The ABC Company supplies products to a number of original equipment manufacturers

(OEMs). It employs 5000 mostly unionized workers and generates about

$2.2 billion in revenue annually. In 2012, it won an “Excellence Award” from one of its major client companies for having supplied an OEM product at the quality level of 10 defects per million in three consecutive years, thereby exceeding the specific target of 15 defects per million set by this client.

However, the corporate parent of the ABC Company was less than happy with its financial performance. It declared this subsidiary a “Troubled Operation” in 2013, giving notice that if its business performance did not improve within a certain time frame, the ABC Company would be closed down or divested. The specific financial targets set by the corporate parent consisted of (1) NOPAT to sales ratio at 5%, (2) EBIT to sales ratio at 10%, and (3) ROA at 22.5%.

Needless to say, ABC’s management worked diligently to find ways to improve the company’s business performance. One strategy was to induce 700 early retirements from the unionized workforce by November 2013. However, as of April 2014, only 480 workers had signed up for this heavily promoted early retirement program that qualified them each to receive a $35,000 cash incentive.

Besides encouraging workers to retire earlier, what other strategies do you think the ABC Company should pursue to achieve all three of the noted financial targets?