How to make a full compensation plan for this case

MULTI-PRODUCTS CORPORATION is early February. Late last year, the firm you work for, Multi-Products Corporation, acquired the rights to a new type of golf club, invented by a retired machinist who had been a lifelong golfer until his untimely demise (it turns out that golfing during a lightning storm is not such a great idea). The machinist had produced only a few sets of the clubs, but their superiority over existing clubs was so pronounced that word of his invention had spread far and wide. Fortunately for him (for his estate, actually), he had patented the design of these clubs, so nobody could copy them. Multi-Products Corporation has numerous divisions, each producing different products in the sporting goods field. The company has never produced golf equipment of any kind, and plans to set up a separate division to produce and distribute the new clubs. You found out yesterday that you have been selected to head the new division. Corporate management will provide you with all the financial resources you need to get the division going and will also help you staff the division with experienced managers from the parent corporation. Because of their confidence in you, management has given you complete freedom to organize and operate the division as you see fit, as long as you attain the financial goals that have been set for the division. : Your first task is to design the organization structure. But you recognize that before doing so, you need to understand some key aspects about the organization and its con- text. Market research suggests that the demand for your product will be strong and stable. This demand will not be very price-sensitive, since golfers who want your product will generally be willing to pay what it takes to get it. Therefore, it will be relatively easy for you to secure distributors. In fact, one distributor is willing to agree to a four-year sales contract for your equipment, with a fixed volume and a fixed price. This distributor is confident enough to make this offer because it believes that nobody else will be able

to manufacture a similar club, due to the patent protection. The production side also looks straightforward. Your production process include: readily available materials and there are many possible suppliers. You expect to be able to negotiate long-term contracts with suppliers at a fixed price. Acquiring the productior. equipment will also be straightforward, since the equipment is readily available in the marketplace. The basic production technology, which will involve a sequential, step-by-step man. ufacturing process, has been in use for many years and has been refined to a high degree of efficiency. Since you know the likely volume of demand for your product, it is easy to decide on the optimum plant size, which will involve about 600 workers. The type of semiskilled worker that you need is readily available, and since unemployment is quite high in your region, acquiring employees should not be very difficult. Employees in this industry are usually unionized, but the main union in the industry has not been highly militant in recent years, so labour disruptions don't seem likely. Government regulations represent another possible factor that might affect your operations. However, as long as your clubs meet CSA (Canadian Standards Associa- tion) standards, the government is unlikely to get involved with your product. Similarly, except for some groups opposed to the expansion of golf courses in ecologically sensi- tive areas (such as national parks), consumer and environmental groups are not likely to pose any concerns. Future technological change is another possible issue, but it does not appear to be of great concern. You will start out with the most up-to-date production equipment, which has not changed much in recent years. The product itself (golf clubs) is not likely to be replaced by anything radically different. The pace of technological change for golf clubs is quite slow, and some of the most popular clubs have been virtually unchanged in 30 years.