A Case For Analysis: Catastrophe or Opportunity? TM Abbott, February 26 2012
A Case for Analysis: Catastrophe or Opportunity?
Originally developed for theInterdisciplinaryEd.D. Program in Leadership,
Creighton University
Abstract
A case study in strategic thinking and planning is presented. The case is based on the actual situation created by the catastrophic fire at Malden Mills in 1995 and the subsequent problems faced by its management and ownership. While used widely as case study in business ethics, the author presents the situation as a case in the strategic process. Therefore the actual Malden Mills case has been adapted by the author to this purpose using a fictitious enterprise, persons and locale based on the Malden Mills story. Learners will be presented with an urgent business problem. Decisions will be required in both the strategic and operational modes; plans will have to be formulated. The expected outcome is a viable strategy for the future of the company. Learners will be expected to apply knowledge of strategic planning models, decision processes and an understanding of the business environment.
The work is presented as an actual case study that can be incorporated into academic courses or training programs teaching strategic thinking and plan development. A brief sample of a learner generated case analysis is provided.
Case for Analysis: Catastrophe or Opportunity?
Table of Contents
I) Overview of the Case
II) Main Characters
III) The Disaster
IV) Your Role
V) A Guide to the case for the Learner/Analyst
VI) Suggested Readings and Resources
VII) Sample Case Analysis & Suggestions
- Overview of the Case:
As we enter the winter months, Family Fabrics Corporation occupies an enviable position. Owned and operated by the Farnsworth family, the company has developed and marketed a unique product, made exclusively of recycled materials that have been made into an outstanding fabric for cold weather gear. The product is known as “ArcticCloth”. The fabric is warm, lightweight and available in an infinite variety of colors. The product has proven so successful that major outdoor clothing manufacturers and designer houses have purchased the product and demand is sky high. This is a high point in the history of Family Fabrics. The company is based in Farnsworth, Massachusetts, an old “mill town” in New England where it has been a pillar of the local economy for over one hundred years. In fact, without the resurgence of the business being driven by the new product, it’s likely that the town itself would be a ghost town. Many similar towns in the region have suffered as the textile industry declined due to technological advances, foreign competition and a variety of economic factors. As those towns struggle to fill vacant factories and provide basic services to the remaining residents, the success of Family Fabrics sustains the town of Farnsworth. Family is far and away the largest employer in town, engaging close to two-thousand employees, over ten percent of the population of the town. The Farnsworth family is seen by some as being the personification of the town itself. In fact, it might be said that “as family Fabrics goes, so goes the town.” With success of ArcticCloth, things are going rather well for Family Fabrics, the town of Farnsworth and the Farnsworth family. It’s been a long road back, but it looks like the town will evade the fate of its neighbors.
- Main Characters:
With all the good things happening, there are still some problems for Family Fabrics. Jacob Farnsworth (known in the community simply as “Jake”) has been heading up the family business for close to thirty years. Keeping the company alive during the tough times of the textile industry has given him a real education in all facets of business. He is a clever financier and has arranged and maintained excellent relationships with bankers and other lenders, managing to keep the business “in the family.” He has also masterminded the development of ArcticCloth, knowing that a product like that could give Family Fabrics a distinct competitive advantage in the textile marketplace. He also knows that while Family holds a patent on ArcticCloth, his competitors will be seeking to develop their own versions of his wildly successful product and chip away at that advantage.
As the Farnsworth family legacy goes back to the founding of the town in colonial times, Jake is keenly aware of his and his family’s position. Farnsworths have served as the First Selectman of Farnsworth on several occasions. Jake himself is almost always consulted by the Town Council on important municipal matters. He understands the town’s dependence on the ongoing success of the company. He is also aware of the intense competitive pressures of the textile industry. He knows that standing still and resting on his company’s current success does not ensure the future. He’s thinking of the next move. He’s decided to hire a consultant to help develop a strategy for the future and after a lengthy and careful search he has decided to hire you. You’ve arrived in Farnsworth to meet with Jake and his management team to begin the framework of the plan.
