Innovative Thinking in a Business

Innovative Thinking in a Business: Theory-Based Strategic Experiment

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Utilizing the same virtual organization from the measurement and reward System, design a theory-based strategic experiment based on one of the following problems associated with the organization:

Riordan Manufacturing

• One of Riordan Manufacturing’s largest customers purchases a number of different styles and types of a polycarbonate drinking bottle. The formulation for this particular bottle style contains Bisphenol A. Due to highly publicized, recent news stories concerning the safety of reusable plastic containers, Riordan’s customer has advised them that it will no longer be purchasing bottles containing Bisphenol A. Some time ago, the purchasing department found an attractive price on a bulk purchase of many of the components that went into the manufacture of the bottle. Around the same time, the operations department foresaw a period of unused plant capacity in the China plant. In order to keep the plant running at peak efficiency, they had the China plant do a number of production runs of the polycarbonate bottle in the most popular sizes and colors. No one saw an issue in producing the bottles without an existing purchase order given the customer’s history of purchasing large quantities of these bottles in the past. The bottles are currently being stored at the China plant, but the warehouse space will soon be needed for other orders. The bottles have not yet been scored with volume markings or the customer’s logo.What can Riordan Manufacturing do with the bottles?
• Riordan Manufacturing uses Huffman Trucking to ship their products all over the United States. With rising fuel costs, several trucking companies have gone out of business or have substantially raised their rates. Huffman Trucking has innovated a way to stay in business without having to raise their shipping rates for customers. In turn, Huffman has also picked up many new shipping contracts from other businesses. With the increased business at Huffman, Riordan Manufacturing has noticed a decrease in their timeliness and customer service. Several orders have been distributed or picked up late, adversely affecting functioning at Riordan. What can Riordan do to solve this problem? Keep in mind that Riordan and Huffman have a 5-year contract with little room for renegotiation and Huffman continues to have the most competitive shipping prices in the country.

• A majority of employees at the Pontiac branch of Riordan Manufacturing work at the production level. While the company expects a higher rate of employee turnover for those positions, they have recently seen a substantial increase in the turnover rate. In turn, production managers have had to increase their time spent interviewing and training new employees. This affects their time spent managing the day-to-day quality control, sales, and safety aspects of their positions. The managers have agreed that they must establish a way to better retain their production employees.What can they do?

My part is the Legal department

Create a 3 slide Microsoft^® PowerPoint^® presentation, with detailed slide notes, on your strategic experiment. Incorporate the following into your presentation:

• Present two innovative ways to solve the problem.
• Address the followingsix changes involved with theory-based planning in your process and presentation:
  • Level of detail:Focus on the most critical market, technology, and unknown costs.
  • Communication of expectations:Base your predictions on theory and include a description of the theory used to generate your predictions.
  • Nature of predictions:Predict the trends, rather than the specific numbers.
  • Frequency of strategic reviews: Set a strategic review schedule.
  • Perspective in time:Consider the history of the organization when devising the experiment. Focus on long-term history, rather than just recent changes in the organization. Use information available through the virtual organization to gain insight on the historical background of the organization. Some examples of helpful documentation are a strategic plan, company history, employee handbook, sales plan, or internal memos.
  • Nature of measures:focus on leading indicators
• Based on your theory-based planning, state what other factors need to be analyzed and what other steps must be completed to determine the best solution for the organization.
• Include three to four scholarly references.

Legal department information

Overview

Lowell Bradford, Chief Legal Counsel, oversees all legal matters for Riordan Manufacturing. All contracts have to be approved by Mr. Bradford before they can be signed. Department heads forward all legal questions to Mr. Bradford who answers them from his personal knowledge and experience or after consulting with the attorneys at Litteral & Finkel, the law firm retained by Riordan Manufacturing.

Mr. Bradford and Rick Ethridge handle all the company’s patent applications. Litigation, tax issues and real estate matters are referred to Litteral & Finkel, but closely supervised by Mr. Bradford. Per Mr. Bradford’s instructions, all communications between Litteral & Finkel pass through Mr. Bradford’s office.

Litteral & Finkel have been representing Riordan Manufacturing since its inception. Dr. Riordan’s cousin was a partner in the firm and the close relationship between the two firms has continued even though Dr. Riordan’s cousin passed away eight years ago. Riordan Manufacturing pays Litteral & Finkel a monthly retainer to assure prompt response to any legal inquiries. If legal matters arise, legal fees are charged against the retainer. If the amount of the month’s legal fees exceeds the retainer, excess charges are billed to Riordan Manufacturing at the end of the month. Unused retainer amounts are not carried forward.

