just started sending them to Freeman." the same time. As soon as Lauson and Fly come up Ferguson acknowledged that there were times of short with a new design, it should be posted on the intranet delay, but said that there were good reasons for them so all of us can be informed. And everyone needs ac cess to sales and order information, production sched They the salespeople and Freeman) are so interested in ules, and shipping deadlines. If everyone--from Allison me designs, colors, and lasts that they can't understand down to the people in the production plants-was kept the importance of a systematic handling of the whole order up to date throughout the entire process, we wouldn't procedure, including hoth old and new sbor styles. There have all this confusion and bickering. But no one around must be curacy. Sure, I give some priority to experiment bere wants to give up any control--they all have their tal orders, but sometimes when rush orders for existing own little operations and don't want to share informa- company products are piling up, and when there's a lot tron with anyone else. For example, I sometimes don's w planning I have to do to allocate production between even know there's a new style in the works until I get Centerville and Meadornale, I decide which comes first finished samples and photos. No one seems to recognize processing of these, or processing the experimental shoe that one of the biggest advantages of the Internet is to anders. Shipton is my boss, not the salespeople or Freeman. help stay ahead of changing styles. I know that Hymn has a good feel for design, and we're not taking advantage of I'm going to insist that there orders come to me, bis abilities. But I also have information and ideas that could help this company keep pace with changes and re- ally stand out from the crowd. I don't know how long The Push for New Technology we expect to remain competitiw using this cumbersome, slow-moving process and putting out shoes that are al Katherine Olsen believes many of these problems could ready behind the times. be solved through better use of technology. She has 3. If you were the CEO, how would you get employees to use the new information technology available within Fabulous Footwear? Questions 1. How would you characterize the structure of Fabulous Footwear? Explain 2. In what ways is the structure appropriate or inappro priate for frequent changes in shoe styles? What struc ture changes would you recommend