Stone Finch Inc.- Young Division Old Division case study answers by taranzat2

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									                 Case Analysis
Stone Finch, Inc.: Young Division, Old Division
            Managing Organization

        Copyright: Taranjeet Gill MBA

Question 1:

Assessment of Jim Billings performance.

As president of Stone Finch, assessment of Jim Billings’s performance will be done by
comparing his style, achievements and leadership skills in his previous company (Gold finch
Technologies) and Stone Finch Incorporated. The style, achievements and leadership skills are
summarized and elaborated below:

  Goldfinch Technologies                        Stone Finch Inc.
        Energetic/ Risk taker                       Visionary and growth driven
        High potential leader                       Innovative but radical change
        Belief in his leadership            by      Rewards for motivating but unfair
         subordinates                                 scheme
                                                     Decentralized the authority
                                                     Misplaced faith/trust Beth Suarez
                                                     Financial mismanagement (funding)
                                                     Mixed up priorities (forget core

       In Goldfinch Technologies, Jim Billings was identified as energetic, risk taker and high
potential leader as this was admitted by Richard Stone (CEO of Stone Finch). Stone decided to
acquire Goldfinch primarily because of Billings. Billings is a transformational leader in which he
demonstrates all the characteristics of transformational leader.

        Jim Billings had performed exceptionally well to gain the trust of his employees. This
belief in his leadership was proven when over 80% of employees followed him when the
company was acquired by Stone Finch. In this sense, the employees ‘respond to influence tactics
of leader’ because of his expertise and charisma.

        In Stone Finch, Billings remained visionary and growth driven as the company revenue
increased 74% in 4 years. He brought in the culture of innovation by promoting the subsidiaries
strategy for business growth.

       The organizational change in Stone Finch which he introduced was radical although there
was no major reason for it. Radical changes are generally prompted by environment,
performance decline or significant personnel turnover. But none of these were seen in the case of
Stone Finch. Billings introduced radical change in implementation of subsidiary concept. In
implementing the changes, Billings followed the Vroom-Jago Leadership Model ‘decide style’ as
he decided on the concept of entrepreneurial subsidiaries and then sold the idea to the team.

         In terms of motivating employees, Billings accept the fact that money motivates to keep
the best people as evident by the ‘officer concept’. But his concept is flawed as he focused on his
‘falcons’, creating dissatisfaction among other employees. According to equity theory, fair
treatment of all employees can have positive effect on employees.

       Before acquisition of Billings company; Goldfinch, the operation was highly centralized
with standard functional organization. The authority at that time lies with the Stone family as
they are major stockholders until the surprise acquisition of Goldfinch. But with Billings as
CEO, he continued the concept of decentralization with Saunders at Water Product and Suarez at
Solutions after the acquisition of EnzaClean which was headed by Suarez. Decentralization is
good because the decision can be made faster without much red tape.

       The appointment of Beth Suarez to manage Solutions Division revealed Billings’s
weakness in assessing people. Despite Suarez doing well in EnzaClean, Billings should have
acknowledged if Suarez is capable of handling a bigger group and the relevant training and
development program should have been arranged for her.

        As the CEO, Billings is responsible to plan a better funding system for his subsidiaries
concept as to not deprive other divisions of their growth (in this case, the Water product
Division). This can ultimately result in personnel turnover because of lack of challenge,
motivation and low morale. Again the theory of equity is important in ensuring employees

        The core business of a company is reflected in the company’s vision and therefore it is of
utmost importance to focus on the core business (Water Product) at the same time the innovation
takes place.

Overall, we believe Jim Billings did not perform very well as CEO of Stone Finch!

Leadership style of Jim Billings

        Leadership style of Jim Billings is according to Vroom-Jago Leadership Model. He
evaluated situational factors and then decided how to behave. In the first situation, he used
‘decide style’. This was evident when a few of his ‘star’ employees who wanted to leave the
company and commercialize a product. From this he decided on the subsidiary concept himself
by collecting the information from others, deciding and then selling the idea to the board.

       In the second situation, prompted by an e-mail from Saunders of the high turnover and
unhappiness of employees, Billings used the ‘consult individually style’ through the intranet
‘jam’ to find out problems and ways of solving problems. This type of style requires ideas and
suggestion from employees to respond to the issues.

       Our group in general feels that Jim Billings should have used the Situational
Leadership® Model as the style used should match with level of readiness of the followers using
task behavior and relationship behaviour.

Question 2

Assessment of the entrepreneurial subsidiary concept

Assessment of entrepreneurial subsidiary concept will be done according to advantages and
disadvantages summarized and elaborated below:

 Advantages                                 Disadvantages
      Entrepreneurial culture promotes          Loss of focus on core business
       innovation, risk taking and dynamism      Risk and uncertainty in investment
      Motivate and retain employees
      Foster corporate entrepreneurship
          o Flexible Organization Design
          o Autonomy
          o Competent/ talented people
          o Incentives/reward 20%
      Cash flow within organization

         Corporate entrepreneurship is development, promotion and implementation of innovative
initiatives in established firms for purpose of generating growth and profits under conditions of
risk and uncertainty.

        The adva
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