Case for critical analysis: Pinnacle Machine Tool Co.

Introduction
Pinnacle Machine Tool Co., it is a small, publicly held Indiana-based machine tool Company, it was founded in 1976. This company specializes in manufacturing all kind of machine centres. They too have excellent experiences in Technology, Quality and Service (Pinnacle Machine Tool Co. Ltd.). Problem Statement
How is Pinnacle going to avoid its company to fall off the market? Is entering a new market the only solution to defend itself from rival companies to take over the market or company?
Don Anglos mentions in the case that the current situation of the Pinnacle shows that it is facing an increasing amount of rivalry with foreign manufacturers. Anglos managed to slightly increase Pinnacle’s revenue growth and market share however it came with a price which is a drop in profitability. This issue can lead to the loss of the business, this is causing Anglos to make a change as there is a credible rumour of Pinnacle’s chief competitor’s plan to take over the company
Porter’s Five Forces Analysis:
Economies of Scale
Brand Identity
Proprietary Product
Access to Distribution

Economies of Scale
Brand Identity
Proprietary Product
Access to Distribution

Diversity of competitors
Industry Growth
Brand Identity
Product & service Differences
Exit Barriers

Diversity of competitors
Industry Growth
Brand Identity
Product & service Differences
Exit Barriers

Buyers might tend to feel the substitute is easier to use or cheaper to purchase

Relative price performance of substitute

Buyers might tend to feel the substitute is easier to use or cheaper to purchase

Relative price performance of substitute

Price
Buyer Information
Impact of Quality & Performance
Buyer Profits
Buyers switching costs

Price
Buyer Information
Impact of Quality & Performance
Buyer Profits
Buyers switching costs

Supplier Concentration
Cost relative to total purchases
Presence of substitute inputs
Supplier Concentration
Cost relative to total purchases
Presence of substitute inputs

Strategic Choices and Solutions * Pinnacle can consider retaining the manufacturing base while entering into the service industry.

* To come up with ways to find various opportunities with other companies to create a joint venture.

* Pinnacle as manufacturing company can create new market strategies to find new ways to keep the quality of their product and lower their cost by discovering ways to negotiate or find new suppliers that provide the same quality of tools for a lesser price.
Strategic Options * Strategic alternative 1: Continuing with Don Anglos’ initial plan but he first needs to complete the requirements of coming up with a solution and holding on to the manufacturing base gives the company more stability rather than risking everything when entering a new market. Therefore making it suitable for the company to take the risk for the bettering of the company.

Although there will be an increase in financial expenditure and training of employees may be required, it is acceptable as the staff in the organization also want a change.

When supported by the board and the shareholders, it is not feasible for the company to acquire Hoilman Inc. and enter the market with cutting-edge technology as entering a new market is costly and Pinnacle doesn’t have much finance to work on.

* Strategic alternative 2: For Pinnacle to combine with two or more companies and work on a project on a short-term or a long-term basis would be suitable for the company as joining together with other companies could help Pinnacle get on the right track and find new strategic ways to ahead of the market.

Creating a joint venture with other companies might include sharing and the corporation of both managements in the venture. This might not be acceptable by the organization as sharing management is one thing but having to share profits is another. Pinnacle who is already making a low margin in profits would not gain much out of joint ventures.

This alternative is feasible because when entering into a joint venture the workload is shared among the number of companies involved. Therefore, this reduces the cost of production and management in certain areas of the business.

* Strategic alternative 3: To adapt to the changing environment is important and as developing organization. Finding new suppliers or better rates with current suppliers is key to keeping up with market and the economy. It is suitable for Pinnacle to do research and find the best supplier company with low rates to help lower cost of production and help in the increase of the level of profitability.

As employees aim to deliver the best to their customers with good quality machinery and low prices. It is acceptable by the management to work towards this goal and use it as strength.

Unlike the other alternatives this does not include adding on finances to the organization to improve Pinnacle from its predicament. It is feasible as it only reduces costs of the business, the research and development management will be finding new suppliers or better deals to reduce the cost of production.

