(Word Limit: 200 words)

Axel Corporation is a private German audio company specializing in design and production of a wide range of both consumer and high-fidelity products. Founded 40 years ago by Henry Wilson, the firm now employs 250 workers and has annual sales of over $17 million. Henry operates the firm in a highly centralized way and retains control over all changes in operations. Although Henry Wilson is now 68 years old, he has no apparent management successor, and has always hand-picked his department heads and staff personnel. He has been generous to those who worked for him, paying substantial bonuses each year to the employees based on his personal evaluation of each worker. Just six weeks ago, a heart attack convinced Henry to consider retirement, and he decided to sell the firm to his employees.

Required:

Assuming that the new management wants to operate as a decentralized firm, what major management problems do you foresee in the transition from sole owner to employee ownership?

(4 marks)