Litteral & Finkel is a large international law firm that practices in all areas of the law. The firm has offices in a number of cities including:

• San Jose, CA
• Los Angeles, CA
• New York, NY
• Chicago, IL
• Atlanta, GA
• Detroit, MI
• Washington, D.C.
• Cleveland, OH
• Mexico City, Mexico
• London, United Kingdom
• Paris, France
• Geneva, Switzerland
• George Town, Grand Cayman
• Sydney, Australia
• Perth, Australia
• Dublin, Ireland
• Tokyo, Japan
• Seoul, South Korea
• Kuwait, Kuwait
• Doha, Qatar
• Moscow, Russia

Litteral & Finkel has provided Riordan Manufacturing with legal services in the areas of tax law, real estate transactions, employment law, immigration matters, civil litigation, workers compensation, labor law, and customs regulations. With its vast resources, Litteral & Finkel can immediately provide a team of attorneys, paralegals and clerks to any legal issue that confronts Riordan Manufacturing. With its international network, it can send attorneys from its closest offices and within a few hours be on the scene to provide legal advice anywhere in the world.

Corporate Governance Policies

The Riordan Manufacturing Board of Directors carries the responsibility of overall management of business affairs of the Company in accordance with state corporation requirements, the Articles of Incorporation, and its By-Laws. The encompassing role of the board is to govern and manage the affairs of the Company for the benefit of shareholders. The Board endeavors to faithfully fulfill its obligations through oversight of quality management personnel who carry out the daily activities on behalf of the Board of Directors of Riordan.

Selection of Board

1. Criteria for Board Membership

   The Board shall maintain a Nominating Committee with responsibility to review the skills and characteristics of the members of the Board. Those attributes sought in retaining and adding members of the Board will include industry knowledge, financial literacy, availability to participate, and commitment to act in the capacity of a Board member of Riordan.

2. Director Independence

   The Company shall engage a majority of Board members independent of current management of Riordan, as stipulated through standards set out by regulation. The Nominating Committee will review the relationship of each Director to the company on a regular basis.

3. The Board will have the responsibility to select new members to its body. The Board, under the supervision of the Nominating Committee, will be responsible to recommend new members. New Board members will be provided with information concerning the Company and be given access to senior management in an effort to orient them to their new position on the Board.

Board Leadership Roles

1. Selection of Board Chairman and CEO

   The Board may designate as its Chief Executive Officer any current officer of the Company. The Chairman of the Board of Directors may be designated from any current seated member of the Board, including the Chief Executive Officer, if also a member of the Board of Directors.

Board Composition and Performance Criteria

1. Size of Board

   The size of the Board shall be no larger than necessary to manage the operations of the Company. The Board shall, from time to time, assess the number of Directors and overall size in relationship to Company operations and size.

2. Assessing Board Performance

   The Nominating Committee shall assist the Board in carrying out a self-assessment of performance. The Nominating Committee, along with the Auditing Committee, shall compile performance reviews to present to the full Board for the purpose of evaluating overall performance and effectiveness of Board activities.

3. Resignation or Removal

   A Director may, for personal or other reasons, such as a conflict of interest, submit his or her resignation to the Chairman of the Board. The full Board may accept or reject the tendered resignation based on the best interests of the Company. For just cause, the Board, assisted by the Nominating Committee, may request and/or vote on an approved request for removal of a Board member.

4. Board Compensation

   Company Human Resources staff will provide an annual review of Corporate Board compensation. The report will provide the basis for proposed compensation of Board members, based on the recommendation of the Chairman of the Board

Board Meeting Etiquette and Proceedings

1. Board Member Attendance

   All Board members are expected to be present at a minimum of three quarters of the regularly scheduled meetings in a calendar year. Absences should be reported to the Board Secretary in advance, when possible, to allow the Board to disseminate Board business to the absentee member.

2. Selection of Agenda Items

   The Chairman of the Board will establish the agenda, based on advance submission of requested items from other Board members or the Chief Executive Officer of the Company.

3. Distribution of Board Materials

   Information pertaining to the agenda items for the upcoming Board meeting will be distributed to Board members, when feasible, three days prior to the Board meeting date. All reports, financial or otherwise, and any presentations should be included in the Board Meeting Package and distributed on behalf of the Board Secretary.

Committee Matters and Membership

1. Committees will be established to support overall Board operations. A minimum of the following committees will be established and maintained during the life of the Company: Executive, Auditing, and Nominating. Other committees may be created by recommendation of the Chairman of the Board and approval by the full Board.
2. Committee Membership

   All committee members will be appointed by the Chairman of the Board with approval of the full Board. The Nominating Committee shall solicit membership from the full Board, based on desired participation of individual Board members.

3. Committee Meeting Frequency and Participation

   Frequency of committee meetings, length, and agenda will be the responsibility of the Committee Chairman, as elected by the seated Committee membership. Committee members are expected to participate in committee meetings as often as possible. The Committee Chairman is responsible for distributing materials to committee members prior to the meeting date and reporting committee findings and recommendations to the full Company Board through the Chairman of the Board.

Board Responsibility to Operations and Financial Activities

The Board of Directors designates its authority to operate the Company to senior management and Company staff, passing to them the responsibility to carry out Board policies and report back activity. The Board of Directors holds the ultimate fiduciary responsibility of managing affairs through its designated senior managers, with the right to remove senior management when it is in the best interests of the Company and its shareholders. The daily activity of operations shall by governed by departments through the development of a Departmental Governance Plan.