Beifang Chuang Ye Vehicle Group |
|
|
General Management |
|
Management Control Systems |
|
Organizational Behavior |
|
|
Developing Country |
|
For Profit |
|
Beginner |
3 |
Available.
|
$9.00
Sign in to find out if you are eligible for an Academic Price of $5.00
|
|
|
|
|
On January 1, 1999, the municipal government of Beijing (People's
Republic of China) mandated a new vehicle emission control standard.
The new law, in essence, required all passenger vehicles sold within
the Beijing city limits to be equipped with a fuel injection system,
rather than an older carburetor system.1
This new law did not come as a surprise to the managers of Beifang
Chuang Ye Vehicle Group, a large group of companies that included four
automobile dealership locations in Beijing. They had become aware of
the impending new law about a year earlier. However, like most other
Beijing dealers and the manufacturers who supplied the vehicles, they
did not believe that the Beijing government would actually enforce the
new law. But it did! The government would not register any vehicles
that did not meet the new, tighter emission standards. As a
consequence, in early 1999 the Beifang dealers had no cars meeting the
legal requirements to sell. In January 1999, their new car sales fell
to zero.
Now, in early February 1999, Ming Zhou (vice director and general
manager), had to decide, among other things, whether he should
compensate his dealership managers and sales personnel as if this
unfortunate external circumstance had not happened or whether they
should be made to share the company's losses, and if so to what extent.
THE COMPANY
Beifang Chuang Ye Vehicle Group (Beifang) was a holding company
comprised of 14 companies, most of which operated in segments of the
transportation market in Northern China. Among the Beifang companies
were three taxi companies (operating 3,600 vehicles), a car rental
company, an automobile association (with 160,000 members in Northern
China), an advertising company, a vehicle importer, three automobile
dealerships, and an automobile repair company.
Beifang was formerly 100% owned by the Chinese central government, but
the company was privatized. By the year 2000, the government owned only
10%. The other 90% was owned by private investors, the most prominent
of which were members of Ming Zhou's family.
Assignment
To what extent should Mr. Zhou compensate his employees, even though
his company is losing money? Why? What factors did you take into
consideration in making your judgment?
|
|
|
|