Free Essay

Great Lake

In: Business and Management

Submitted By vicky19890
Words 2158
Pages 9
GREAT LAKES PIPE & TUBE, INC. “If we do decide to produce the 10- and 12-inch pipe internally, it could solve our overstaffing problem,” Mark Rubin, owner of Great Lakes Pipe & Tube, Inc. (GLPT), remarked to Vinny Patricko, the plant manager. “I’m reluctant to lay anyone off or even cut back hours. It’s not good business and it’s not the right thing to do if it can be at all avoided.”

THE FIRM Mark Rubin had no intentions of starting his own firm in 1972. Since graduating from college in 1964, he had worked for ML Pipe, a company based in Youngstown, Ohio. In January 1972, the company decided to relocate to New Jersey, and Rubin went also. Rubin and his wife were quite unhappy in Virginia, mainly because they felt so distant from their relatives, nearly all of whom were located around Youngstown. In May of 1972, he decided to move back to Youngstown and start his own pipe company.

Rubin felt he understood the manufacturing side of the piping business “inside and out.” He recognized, however, that in order to be successful, he needed marketing and financial expertise. By his own admission, Rubin made “many mistakes” during the first 18 months, but nonetheless, the business surged ahead. By the third year, it was clear not only that the company would be successful, but that it had the potential to prosper.

And prosper it has. GLPT operates on 14 acres and employs 31 people. In fiscal year 1991, sales totaled nearly $25 million despite a nationwide recession and the highly competitive nature of the piping business.

Rubin attributes his success to two factors: service and dedication to quality. While many firms are concerned with the quantity of pipe they produce, right from the start Rubin was dedicated to manufacturing the best quality of pipe possible. He often tells his employees, “If we achieve quality, the quantity will take care of itself.” The company also provides exceptional service. GLPT keeps an unusually large volume and selection of inventory at all times and maintains a relatively large fleet of trucks. As a result, the company can fill an order quite quickly. Such fast delivery means that distributors GLPT sells to--many of whom are nationally known wholesalers of building materials--are able to keep their inventory low.

A PROBLEM OF SIZE

The bulk of the firm’s sales come from PVC pipe, which is mainly used in residential and commercial plumbing and government sewer systems. This pipe comes in many different sizes, and sales depend in part on customers viewing the firm as a “full-line producer.” That is, a salesman is more likely to win an account if a distributor is convinced that the manufacturer can promptly deliver various sizes of pipe as needed. This typically means that a producer can quickly fill orders for the most commonly used sizes of PVC pipe; that is, pipe with diameters of 3 inch, 6 inch, and 8 inch.

Sometimes, however, a distributor is interested in 10-inch and 12-inch pipe as well. GLPT has never produced these sizes internally because Rubin feels that annual sales volume is too low to justify the start-up cost. If a customer does request such pipe, GLPT will typically buy it from a competitor who does manufacture the desired sizes. Rubin has never carefully analyzed whether this is a good policy, and he thinks now is the time to do so, especially given the firm’s staffing situation.

As he sees it, there are two main advantages to producing the 10-inch and 12-inch pipe internally. First, GLPT avoids the expense of buying the pipe from another firm. GLPT pays 45 cents per pound for this pipe plus another 2 cents per pound in distribution costs to get the pipe to GLPT customers. Unit selling price is 56 cents per pound. A second advantage is that the company’s staffing problem would be helped.

Though dollar sales have increased slightly in the last two years, the increases have not kept up with inflation. Rubin realized six months ago that the firm is overstaffed by two employees. The orders simply aren’t there to keep all the production workers busy full time. He thinks this could continue, given not only the state of the economy but also the increase in industry competition.

In its entire 29-year history, the firm has never been forced to even cut any worker’s hours, let alone lay off someone. And Rubin has decided that he won’t start now.

RUBIN’S ESTIMATES

Rubin can’t be certain, of course, what future sales of the 10-inch and 12-inch pipe will be. He finds it helpful to think in terms of scenarios, and he has devised a set of estimates shown in Exhibit 1.

In addition, two salespeople complained that accounts were lost when some distributors learned that GLPT does not produce 10-inch and 12-inch pipe internally. Apparently, these distributors were concerned that GLPT would not be able to fill orders as quickly as they would like. As a result, these salesmen argued, the entire account was lost and not just the orders for 10-inch and 12-inch pipe.

