Casual Togs, Inc. From: Organizational Behavior by Marcie, D. & Seltzer, J. (1998) Casual 'l'ogs is a 20-year old rm producing moderately priced women's apparel, headquartered in a Midwestern city. About 80 percent of production is sold to large and middle- size department stores in cities throughout the country. The remaining 20 percent is sold to small women's specialty shops. All clothes carry the rm's wellknown brand label. Products are principally shorts and blouses, with some knit dresses making up the balance. The owner and principal stockholder, Cy Geldmark, is an en- trepreneur. Cy served a long apprenticeship in the New York garment district and saved part of his meager wages until he could open his own rm, staffed primarily with relatives and friends. An innovator, Cy pioneered in the 'mix and/or match' coordinate idea of fashion ensembles whereby a customer of moderate means could build a complete wardrobe of work and casual clothes. Designers with trend-setting styles and above- average quality (considering the semimassproduction meth ods employed) helped propel Casual Togs to a prominent po- sition in the industry. However, the mixandmatch coordi nate idea was not patented, and intense fashion competition has now developed from larger rms as well as from new, smaller companies with fresh fashion ideas. In Cy's words, price competition is 'deadly'. The company has rapidly expanded in the last ve years, set- ting up production plants in seven southern states as well as one in Arkansas to capitalize on wage rates in those areas. All facilities in those states are leased. Notwithstanding the use of the latest in large-capacity cutters and high-speed sewing ma- chines, production hinges on a great expenditure of carell, personal effort by the individual worker. Many quality checks are necessary before a garment is nished. In an attempt to coordinate production and delivery, the com- pany is constructing a new multi-milliondollar central distri- bution plant at the present home ofce location, where all ad- ministrative and some production functions are performed. All production runs will be shipped to this new facility and then dispatched by a computer-programmed delivery-inven- tory scheduling method. The facility is planned to help cope with the increasingly serious problem of merchandise being returned from customers who refuse acceptance because de- livery is latcr than promised. The fashion industry is characterized by ve distinct selling 'seasons', consequently garments must be ordered, produced and delivered within a relatively short time period. The ve season cycle produces unusual production and forecasting problems. On the basis of pilot sales during the first two weeks of each season, forecasts are developed about the quan- tity and styles to be produced for the entire season. Once the bolts of cloth are cut into a particular season's patterns, there is no turning back. If pilot sales are not indicative of the rest of the season or if the sales forecast is an error, the company is saddled with stock that can be disposed of only through 'offprice' outlets, usually at a loss. In an effort to increase the accuracy of sales forecasting and to pinpoint specic reasons for late deliveries, Cy instituted a computer printout of each day's sales, as reported by tele- phone by eld salesmen. This printout was initially distrib uted to the president, vice-president of sales, the sales forecast manager, the treasurer, the production manager, and the eight regional sales managers. All of these people were located at the rm's headquarters ofces. The printout was voluminous, often running 100 or more pages. Cy relied greatly on his 'fecl of the situation' for making decisions. Although he made all nal important operating and policy decisions, he said that all department heads should feel free to act as 'you see fit'; he said that he would back any decisions made without consul tation with him. Despite Cy's exhortations that he need not be consulted, al- most all vice-presidents and departmental managers conferred daily with him, usually about the progress of the current fash- ion season's products. During each fashion season, many style modications and quantity level changes were made. With rare exceptions, Cy made all important daily decisions in those matters. The daily decision sessions were marked with emotional outbursts by various management personnel. The meetings were informal and non-scheduled and different groups would meet at different times with Cy. The groups were not formal or even based on functional problem lines. If one individual felt that a daily printout indicated change 'X' regardless of whether or not it affected his department, he would go to the president asking that the change be effected. If another department manager or even a vice-president were present and disagreed, inevitably a shouting match developed in the president's ofce. Usually cy remained impassive dur- ing such interchanges, giving his decision after all participants had nished. Some management personnel said Cy was 'too lenient' and should curb the emotionally charged sessions because they were disruptive and led to erroneous decisions. These same critics pointed to Cy' s reputation as an easy mark for suppliers if a supplier had some previous tie from the old days or was remotely related to someone in Cy's family, he would be as- sured of at least some orders, despite the fact that his prices were higher than those of some competing suppliers. Often the president's sister Judy, who was vice-president in charge of administration, would wander into the daily deci- sion sessions. She would often object to proposed changes on the grounds that they had been proposed by 'imbeciles' or were 'too darmied expensive'. Judy was everywhere, initiat- ing changes herself in every department. Her decision af fected everything, from copier paper to salesmen's commis- sions to rest period schedules for clerical help. She often counterrnanded a department manager's instructions and would hire and re personnel without the manager's knowledge. Judy's personality was judged abrasive by all who had contact with her; she was given to using profanity publicly at a 'longshoreman's quality level'. When speaking 'normally', she could be heard for some distance. Cy always backed Judy's decisions once they were made. Alt- hough the formal organizational chart depicted Judy and the treasurer as being on the same level, the treasurer, Stan Sce- burg (Cy's nephew), was not allowed to approve any expendi- ture over $1,000 without