Management Chapter 2 Homework the research and development process was shortened

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148 Simulations

SIMULATION TWO

National Farm and Garden, Inc.*

Background

(Everyone reads)

National Farm and Garden, Inc. (NFG) was incorporated in Nebraska in 1935 and has been a leading

supplier of farming equipment for more than 60 years. Over the last five years, however, demand for

NFG’ s flagship product, the Ultra Tiller, has been declining. To make matters worse, NFG’s market

lead was overtaken by the competition for the first time two years ago.

specialized tools. Owners can have the supplier make modifications on-site or at the sales location, or

leave the shielding off and continue operation. All product documentation warns against operating the

tiller without the shielding, and the product itself has three distinct warning labels on it. Modifications

are now available that allow for the shield to be removed and replaced quite easily, and these

modifications are covered by the factory warranty. However, most owners have elected to operate the

Turbo Tiller without the safety shielding after its first cleaning.

Over the last year, a number of farm animals (chickens, cats, a dog, and two goats) have been killed by

Turbo Tillers being operated without the guard. Two weeks ago, a seven-year-old Nebraska boy riding

on the back of an unshielded tiller fell off when the tiller caught the sleeve of his shirt; his arm was

* This simulation was prepared under the direction of O.C. and Linda Ferrell for classroom

discussion, The research and conceptual assistance of Larry Gonzales, Pat Hansen, Heidi

Hollenbeck, Marilynn Hill, Michael Mitchell, Craig Hurst, Bill Haskins, and Dana Schubert is

Simulations 149

Divisional Vice President

(Only the student assigned to this role reads this page)

As the divisional vice president, you are focused on coordinating all departments. You are responsible

for output from the sales, manufacturing, and field service engineering departments. The Research and

Development department, which must sign off on all new products before they are approved for

production, is not under your supervision.

Recently, you received a memorandum from the director of R&D outlining some potential problems

with the development and testing of the Turbo Tiller. The memo was copied to you, the director of

manufacturing, and the director of sales. You agreed with the director of manufacturing not to share the

150 Simulations

Director of Product Development

(Only the student assigned to this role reads this page)

You are the director of product development. Although you have a master’s degree in mechanical

engineering from Stanford University, you are originally from the inner cities of Chicago, where you

grew up in the school of “hard knocks.” From previous experience, you tend to be rather

uncompromising about products that are engineered within your organization. Your engineering team

has been very successful in the past, and you are quite proud of the many new successful products your

department has developed.

You originally fast tracked the Turbo Tiller product due to constant pressure, particularly from the

director of sales. However, upon further investigation, you have become concerned about the

implementation of the product’s safety shield. Consequently, you recently sent a memorandum to the

director of manufacturing, director of sales, and the divisional vice president outlining the fact that

Simulations 151

Director of Manufacturing

(Only the student assigned to this role reads this page)

shield requires a professional machine shop and additional assistance. However, with your knowledge

of statistics, you know that, even without the shield in place, the chances of an animal or a person being

injured by the Turbo Tiller are small. Thus, you agreed with the divisional V.P. to bury a memo sent by

the director of R&D stating related concerns. You both felt that the risks were small enough and that

raising these concerns to your superiors would only cause headaches and paperwork. Furthermore, you

need to stay on schedule in order to reach your volume goals if you are to earn your bonus.

You have also received several e-mails from the manager of the field service engineering department

about reports of farmers operating the Turbo Tiller without the guard. When you requested statistical

data regarding the number and location of occurrences and any related accidents, the field service

engineering manager replied with field data indicating that more than 85 percent of all Turbo Tillers are

eventually operated without the guard.

152 Simulations

Director of Sales

(Only the student assigned to this role reads this page)

You are the director of sales and have been with NFG for more than ten years. You were recruited from

a competing firm and have more than 25 years of sales experience in the industry. Because of sagging

sales, you face extreme pressure from above to meet your numbers. However, you feel that sales

forecasts have been set unrealistically. Furthermore, these aggressive forecasts create churning within

legal concerns over the Turbo Tiller; however, you feel that these concerns are manufacturing’s, and

not your department’s, problem. Furthermore, because the director of manufacturing received a carbon

copy of the memo, you are sure that the concerns will be addressed appropriately.

You have organized training on this product for your sales staff that included proper operating

procedures and the dangers of standing within five feet of the tilling blades. Independent of these

training sessions, you arranged a separate class on how to address and downplay these concerns with

customers.