Rubin is unsure what to make of this “lost order” argument. If the sales personnel are correct, then GLPT could nearly double the figures shown in Exhibit 1 by producing the 10-inch and 12-inch pipe in-house. While he can believe that some sales have been lost, Rubin finds it hard to believe that the volume is anywhere near what the salespeople claim. For the time being, he decides to ignore the possibility that orders have been lost. He wants time to investigate the claims of the sales personnel who, he believes, have a strong incentive to inflate any loss.

The most inexpensive equipment that is capable of producing the quality that Rubin desires costs $600,000 and can generate 2 million pounds of pipe per year. For the purpose of analysis, Rubin will assume straight-line depreciation to zero salvage value over the eight-year life of the project. (Ideally, you should use MACRS depreciation). The market value of the equipment after eight years is expected to be $180,000 before taxes.

THE ACCOUNTANT’S ESTIMATES

The firm’s accountant, Abe Komansky, has developed a set of numbers that, in his view, “strongly indicates” in-house production is a “losing proposition.” (See Exhibit 2.) Komansky estimates it will cost 54.3 cents per pound to produce the 10-inch and 12-inch pipe internally. He notes that GLPT can purchase the same pipe for 45 cents per pound from another manufacturer and incurs another 2 cents per pound to get the pipe to GLPT’s customers. Thus, Komansky argues, internal production results in an 7.3 cent per pound loss, or $87,600 per year assuming 1.2 million pounds of pipe.

As Rubin scans these figures, he smiles as he notices that Komansky used Rubin’s sales estimates and annual sales probabilities. He wonders, though, how accurate the accountant’s numbers really are. For one thing, the estimates are based on the “most likely” sales figure and do not consider the other sales possibilities. In addition, Rubin questions the appropriateness of including depreciation, given that it is a non-cash item. For these and other reasons, he decides to rethink the figures the accountant has compiled.

Rubin is comfortable with a number of the items listed in Exhibit 2. He believes it is quite reasonable, for example, to assume material costs will be 32 cents per pound. And, yes, the project would use two laborers and will require plant space and supervisory personnel. Yet the firm has significant excess space and the equipment could be operated in an area of the factory that Rubin believes would otherwise be vacant for the foreseeable future. In addition, Rubin believes that the firm’s plant manager could easily supervise the project without affecting her efficiency in other areas.

Rubin then reflects further on his staffing situation. Although it may not be good business, he is quite comfortable with his decision not to terminate any employees. Rubin realizes that at most, he will be over-staffed for three years, since two workers are scheduled to retire at that time. And there is the possibility that sales will increase sufficiently over the next three years so that all the staff would be fully utilized. If this did happen, of course, new workers would have to be hired (but no new supervisors) if the project were implemented. Rubin estimates there is only a 20 percent chance that this would happen in any year. Looked at from a different angle, there is an 80 percent chance in each of the next three years that the two laborers used in the project could not be productively employed somewhere else in the firm.

Rubin uses a 12% cost of capital for all projects. GLPT has a marginal tax rate of 36%.
-------------------------------------------------

EXHIBIT 1

Rubin’s Estimate of the Probability Distribution of Annual Sales of 10-inch
-------------------------------------------------
and 12-inch Pipe, Years 1 - 8 (in thousands of pounds).*

------------------------------------------------- Annual Sales Probability 900 lbs. .20 1,200 .50 1,800 .30

*These estimates do not consider the possibility that in-house production may increase sales (see case)

EXHIBIT 2
-------------------------------------------------
Accountant’s Estimate of Annual Cost of Producing
10 inch and 12 inch Pipe In-House

1. Raw materials $384,000 2. Distribution cost 24,000 3. Direct labor 40,000 4. Indirect labor 8,000 5. Pension and welfare 6,720 6. Payroll taxes 4,800 7. Utilities 8,000 8. Repairs and maintenance 7,000 9. Space 6,600 10. General factory 18,000 11. Depreciation 75,000 12. Lost interest 72,000 $654,120 Unit cost 54.5 cents - 654,120/1,200,000
-------------------------------------------------

Description of the above items: 1. 32 cents per pound times 1.2 million pounds per year. 2. 2 cents per pound times 1.2 million pounds per year. 3. Two workers at $20,000 per year each. 4. 20 percent of item 3. This is mainly the project’s share of supervisory salaries. 5. 14 percent of items 3 plus 4. This includes the firm’s contribution to the employee’s pension fund. 6. 10 percent of items 3 plus 4. This is mainly for social security and unemployment insurance. 7. The project’s share of electricity, heat, water, etc. 8. Annual maintenance and repair on the equipment. 9. The project’s share of the factory space occupied by the equipment and the two workers. 10. The project’s share of items like property taxes, corporate fees, secretarial support, etc. 11. Based on the cost of the equipment: $600,000/8 12. Lost interest on the $600,000 used to purchase the equipment: .12 x $600,000 where .12 is the project’s after-tax discount rate.

