The operating profit generated by the Stay & Shop account was approximately...
| | | $150,000,000 |
| | | $3,500,000 |
| | | $250,000 |
| | | $875,000 |
When he returned to his office, Charlie Moore reflected on the morning's events. He was upset with losing Stay & Shop's business, as well as by the way his management team had reacted to the news. He guessed that the loss of Stay & Shop's business would reduce the division's operating profit by as much as 25%. Additionally, he was uncertain how soon the volume could be replaced and whether word of Stay & Shop's switch to Sealtest would unfavorably impact Chattanooga's business with other customers. As for his management team, Moore was both surprised and unhappy with the public display of conflict. He also wondered whether his people possessed the capabilities necessary to lead a recovery of the business. After a few moments' silence, Les Holly responded. "We will try like heck to replace the volume, but I can't promise how long it will take. I have been talking to an eight-store chain in the Florida panhandle about taking on our line, but the distance will make it an expensive account to service. In addition, I doubt that we can get them to make a quick decision without our paying them a substantial promotional allowance up front." "What do you think?" Moore asked, turning to the others. "This isn't the time to go spending more money on promotion," Stephanie Krane responded. "I think our immediate goal should be to cut expenses by roughly the same amount as the operating profits we're losing at Stay & Shop. That way we'll be able to stay on the profit plan and deliver the dividend we promised to CFC. All we're talking about is cutting expenses 3%." "How are we going to do that?" Holly asked, noting that the division had worked hard for the past few years to reduce expenses and was already managing its costs aggressively. Sales Revenue Millions of Dollars 1991 1992 1994 1995 1993 Year Operating Profit Millions of Dollars 1991 1992 1994 1995 1993 Year When he returned to his office, Charlie Moore reflected on the morning's events. He was upset with losing Stay & Shop's business, as well as by the way his management team had reacted to the news. He guessed that the loss of Stay & Shop's business would reduce the division's operating profit by as much as 25%. Additionally, he was uncertain how soon the volume could be replaced and whether word of Stay & Shop's switch to Sealtest would unfavorably impact Chattanooga's business with other customers. As for his management team, Moore was both surprised and unhappy with the public display of conflict. He also wondered whether his people possessed the capabilities necessary to lead a recovery of the business. After a few moments' silence, Les Holly responded. "We will try like heck to replace the volume, but I can't promise how long it will take. I have been talking to an eight-store chain in the Florida panhandle about taking on our line, but the distance will make it an expensive account to service. In addition, I doubt that we can get them to make a quick decision without our paying them a substantial promotional allowance up front." "What do you think?" Moore asked, turning to the others. "This isn't the time to go spending more money on promotion," Stephanie Krane responded. "I think our immediate goal should be to cut expenses by roughly the same amount as the operating profits we're losing at Stay & Shop. That way we'll be able to stay on the profit plan and deliver the dividend we promised to CFC. All we're talking about is cutting expenses 3%." "How are we going to do that?" Holly asked, noting that the division had worked hard for the past few years to reduce expenses and was already managing its costs aggressively. Sales Revenue Millions of Dollars 1991 1992 1994 1995 1993 Year Operating Profit Millions of Dollars 1991 1992 1994 1995 1993 Year
