Com 316 - Freddies Ride-on Mowers
Cohort 3, Team 30
Aman Aujla
Katherine McPhee
Justin Smith
Catherine (Lok Yan) Wong
Cecelia (Yiyin) Zhang

1. Size up
Facts
* Fred Bailey is the general manager of Freddies Ride-On Mower dealership * The dealership have 3 services: * Sale of new mowers * Sale of used mowers * Service mowers: * Purchased from the dealership under warranty * Other mowers that local people brought in for repairs * Bailey has had a long-standing policy of emphasizing new-mower sales as the principal business of the dealership * Good reputation and close attention to customer relations generated a substantial amount of repeat business, and increased company’s sales * Bailey (nearing retirement) wanted to make organizational changes to relinquish his control over the company, and withdrawal from day-to-day managerial responsibilities * He divided up business into three departments and named trusted employees as managers of each department: * Kevin Foyle, new-mower sales * Grace Chen, used-mower sales * Peter Stockwell, service department * Each manager was told to run her or his department as if it were an independent business (in other words, treated as profit centres) * Managers’ salaries are to be calculated as a straight percentage of their department’s gross profit * A particular customer wanted to trade his old mower as part of purchase price of a new one * Kevin had to decide what amount he would offer for a trade-in value * Kevin would deduct 8% of the new mower’s list price to be competitive in the market without the trade-in * The customer had an inflated view of the worth of his old mower * The new mower the customer wanted to purchase had been in stock for some time, and the model was not selling very well * Chen, Foyle and the customer examined