Content based on:

1 - Managing and Performing

2 - Managerial Decision-Making

3 - The History of Management

4 - External and Internal Organizational Environments and Corporate Culture

5 - Ethics, Corporate Responsibility, and Sustainability

Guitar-making - What are the Major Keys?

Les Mowatt is recently retired at 68 years old, but he doesn't feel a day older than 20. His entire life he was a carpenter. He has a strong passion for woodworking and does many projects on the side. Les's parents are from Uttewas on the island of Haida Gwaii, where Les and his wife Cynthia still live today. Fred was a respected woodworker in his own right and was an artist as much as he was a craftsman. Les found his passion for craftsmanship and artistry from his father before Fred passed.

15 years ago, Les started playing acoustic guitars, and 10 years ago he decided to have a hand at making his own. His first attempt at a guitar was long and arduous, and the final product was certainly not saleable, but he cherishes that guitar to this day. Its flaws became character traits that made the final product all the more endearing in his heart. So, that guitar hangs on his wall - never to be used but always as a reminder of his first instrument and how far he's come since then.

All instruments are beautiful, but Les wanted his guitars to be different. He viewed them as art as well as a musical instrument. To that end, he incorporated Haida artwork into the guitars that he crafted that made the guitars uniquely his.

Les kept trying to make guitars until, 5 years after making his first guitar on what felt like his 50th attempt, he made a guitar that he felt was perfect. It took over 100 hours to craft, and every piece of this instrument was impeccable. The wood was the highest quality, and every centimetre of this masterpiece had loving attention paid to it. The sound it produced was enchanting. Fred would be proud of his son. Les lovingly named this style of guitar "Les Guitars" and hung this one on the wall beside his first. It was so gorgeous he never wanted it to be grimed by ordinary use.

One day, he was introduced to a guitar enthusiast by a mutual friend. Les happened to mention how he had been building guitars for the last 5 years, and he'd finally created one of the finest guitars he had ever seen. The guitar enthusiast asked to see it and was immediately impressed. He couldn't believe that Les crafted something so elegant and beautiful. He made an offer on the original "Les Guitar" of $5,000.

Les was astounded, but he couldn't sell the guitar. It was his pride and joy. However, Les offered to make this fellow a guitar just like it for the same price. The guitar would take two months to build and Les offered the same love and affection towards this creation as well. The man agreed, and a deal was made.

As promised, Les delivered the commissioned Les Guitar two months later and received payment. As more people saw his work of art, word started spreading around town and online of this craftsman's work. Soon, Les started receiving more and more bids, but he could only accept a few as each guitar was 100 hours and he still had a full-time job at the time and wanted to spend time with his wife.

The price of his guitars started around $5,000 (with materials costs being roughly $150 per guitar), but the Les Guitar came to sell for a range between $10,000 and $12,000 within two years of his starting sales. He only made 5 guitars on average per year. Part of the reason for the price was the scarcity of Les's time, and demand met supply.

At the same time, experiments in other guitar-types proved successful. Les was able to "mass-produce" a reasonably good guitar with 20 hours of labour. It was still a very good hand-crafted guitar by ordinary standards, and featured artwork that he would specifically identify the guitar as Les's creation. It didn't capture his heart in quite the same way as the Les Guitar, but he knew he would be able to produce more and teach other skilled woodworkers how to produce it as well. He called this style the "Craftsman's Guitar."

This business started making a good side-income for Les, although it took up a lot of time. Yet, he was happy, and his wife was supportive that he was doing something that he loved. Eventually, skilled artists and woodworkers asked to apprentice under him. He taught a couple artists how to make the Craftsman's Guitar and started selling them based on commission. In exchange for Les offering training, guidance, and selling them under his "Craftsman's Guitar" personal brand as long as the guitar met Les's rigorous quality standards, Les received a commission of 25% on each guitar sold. These guitars sold for $2,000 on average. The artists were able to make a guitar once every 10 days on average.

This arrangement has been going on 3 years now. This passion has produced some nice money for Les and his wife. However, Les has just retired and needs to make some life decisions. He thinks he has a shot at turning this business into something bigger and is considering building a workshop and taking on a half-dozen apprentices. At the moment he has only had 2 apprentices and he's been working out of his garage, but that arrangement won't be satisfactory if he wants to turn this into a real business. He believes his high-quality guitars will not only be his legacy to the world but will create worldwide awareness about the intrinsic beauty of Haida artwork.

The workshop, tools, and equipment to outfit it will be expensive. It wasn't so bad having 2 apprentices that sought him out but having a rotating set of 6 apprentices and woodworkers will put more pressure on Les to make sure the people he takes on will work out both as good artists and as keepers of the artwork's traditional inheritance.

Additionally, he's going to need to take on more managerial roles which will take away from the time he wants to spend making his very own Les Guitars. He'll be spending more time on marketing, customer relations, employee management, training, and all the other little things a business owner has to do. He wants to make guitars - not get after employees and debtors!

Next, he would need to decide what his relationship with his apprentices are. Should they be full employees? This means that they would be entitled to full wages and employment laws, but Les would receive the full benefit of their labour. Or should they be independent contractors that are apprenticed by Les and have their product put out by Les on consignment? In other words, Les would receive only 25% of the revenue and he would supply a work environment, but Les would not be obligated to pay a full wage as they are not employees. It's less risk, but also less reward.

These aren't the only difficulties. Not all is well at home. Les's wife, Cynthia Mowatt, isn't pleased about Les possibly going back to work even longer hours after retirement. Les worked hard during his working years, and he spent a lot of time in his workshop besides. But that was all to make Les happy and put food on the table. Cynthia herself is a year away from retirement as a payroll clerk for her local government. A few years back, Les promised that after retirement the two of them would travel and see the world together. This new guitar business threatens to put an end to that dream. Cynthia did not sign up for this. Les is passionate about this guitar business and he doesn't want to let the opportunity pass, but he also feels like he owes Cynthia a lot for working hard and taking on a disproportionate share of the work when raising their children.

Les has come to you with a lot of uncertainty. He needs help, and he needs it now. Every day that passes is a day that actualizing his dream becomes harder and harder.

Questions:

1. Discuss how Les would engage in each of the following management activities:

a. Long-range planning

b. Controlling

c. Supervision

d. Coordinating

e. Customer relations and marketing

f. Monitoring Products

2. Les has a tough decision to make about whether and how to open his guitar business. You'll need to assist him by providing recommendations.

a. Generate multiple alternatives. What possible alternatives does Les have?

b. Analyzing Alternatives.

• Generate criteria. What matters to Les?
• Discuss the pros and cons of each of the alternatives you have generated against the criteria you have created.

c. Select an Alternative. What recommendation do you have for Les? Justify your answer

Note: You need to consider Cynthia in your recommendations. Les's wife is an important part of his life and you need to address the ethical dilemma he has with his obligations to his family head-on.

3. Assume for a moment that Les decides to open a full workshop and business. Should his apprentices be employees or independent contractors? Justify your reasoning.