Simulations 153

V.P. of Public Relations

(Only the student assigned to this role reads this page)

You are the most recent addition to the management staff at NFG, having been with the company for

just three years. You obtained a bachelor’s degree in human resources from Ohio State University and a

master’s degree in communications from Florida State University. Prior to working with NFG, you

handled public relations at a nonprofit organization for five years. You took this job because you

thought it would be a personal challenge to represent a larger for-profit business. Besides, you were

raised in Nebraska, and are a farmer at heart.

Nearly six months ago, you learned that the company had developed and released a product that has

some safety concerns. Most department heads were not concerned about the problem because of a lack

154 Simulations

[SAMPLE STUDENT REPORT]*

National Farm and Garden, Incorporated

TO: Linda Ferrell, CEO

FROM: Louann De Coursey, Divisional Vice President

RE: AM meeting on 3/1/XX

After our meeting on March 1, Lara Bruger, Director of Product Development, Annie Hodges, Director

of Sales, Shannon Quinn, VP of Public Relations, Jeff De Weese, Director of Manufacturing, and

myself met in order to develop a comprehensive plan of action regarding the Turbo Tiller as well as

* Used courtesy of Louann De Coursey.

Simulations 155

PHASE 1

NATIONAL FARM AND GARDEN

Short-Term Goals

The most pressing matters facing the company in the short term include handling the problems with the

safety shield on the Turbo Tiller, negative publicity, and our liability.

We, in the short term, will:

Issue a public statement addressing the confusion created by the tiller modifications, as well as

stressing the fact that all owners can take the tiller to the supplier or sales location to have the

We will recall all Turbo Tillers in order to make the shield changes. This will be a preventative

measure to insure that more tillers are fixed. We will issue a press release stressing that our

company, and not the government, issued this recall in order to keep our customers safe.

We are going to set up a team to evaluate the possible product defects. Representatives from

product development, manufacturing, and legal departments will evaluate all of our products

as well as all company official names, press releases, company information, product information,

customer service, and public financial information. An employee-only section will also be created

on the website to answer personnel questions, announce job promotions, opportunities, etc. We

will also be contacting the parents of the little boy injured in the tiller accident. We will cover the

costs of the medical bills contingent on the parents signing a silence agreement. We are a

156 Simulations

license distributed with a certain product or service or otherwise on a password protected website for classroom use.

PHASE 2

NATIONAL FARM AND GARDEN

Mid-Term Goals

Once we set our short-term goals into motion, we will then address our mid-term goals. Probably the

most important of these is acknowledging where we stand in relation to the Federal Sentencing

Guidelines and then fixing any problems. The corporate culture will change once we improve our

internal structures concerning ethical issues.

In response to the Federal Sentencing Guidelines for Organizations, the following goals will be

implemented:

The human resources department will create a code of ethics and business conduct that will be

posted throughout the company as well as printed in both the employee handbook and in all

training manuals. This will include conduct toward employees, customers (both our retailers and

the end consumer), suppliers, or toward anyone to whom we have an obligation.

Ethics training will be held yearly for all employees through a seminar. Included in the monthly

employee newsletter will be articles related to ethics issues.

Within the newly created website will be a link to the ethics officer so employees can

anonymously report ethics violations.

Other mid-term goals include:

Modifications to the tiller in order to change the shield to an attached design instead of being

taken off for cleaning.

Simulations 157

PHASE 3

NATIONAL FARM AND GARDEN

Long-Term Goals

In order to protect our company, not only must our short- and mid-term goals be implemented, but we

must also invest in the long term. The following goals will help us improve our standing within the

customer community as well as help us to achieve our obligations to our shareholders.

Create a team to evaluate various philanthropic endeavors to improve our image, increase

customer and employee loyalty, and to create goodwill relationships with future customers. Some

potential charities could include:

On a national level:

a. The American Farmland Trust: This organization helps to stop the loss of farm and ranch

land to development. It works with communities on smarter growth, which includes local

farms.

On a more local/state level (improving our community):

a. Center for Rural Affairs (Walthill, NE): This charity serves and advocates for family farms

and rural communities.

b. Farm and Ranch Museum (Gering, NE): Donate machinery with our corporate name on it to

preserve the history of farms and ranches.

158 Simulations

TEACHING OVERVIEW ON VIDEOPOLIS

Videopolis provides a more complex case and decision-making process than the other two simulations.

Therefore, we recommend that you use it last (after the class has experience using Soy-DRI and

National Farm and Garden). This simulation features a technology company that is assisting in

information transfers between different organizations and among different divisions of the same

Some important concerns include intellectual property issues associated with the transfer of copyrighted

materials. This issue is discussed in Chapter 2 of the text. The Napster case in the text may provide a

helpful background before students attempt the Videopolis simulation. The human resources issues are

more straightforward and deal with honesty in communications and organizational relationships. You