Scenario Analysis

The purpose of this exercise is to evaluate the sensitivity of investment decisions to management uncertainty concerning input variables. For the Great Lakes Pipe and Tube, Inc. take the base case analysis and test the sensitivity of the investment decision to each one of the following assumptions. Change one assumption at a time.

1. Rubin was concerned about the fact that the accountant may have ignored inflation in his analysis. While the first year costs are correct, Rubin believes the accountant has simply forgotten about the effects of inflation on the project cash flows after the first year. The accountant’s estimate of direct labor cost reflects the terms of the current labor market conditions. Rubin believes, however, that at the end of three years, inflation will start pushing labor costs higher. His expectation is that total labor costs including benefits would increase annually at the rate of inflation of 3 percent, starting in the fourth year of the project. Rubin believes raw material costs will increase with inflation (at 3%) in every year of the project. He also expects the unit cost of purchased pipe (at 45 cents in the first year) to increase annually at the rate of inflation during the life of the project. Recalculate the NPV of the project, adjusting the cash flows for expected inflation.

2. Assume that there is an alternative use of the space in which the proposed pipe manufacturing project will be located. The Gross Present Value of the alternative project is $200,000. The net present value of the alternative project is $20,000.

3. Assume that the two laborers who were going to be employed for the project in the first three years have both decided to retire immediately.

4. Assume that the market value of the equipment is expected to be $250,000 before taxes (instead of $180,000 in the base case scenario).

5. Assume that the current supplier responded to the news that Great Lakes planned to start its own production by cutting the unit cost of pipes to 42 cents per unit.…...

Similar Documents

Free Essay

Great Lakes Great Decisions

...12 Assignment 1 Great Lakes Professor Mary May Bus 499 When analyzing the article “Great Lakes, Great Decisions” the six factors that are used are technological, demographical, socio-cultural, economic, political, and global. The technologically that is available is starting to leave the company behind. The article stated that some countries had not yet switched from leaded to unleaded gasoline for their cars and machinery. When the new technology is used this could leave behind some of the current customers and cause the company to lose money in the short term. The company will have to consider this when they are deciding what technology they will use and which they will skip. The largest factor’s that has impacted the Great Lakes project is the demographics and socio-cultural issues. Octel’s customers are located around the planet and from all different kind of backgrounds and economic groups. The countries that these people call home could be third world or they could be highly developed. The income distribution is wide. They do not have a stable middle class. The socio-cultural concerns are the driving force for the other five factors. When governments begin taking on the mentality and values of its people they will begin leaning toward “greener” processes which could cause the company to lose more customers. Without changing the processes and the products being offered the company could be left behind. The company will lose its market and will not...

Words: 1224 - Pages: 5

Free Essay

Great Lakes

...Perform an analysis of the Social/Demographic, Technological, Economic, Environmental/Geographic, and Political/Legal/Governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. Social Demographic Great Lakes began as a small oil and gas exploration company named McClanahan Oil Company. It was based in Michigan. In 1948 Charles Hale took over the company and changed it into a chemical and bromine business. In 1958 Emerson Kampden became the CEO. Hale found bromine and rich deposits in Arkansas. The company subsidiary with Octel Associates allowed the company to produce lead additives which afforded it the opportunity for growth. The company went from $50 million in revenues to a multinational company with $1.8 billion in sales. Technological Great Lakes was the top bromine business. This product allowed Great Lakes to produce a wide array of products as well as household items. Great Lakes also produced several specialty chemicals. Some examples of its products are water treatments, specialty household cleaners, polymer stabilizers, and performance chemicals. Octel gave the company the push it needed by producing tetraethyl lead (TEL). Octel produced lead additives. These additives were used as color stabilizers and as fire retardants. The salt water and bromine extraction process is what made the company international. Economics Some countries were developed and some were......

