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Stan Abraham
Founder & CEO |
What Would You Do?
Case 3: Pure Water Systems, Inc.* in 1990**
In 1990, Pure Water Systems, Inc. (PWS) was a small company producing large volumes of water-purification filters for Amway. The company's product was good. Most of the components were purchased, and all the company had to do was essentially assemble them into the final product. An important factor was that an independent third party certified the product as meeting water-purification standards. This combination, plus a reasonable price, assured a continuing stream of orders from Amway. However, the company was not well managed. Orders were always delivered late (no inventory-control or production-planning system), executives helped themselves to extensive perks, cash flow was often negative, and no strategic planning was done. Despite the good product, Amway's patience with the company was wearing thin, and reached the point where it threatened to stop sending the company orders and change suppliers.
If you could have influenced the board of directors at that time, which of the following choices would you have recommended?
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* This is a fictitious name, but the case is based on a real company
** The date of the case doesn't affect the quality of the strategic decision you are being asked to make
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New Book On
Strategic Analysis |
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QUOTE OF THE DAY |
"Strategy is a handful of decisions that drive or shape most of a company's subsequent actions, are not easily changed once made, and have the greatest impact on whether a company meets its strategic objectives...This handful of decisions consists of selecting the company's strategic posture, identifying the source or sources of competitive advantage, developing the business concept, and constructing tailored value-delivery systems."
Kevin P. Coyne and Somu Subramaniam, "Bringing Discipline to Strategy," The McKinsey Quarterly, No. 2000 3 Strategy (originally)
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