Academic journal article Journal of the International Academy for Case Studies

Creating Customer Value at Rocky Mountain Fiberboard

Academic journal article Journal of the International Academy for Case Studies

Creating Customer Value at Rocky Mountain Fiberboard

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns strategic planning, strategy formulation, and the alignment of functional strategies with the overall business strategy. Secondary issues examined include the incorporation of societal & environmental needs into business decisions, the strategic issues associated with staying focused, and bankruptcy. The case has a difficulty level of five. It is best suited for use in graduate level or advanced undergraduate courses given the scope of the difficulties the company faces and the complexity of the situation described. It is ideally suited for use in a capstone strategic management class because it requires the student to deal with strategic marketing, production and financial issues in an integrated manner. The case could also be used in a capstone marketing course, a small business management course, or in an entrepreneurs hip course. The case has been designed to be taught in 75 to 90 minutes and is expected to require four to five hours of outside preparation given the detailed financial analysis that can be done.

CASE SYNOPSIS

Rocky Mountain Fiberboard (RMF) produced particleboard out of bluegrass straw. It was established in 1999 as a joint venture between a processor of bluegrass seed and a Northwest American Indian Tribe. RMF was created to help solve the problem of waste bluegrass straw and was also part of the Tribe's effort to diversify the economic base of its reservation. RMF, however, experienced significant difficulties. It had lost $1.9 million in 2001, had $4.5 million in debt, and had no real working capital. Its Tribal owners were putting $42,000/month into the company to keep it going. While a pending grant application with the U.S. Department of Agriculture offered hope of reducing its significant debt burden, the business was also experiencing difficulties attracting and retaining customers and was experiencing significant quality problems. Luke Waterman, a trusted Tribal member who was in the process of completing a business degree at a nearby university, had recently taken over as general manager and was faced with the task of overcoming the considerable financial, marketing, and production problems the business faced. Luke was considering three options: (i) identifying additional funds to undertake a focused marketing effort and to implement process improvements in production; (ii) acquiring equipment and licenses to produce another product - wall panels - that would use RMF's strawboard; or (iii) declaring bankruptcy.

INSTRUCTORS' NOTES

Recommendations for Teaching Approaches

The case can be used to illustrate a number of business principles and accomplish a number of teaching objectives. These include:

** Illustrate the problems that can arise when a new business venture does not adequately research the assumptions upon which its strategy is based.

* Highlight the need for alignment between key business decisions (across all functions) and a firm's intended business strategy, and illustrate the problems that can occur when such alignment does not occur.

* Show why a business established to satisfy societal/environmental needs still needs to be built on a market-driven strategy that creates value for customers.

* Show how the analysis of financial and production data can lead to a better understanding of the strategic capabilities of a business.

* Illustrate the need for a firm to understand its competitive environment and the basis upon which it might build a competitive advantage within this environment.

* Provide the basis for a discussion of the pros and cons of staying focused. One alternative in the case would shift the focus of the business and add complexities to the management of the business but make limited contribution toward solving core business problems.

* Provide a context to discuss what bankruptcy really involves and when bankruptcy should be considered as a serious option. …

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