Words: 1069 - Pages: 5

Premium Essay

Great Lakes Water Wars

...Great Lakes Water Wars Introduction Water is a requirement of all life, as “it dissolves organic molecules…allows for transportation in and out of cells; and it is involved in many of metabolic reactions in the cells,” (Bennett & Shostak, 2007). Water is therefore in high demand due to its importance need to sustain life. With a rising world population and increasing world pollution, is the supply of clean water is decreasing per capita against its forever growing demand. “While about three-fourths of the earth's surface is covered with water, only about 2.7 percent of it is drinkable,” (Allardice, 2005) “Some two-thirds of that is locked up in snow and ice,” (Ehewnman, 2003). Water is in conflict between countries as the quality of clean water per person is steadily decreasing. The Great Lakes, the biggest body of water in North America, and supplies water to Canada and the U.S. and its rivers are also used for Hydro powered damns. This paper examines the Great Lakes water conflicts between Canada and the U.S., by observing the drinkable water that can be supplied. While also observing the legalities and regulations of who has the rights to Canada’s massive water supply. Even if the water is in Canada’s country, they may not have complete control over it. Many solutions from one side, such as water diversion, have created concerns for the other. Due to Canada’s high water supply from other lakes and river systems, they do not as dependent on the Great Lakes as much...

Words: 2813 - Pages: 12

Free Essay

Great Salt Lake Ecosystem

...Great Salt Lake Ecosystem The Great Salt Lake is the remnant of Lake Bonneville that covered much of Western Utah and parts of Nevada and Idaho during the Pleistocene Era. It is a terminal lake, three and a half to eight times saltier than the oceans, which supports brine shrimp and flies along with algae and bacteria that have adapted specially to this extreme environment. It has three contributing rivers that flow into it, the Bear, Provo/Jordan, and the Weber. There are no fish that can survive in the lake, but it has become a resting ground for some two to five million migratory birds making it an important bird refuge (United States Geological Survey, 2013). Although the saltiness and general lack of organisms would make the Lake to appear as simple it is a fragile, complex ecosystem. Structural and Functional Dynamics of Great Salt Lake The structure of the Great Salt Lake lends to very dramatic changes in the size and volume of the lake with even small changes in water amounts. The Lake only averages 14-16 feet in depth with the deepest part around 34 feet, and an elevation of 4200 feet above sea level. At its lowest point of 4191.35 in 1963, or just eight feet lower than its historic average, the Lake saw a decrease of surface area from 1700 square miles to 950 square miles (United States Geological Survey, 2013). With just an increase of 11.6 feet of elevation the surface area jumped to more than 3300 square miles. The Lake serves the millions of......

Words: 964 - Pages: 4

Free Essay

Great Lakes Art Fair

...Great Lakes Art Fair For the second art encounter I attended the 2014 Great Lakes Art Fair in Novi, Michigan. It was a short 1 hour drive for a great experience that I will tell my family about for weeks to come. This art fair reminds me of the Black Swamp festival that is in Bowling Green every year. There was art vendors as far as the eye could see. I enjoyed my time there looking at all different kinds of art, from the more contemporary styles, to classical works of art that looked as if they were taken from museum floors. The show consists of 200 artist displays, and includes free access to decorated gardens and a student art display as well. One of my favorite aspects of the festival was just the amount of art there was there. It was interesting seeing artists make pottery by hand, and showing off their tapestries that some of which took years to complete. It was really amazing to see these things, and to see how close and similar their techniques were, as to what we learned in class. Another thing that amazed me at the fair was the glassblowing demonstrators. Glass blowing has always been something that interests me. It was so cool seeing these people take molten globs of glass, and turning them into amazing bowls, vases and abstract works of art. It was really amazing to see some of the tapestries that these artists had worked on. In some cases their designs looked extremely similar to the sample projects that we had just finished. It was really cool to see what......

Words: 736 - Pages: 3

Free Essay

Great Lakes

...Great Lakes: Great Decisions Great Lakes: Great Decisons 1. Perform an analysis of the Social/Demographic, Technological, Economic, Environmental/Geographic, and Political/Legal/Governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. The firm’s external environment is challenging and complex. Because of the external environments effect on performance, the firm must develop the skills required to identify opportunities and threats existing in that environment (Hitt, Ireland, & Hoskisson, 2011 custom edition). Because firms cannot directly control the segments of their external environment, successful ones learn how to gather the information needed to understand all segments and their implications for selecting and implementing the firm’s strategies (Hitt, Ireland, & Hoskisson, 2011 custom edition). Social/Demographic Segments The demographic segment for the Great Lake Chemical Corporation was that since the world’s population roughly doubled in a forty year period between 1959 and 1999, they did well with their oil and gas exploration company. Great Lakes never set out to be a lead additive producer but acquired Octel Associates for its capacity to produce bromine. Great Lakes could continue to supply lead additives to developing countries. The demand would remain high and the competition would be minimal, but the vocal opposition......

