WENGART AIRCRAFT: BRIEFING NOTES

Source: Harvey, D. & Brown, D. (2001). An experiential approach to Organisation Development (6th. Ed.). Upper Saddle River: Prentice-Hall.

President Ralph Larsen of Wengart Aircraft has become increasingly concerned about profits. Though he is not fearful of a company takeover, he does feel an obligation to maximize shareholders' return on their investment. He and about a dozen top executives receive sizable stock bonuses, so it is to their advantage to obtain a high share price.

Wengart manufactures commercial and military aircraft. It is number two in its industry, which is composed of nine companies. Its profits, however, are ranked seventh. It is disturbing to Larsen and his top management team that they are not able to maximize profits.

QUALITY PROBLEMS

Quality has been identified by the top management team as one of the major problems at Wengart. Aircraft have to be reworked even after they are sent to the customer. The federal government, one of Wengart's largest customers, shares the concern for quality to the extent that several letters have been sent to Larsen from the Secretary of Defence warning him that unless quality is improved by 20 percent within 6 months, the government will exercise its contract provision to withhold partial payment as a penalty. This will place even more pressure on profits. Nongovernmental customers have also expressed serious concerns about quality. There have been major stories in The Wall Street Journal and Business Week about Wengart's quality problems and its deteriorating financial condition.

The Department of Defence, in its latest letter to Larsen, said it would look favourably upon Wengart implementing a "total quality management (TQM) program similar to programs at other aircraft, automobile, and electronic firms. By Presidential Executive Order 12552 applying TQM to