- The Disaster:
As you sit in your hotel room preparing for tomorrow’s meeting, you hear quite a commotion outdoors. Sirens and alarms are blaring and you go to the window. It’s nighttime yet the sky has a bright orange glow and you see thick clouds of smoke. Clearly there’s a major fire and it appears close by. You venture out and follow the noise and it leads to the factory of Family Fabrics, about two blocks away from your hotel. The entire factory is ablaze, nothing can save the nearly century-old building or its contents. Amongst the crowd the crowd of stunned onlookers, you notice the one person you know…Jake Farnsworth. You know your first contact with him at this horrible moment is going to be awkward, perhaps even painful. Yet suddenly in the mass of people milling about, you find yourself next to him. Before you can even say anything Jake turns to you and says “We’re still meeting tomorrow…it’s more important than ever. This is NOT the end.”
- Your role:
The preceding facts and scenario provide a base for developing strategy for Family Fabrics. Your role as a consultant is to guide Jake Farnsworth and his management team as they attempt to deal with this situation. You are expected to assist in providing a framework for developing an effective strategic plan. Use your knowledge of strategic thinking processes and tools from your experience and academic work to create:
- A plan for planning
- An analysis of key stakeholders in this scenario
- A recommendation for immediate action
- A high level strategic plan for the future of Family Fabrics
- A plan of viable business options for Family Fabrics
- A summation of expected results
N.B., Your analysis is to be completed as though you were approaching the problem “live”, that is using business conditions and knowledge as those conditions exist today. Although the case is adapted from historical events, the learner should approach it in “real time.”
- A guide to the case for the learner:
In this case you are asked to be playing a lead role in the development and execution of a strategic thinking process. In order to be successful in that role you will have to consider several things. The situation calls for an immediate response to the catastrophic event. Look for ways to suggest methods to respond to and stabilize the situation. Consider the main players and the roles in the case. What actions can you recommend immediately?
Next, the longer term considerations will come into play. Now you should shift you focus to the bigger picture; where can the company go from here? How about the town? How about the Farnsworth family? How about Jake? Your role will be to guide Jake and his colleagues through a process of strategic thinking that begins to answer these questions. Paying particular attention to questions of stakeholder identification, internal and external analysis of the organization, and understanding the ultimate goals of all concerned, can you help create a plan to begin the “journey to recovery” in whatever form that may take? Readings and resources are suggested in the list to follow to help you with methods for creating items vision and mission statements, core principles, etc.
Finally, the results of the two efforts above will guide you in the development of the operational plans necessary to achieve the “big picture.” Here you’ll concentrate on issues such as core competencies, competitive advantage, creating of critical goals and directing action plans. Once again, readings and resources are suggested to guide you through this process. Suggested Readings and Resources (Arranged by topic)
For the Overview of the case, Main Characters and the Disaster sections:
Gini, A., & Marcoux, A. (n.d.). Malden Mills:When Being a Good Company Isn't Good Enough. Retrieved November 6, 2011, from University of St. Thomas Center for Catholic Studies: http://www.stthomas.edu/cathstudies/cst/conferences/thegoodcompany/finalpapers/gini and marcoux fin.pdf
Moral Hero Aaron Fuerstein. (n.d.). Retrieved from MoralHeroes inspiration for the hero inside of you: heroes.org/aaron-fuerstein
The New York Times. (n.d.). Article Collections-Aaron Fuerstein. Retrieved from New York Times:
Weiss, J. (2006). Business Ethics: A Stakeholder & Issues Management Approach 4e. Mason, Ohio: Cengage Learning, South-Western.
Wells, S. (1998). Choosing the Future:The Power of Strategic Thinking. Boston: Butterworth-Heinemann/Elsevier.
For the Your Role and Guide to Case for the Learner Sections:
Bryson, J. M. (2011). Strategic Planning for Public and Nonprofit Organizations (4th ed.). San Francisco: Jossey-Bass/Wiley.
Dickel, C. (2010). Reflection: A Taxonomy and Synthesis of Descriptions of Reflective Practice/Reflective Inquiry. unpublished paper. Omaha, Nebraska: Creighton University.
Hill, C. W., & Jones, G. R. (2010). Strategic Management:An Integrated Approach. Mason, Ohio: South-Western, Cengage Learning.
Peters, T. J., & Waterman, R. H. (1982). In Search of Excellence. New York: Warner Books.
Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland III, A. J. (2010). Crafting and Executing Strategy:Concepts and Readings (18th ed.). New York: McGraw-Hill/Irwin.