Words: 1218 - Pages: 5

Premium Essay

The Great Salt Lake

...The Great Salt Lake INT1 Task 2 (Ha’Eri, 2004) Location ● The Great Salt Lake is located in northern Utah. (USGS, n.d., b) Biotic Components ● ● ● ● ● ● ● Brine Shrimp Brine Flies Algae Ducks Geese Gulls Pelicans (Wikipedia, n.d.) (Wurstsbaugh, 2014, d) Abiotic Components -Surface elevation 4200 feet above sea level -Depth averages 14 feet -Railroad crosses through the lake -Averages 15.7 inches of precipitation per year -Water temperature varies from below freezing to 80 degrees Fahrenheit. (Gwynn, 2002) Current Human Impact -Humans building a railway through The Great Salt Lake has divided the lake and caused that half of the lake has a higher salinity percentage than the other half. This is caused by the South end has more fresh water flowing into it and the North end has more salt water flowing through it. Because of the railway, it doesn’t pass through to the other side. The percentage of salinity is affecting the brine shrimp eggs harvest. It has decreased. The residents in the Salt Lake area use more water than the average people in the country. Not conserving and using so much water is affecting the water levels of the Great Salt Lake. The lake is getting smaller each year. (USGS, 1999) Future Human Impacts -If current water usage trends continue, the lake will continue to get smaller and smaller. With future growth of the area expected to triple in the next 50 years, Utahns......

Words: 497 - Pages: 2

Free Essay

Great Lakes

.../ legal / governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. When performing an analysis of the social and demographic segments to understand the general environment facing Great Lakes Chemical Corporation. The external factors affecting Great Lakes the most are the population size, in which are using the leaded gas, and the geographic distribution. A great deal of the lead additive that is being produced by Great Lakes is exported to many developing countries, in which are unable to obtain unleaded gasoline. The lead additive’s demand continuously grows in these developing countries and promotes Great Lakes to continue producing this poisonous toxin release upon lead additive production. Upon these developing countries turning into more developed ones it will become simpler form these countries to switch from leaded to unleaded gasoline supply. In return, this will eventually allow Great Lakes to completely phase out their production of the lead additives all together. The technological factors that would affect Great Lakes are the changes in the making of automobiles and other gasoline engines. As these autos and engines only require unleaded gasoline, Great Lakes will have no need of being a lead additive supplier in those countries that are using unleaded fuel. It would be in Great Lakes best interest to continuing making changes to stay ahead of their competitor...

Words: 586 - Pages: 3

Free Essay

Great Lakes: Great Decisions

...Great Lakes: Great Decisions Leah Lasco BUS 499-BUSINESS ADMINISTRATION CAPSTONE Professor Bari Courts October 14, 2011 Perform an analysis of the social/demographic, technological, economic, environmental/geographic, and political/legal/government segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. Social/demographic: Great Lakes started as a successful, low-key corporation. With the acquisition of Octel, they stumbled on a gold mine. They had the ability to create more bromine but also but them as owner of a lead additive called tetraethyl lead (TEL). Socially, this has made them an enemy. TEL has caused the death and disablement of many. Society is not looking at Great Lakes as a hero. They are looking at them as a problem that needs to be dealt with. The terminated use of TEL would make them more favorable here in the U.S. as well as in other developed and developing countries. As they venture into more un-chartered territory to expand the use of lead gasoline, more lives will be put at risk. Mortality and disability rates will increase. Technological: Great Lakes does not have any technological issues. They have the capability to remove the lead additives and to stop producing them as well. Their products were sold not only in the US and other developed countries but developing countries as well. Some developing countries did not have the......