Recommendations
I would recommend them to proceed with the initial plan of entering the service industry after having completed the required decision-making steps, and answering all the questions presented to Don Anglos during the board meeting by Sam Lodge, as well as making a worst case scenario. Don should consider following the required steps, such as: * Complete decision-making steps, as this is key to help a manger make the right decision. * Trying to enter a new market while keeping the main service of the company on manufacturing. So if the plan fails, the business doesn’t have a full loss. * Finding alternative solutions that can aid in the improvement of the manufacturing base of Pinnacle. * Improve brand identity to maintain and gain new customers.
Don can follow all these for optimum results or follow each point on its own for the improvement of the company.

Case Study Questions
1. What steps in the decision-making process have Don Anglos and Pinnacle taken? Which ones have they not completed?
Don Anglos and Pinnacle have not done many steps that are required to be done in the decision-making process. Two steps have been completed which are, “Recognition of Decision Requirement”, where Anglos has found the opportunities and problems in the company and the “Diagnosis and Analysis of Causes”, where the problem is diagnosed by showing the reason of the company’s slow fall in the market and how it can overcome this situation with an opportunity such as acquiring Hoilman Inc.. The steps that Anglos and Pinnacle have not pondered upon are “Development of Alternatives” and “Selection of Desired Alternative” before they can begin their implementation process.
2. Which decision-making styles describe Don’s approach: directive, analytical, conceptual or behavioural? Which style best describes Sam Lodge’s approach?
The case shows that the decision-making style that describe Don Anglos; the CEO of Pinnacle, is Directive. As the Directive style tells you that a manager that uses this style prefers a simple, clear-cut solution to problems and does not deal with a lot of information as they only may consider one or two alternatives (Daft, 2008). In Don’s case it shows how persistent as he thinks there is only one way to improve the company. On the other hand Sam Lodge; the CFO of Pinnacle, is having the opposite style of thinking. As he uses the Analytical style, which is when the managers consider complex solutions based on as much data as they can gather. The decisions are based on objective, rational data from management control systems and other sources (Daft, 2008). Lodge used rational data and gathered information to make a statement in his argument regarding the acquisition of Hoilman Inc., during the board meeting.
3. What leadership style is Anglos employing? Is it the participation style you’d recommend based on a Vroom-Jago analysis of the situation? Why or why not?
By looking at the current situation, Don Anglos implemented the leadership style of a decider, which I think is the wrong style to use for this situation according to the Vroom-Jago analysis. As a decider, you make the decision alone and either announce or sell it to the group. You may use your expertise in collecting information that you deem relevant to the problem from the group or others (Daft, 2008). Applying this style restricts you from having alternate solutions to the problem the company is facing. In Pinnacle’s case Don is focusing on using his only idea of acquiring Hoilman Inc., and to develop new software using their help. For this to be made possible the company’s strategies and procedures will need to completely change, the implementation of this change is going to be difficult to do in a short period of time. Entering a new market is far from easy and will require a large funding solution which Pinnacle already lack’s due to the fall in profitability. Don should not be enforcing only one solution towards the company but come up with many alternatives to keep the company afloat.
4. Would you recommend that Pinnacle attempt to acquire Hoilman? If so, why? If not, what alternatives would you suggest?
I would not recommend Pinnacle to make an attempt to acquire Hoilman Inc. at this stage. Don Anglos has not completed the necessary process of the Decision-Making steps, which is certainly important as every manager takes on the responsibility of providing every possible situation the company can enter while making a change. The acquisition of Hoilman Inc. can be done after having considered and gone through the processes to know what the rewards and drawbacks the company will be facing. During the Board Meeting, Sam Lodge; the CIO of Pinnacle, has argued with Don on this situation as the financial condition of the company was not considered. The problems Lodge has queried are real threats and weaknesses of the company which should have been already addressed and thought about while Don was coming up with his plan. Don should make time to complete his decision by being fully aware of what can happen due to this idea and should also consider creating a worst case scenario, then maybe he can show a full report and ask the board to reconsider on the idea of acquiring Hoilman Inc.

References
Daft, R. L. (2008). New era of management. Mason, Ohio: Thomson South-Western.
Pinnacle Machine Tool Co. Ltd. (n.d.). Retrieved September 23, 2013, from http://www.pinnacle-mc.com/en/profile.html.