Wells, S. (1998). Choosing the Future:The Power of Strategic Thinking. Boston: Butterworth-Heinemann/Elsevier.
Additionally, the author of the case suggests reference to the Essex Group Strategic Planning Workbook (n.d.) for specific exercises that can guide your thought processes as you move through the case. As this work is not commercially available, you may request reprints from the case author at:
Thomas M. Abbott
Academic Program Manager – Business Administration
Post University
800 Country Club Road
Waterbury, CT 06723
(203) 596-4684
- Sample Case Analysis & Suggestions for Case:
Immediate Response:
The fire has caused a complete cessation of operations. The immediate response should be an analysis of all appropriate business considerations (insurance, site safety, displaced workers, customer relations, etc.) in order to preserve the immediate viability of the business. Quick reaction using various techniques including reflection-in-action and reflection-on-action (Dickel, 2010) will result in assessment of the business as it stands in the aftermath of the fire. This assessment is critical as it will form the baseline for decisions that need to be made as the company, family, and town look to their respective futures.
Formulation of a Strategic Plan and Strategic Thinking Process:
The first critical action will be the assembly of the required team that will participate in the process. Bryson (2011) in particular gives excellent guidance in understanding the constituencies that must be represented although the other recommended sources are very helpful in understanding the process of proper stakeholder analysis. However, the unique relationship that Family Fabrics has with the Town of Farnsworth brings many of Bryson’s points about non-profit coalitions into play. Jake Farnsworth is not only the patriarch of his family, he’s the head of the business and the town’s leading citizen. It is critical for him to understand his stakeholder relationships in order to make effective business decisions. Ultimately, the goal of these deliberations is to guide Jake and his colleagues to a set of core principles that will guide the actual formulation of a strategic plan for the future of Family Fabrics.
The next action will be the actual planning process itself. Guided by the principles created in the preceding actions, the planning group as finally constituted will conduct a formal strategic planning exercise, aimed at developing a vision and mission for the company that are consistent with the values as determined. By using the techniques found in Thompson, et al, (2010), Hill & Jones (2010) and Bryson (2011), we expect the company can now develop a long-term plan for recovery from the fire. It is expected that significant attention will be paid to the use of Strengths/Weakness/Opportunities/Threats/Constraints (SWOT/C) analysis in this phase. It is likely that the overwhelming success of ArticCloth is seen as definite strength in the marketplace, but also as an attractive target now that users will be forced, at least temporarily, to seek substitute products. The planning group should investigate every possibility for continuing the company’s market presence, through interim measures such as licensing, subcontract manufacturing etc. The question of core competencies will be addressed as we look at the knowledge base of the displaced workers. Competitive advantage will be a focus as we consider responses and threats by other firms. The ultimate question to be decided will be whether to continue operations or not and if continued should such operations be in Farnsworth? Should the operations be moved? Should the process be technologically enhanced, possibly at the cost of jobs that existed before the fire? The process will be combining elements of emergency operations with answering long term strategic questions. This is not inconsistent with the picture painted by Wells(1998) when he argues that operational planning and having “business plans” can work as strategy, even in the absence or preceding the development of vision and values.
As stated previously, the situation in this case is unique and carries many implications beyond the immediate business questions. Ultimately, it illustrates the impact of the importance of clearly developed and articulated core principles in the formulation of effective strategic plans. As consultant to Jake Farnsworth and Family Fabrics my efforts will be directed at guiding them through the process with the of strategic thinking, first by helping to articulate these core principles and then building a strong business plan around them.
References:
Bryson, J. M. (2011). Strategic Planning for Public and Nonprofit Organizations (4th ed.). San Francisco: Jossey-Bass/Wiley.
Dickel, C. (2010). Reflection: A Taxonomy and Synthesis of Descriptions of Reflective Practice/Reflective Inquiry. unpublished paper. Omaha, Nebraska: Creighton University.
Hill, C. W., & Jones, G. R. (2010). Strategic Management:An Integrated Approach. Mason, Ohio: South-Western, Cengage Learning.
Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland III, A. J. (2010). Crafting and Executing Strategy:Concepts and Readings (18th ed.). New York: McGraw-Hill/Irwin.
Wells, S. (1998). Choosing the Future:The Power of Strategic Thinking. Boston: Butterworth-Heinemann/Elsevier.