Judy's informal approval. Judy was one of the original founders, was umnarried and of middle age, and owned 12 percent of the rm's stock (compared to 80 percent owned by Cy, and 8 percent owned by others). From time to time Cy tried, by his own admission, to calm her down, with a notable lack of success. But several sources re- ported that if Judy and her brother had an argument in private, Judy always deferred to her brother's decisions. For many years Cy's chief source of sales data and forecast was Andy Johnson, sales forecast/budget manager. Andy pre- pared daily handwritten recaps from telephone reports in the earlier years and from the printout in more recent years. Using intuition and a very thorough knowledge of the garment in- dustry Andy would prepare the season's forecasts and modify them as the actual sales started coming in. He has a rapport with Cy and was quite proud of the clearly evident esteem the president had for him. The rapport was important to Andy for the reasons of selfesteem. Andy had been with the rm for 15 years, but despite his knowledge had never been promoted. He resented this keenly and attributed his lack of success to the fact he was not a relative or of the same nationality as the other managers. At least, Andy said once 'Cy listens to me more than to those shirt-tail relatives'. Andy was one of the very few people who called the president by his rst name in public. In a recent change in ofce location, Andy and his former co- worker, Sol Green, were moved from one large, shared ofce, which housed subordinates as well, to individual glass-parti- tioned ofces. The subordinates were now located adjacent to Andy's and 501's ofces. After this move, Sol was promoted to manager/internal accounting and sales, and was given con trol over all subordinates who had previously worked collec- tively for Andy and Sol. Andy was given one new man to help with sales forecasts and budgets; the new man had an MBA and was trained in statistical analysis. Andy held a bachelor's degree in business. Bill Smith, the new man, suggested sev- eral new methods of collating and analyzing the daily printout to Andy, who abruptly rejected the ideas, saying 'Cy isn't used to getting data in that form; he would be confused by a change'. As the daily printouts began to be more detailed and more widely distributed, Andy became more critical of them than usual. He said that they didn't 'really' show what styles were leading, and that there were many errors. Andy quoted per sonal conversations with eld salesmen to prove his points. When Bill cited several new styles in what had previously been one category, Andy replied that he was using horse sense to report data in a way that Cy and the others would best un- derstand. Andy was away from his desk for long periods dur- ing this time, attending numerous management meetings that the president called. The pattern of the meetings was as be fore, or worse; there were loud, emotional arguments punctu- ated by stpounding and doorslarnming. The problem of returns was now most acute; on average, 40 percent of all shipments were being returned. Although all management persmmel agreed that the reason for returns were late deliveries, some managers argued that forecasting by style lines was inaccurate and resulted in erroneous produc- tion scheduling, and others said that there was no coordination between the nine production shipping and/or production methods were not efcient. The production manager said there was a disparity between the delivery dates given by cus tomers and those in the salesmen's orders, which served as the basis of a production run. The sales manager maintained that that poor quality was the real reason for returns: custom- ers did not want to become embroiled in arguments with home ofce personnel over quality questions and therefore they wrote 'late delivery' on sub-standard merchandise because it was simpler. In an effort to solve the dilemma, Cy hired an experienced market analysist, Stan Levine, who had a strong computer- orientated background. Stan was given a private office and authority to effect any changes he deemed necessary. Several events happened innnediately; a supplemental recap of the printout was published every day by Stan in addition to Andy's handwritten recap, and the printout format was changed. Sol objected violently to the new format, saying that it did not provide accounting with the categorizations neces- sary for their work. Andy began a 'war' with Stan, 'to show up this egotistical snot-nosed kid'. At the same time, several new designers were hired, salesmen's commission schedules were changed, many regional Vice-presidents were put on the road 'temporarily', and Andy, backed by Cy, cut all depart- ments' budgets by 15 percent (the company was in the middle of a 12-month budget period). Approximately four weeks after all those changes had oc- curred, the following events transpired: returns had increased to an even higher level; many old customers had stopped or dering, saying that poor quality and late deliveries made Cas- ual Togs too undependable; the distribution center construc tion was halted at midpoint because 'the company could not nd a qualied individual to ll the job of supervisor'; the nine plant centers fell, on average 15 percent under previously established production goals; two of the new designers re- signed; Judy rcd the new vice-president of industrial rela- tions after he had been on the job four weeks (he held a three- year management contract for $60,000 a year); neither Andy Johnson, Sol Green nor Stan Levine would speak to each other; Andy began distributing two daily sales recap reports to a select, small group of top managers; and the computer services department complained directly to Cy that their new workload was too great because Stan now required them to produce a daily selling forecast, by week, month and season. Questions 1. Identify and analyze the issues you determine to be most prob lematic, describing their causes, and use the relevant princi ples and concepts learned in this course to explain them. 2. Make suggestions and indicate the goals that Casual Togs can use to resolve the issues you identied. Be sure to explain how each suggestion or goal will resolve the issues you have iden tied under (1). 3. Describe how the outcomes will be measured to determine the success of your suggestion if implemented. 4. Explain how the suggestions satisfy and balance the interests of the various stakeholders (Board of Directors, Management, Employees, Customers) of Casual Togs, Inc