Words: 1185 - Pages: 5

Free Essay

Great Lakes Case Study

...Great Lakes: Great Decisions Strategic Management October 13, 2011 Great Lakes Chemical Corporation is a chemical producing corporation located in the United States that produces many different chemical compounds and solutions, including the ever controversial lead additive used in gasoline in some developing nations. The company, which was originally founded as an oil company, eventually acquired several other corporations and extended their oil business into one that handles chemicals such as bromine and eventually took over the company Octel which produced a lead additive. While the use of leaded gasoline became illegal in the US and all developed countries, it was still in heavy use in developing countries. These countries had yet converted to non-lead use, impart by the total control of these businesses by the government who cared solely on their profits. By a technological standpoint, Great Lakes uses minimal technological advances in its production of the lead additive, along with their other chemicals. With the advancement and use of non-leaded gasoline, all other chemical companies stopped producing the lead additive, mostly to comply with new regulations enforced against the environmentally unsafe additive. The company has been faced with dramatic push backs from environmentalists who urge the company to stop the production of this. The main issue with following through with this is that their economic situation has been extremely successful. The......

Words: 1422 - Pages: 6

Free Essay

The Great Lakes

...The Great Lakes: Great Decision Rita Stroud-Lipsey Strayer University Professor: Dr. Barry Adkins BUS 499—Business Administration Capstone January 13, 2012 Introduction The main purpose of this essay is to analyze the social/demographic, technological, economic, environment/geographic and political/legal/governmental segments to understand the general environment facing Great Lakes. It will also describe how Great Lakes will be affected by each of these external factors. It will then analyze the lead additives industry in the U.S. using the Five Forces of Competition Model. The Five Forces will display the impact it has on the industry based on the analysis, in which it can then be determined if the industry is attractive or unattractive. Next this essay will describe who Great Lakes’ immediate, impending, and invisible competitors are and how Great Lakes measures up against these competitors. For the conclusion it will describe the main capabilities of Great Lakes. Great Lakes: Great Decision Perform an analysis of the social/demographic, technological, economic, environmental/geographic, and political/legal/governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. Social/Demographic Social/Demographic: Great decisions are constantly being debated for the Great Lakes as to what factors tend to affect the Social and Demographic segment. Socially our......

Words: 1486 - Pages: 6

Free Essay

Great Lakes

...Assignment 1 Assignment #1: Case 11: “Great Lakes: Great Decisions” By Norvinnia J. McLaurine For Professor Sonia Heywood BUS499: Business Administration Capstone October 17, 2010 1. Perform an analysis of the Social/Demographic, Technological, Economic, Environmental/Geographic, and Political/Legal/Governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. Social/Demographic: * Brain damage in Children * Adults lead exposure leads to hypertension, hi blood pressure, and cardio vascular disease * Increased respiratory problems in the elderly * High Demand for Lead gasoline in developing countries * Shift from lead additives to unleaded additives Affect: From the Social stand point Great Lakes must realize that it plays an important role in how the government does business. If they continue giving in to their greed then in the long run there condoning the use of lead additives and gasoline. However this seems to be made easy for them due to the fact that governments of these regions are easily influence. It seems that most of them are content with sticking to the status quo. After looking at the numbers and percentage of people affected by lead I would think that Great Lakes would look a little deeper into its business practices. As a multinational corporation I would think that Great Lakes has a duty to the people in which buy their products.......

Words: 1624 - Pages: 7

Free Essay

Great Lakes

...ASSIGNMENT 1 GREAT LAKES: GREAT DECISION 1. Perform an analysis of the Social/Demographic, Technological, Economic, Environmental/Geographic, and Political/Legal/Governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. A. Social/Demographic: The future direction of Great Lakes will have an effect on different regions of the world, as their product continues to fill a need for leaded gas. This has the potential to impact both business and the livelihood of thousands of individual’s. There are also the potential health related problems as “the globalization of leaded gasoline has made Tetraethyl Lead (TEL) responsible for nearly 90 percent of airborne lead pollution in Third World cities today” (CorpWatch, 1997). Great Lakes will need to determine and understand what their decisions mean to the developing regions they service. B. Technological: Technology is not the issue for Great Lakes, instead the problems lies with the developing countries they serve. Until those countries are able to switch over the existing inventory of vehicles to unleaded gas, they will rely on the products supplied by Great Lakes. Additionally, there will be a need for additional refineries to supply unleaded gas, as the need for that gas spikes. To help offset the loss in profits from the switch from leaded to unleaded gas, Great Lakes has an opportunity to invest in the transition......

Words: 1602 - Pages: 7

Free Essay

Great Lakes

... Business Administration Capstone – BUS Affiliation Here 499 Assignment 1 Great Lakes Great Decisions Strayer University April 15, 2012 Abstract The Great Lakes Great Decision case is about the social responsibility a company leader would have to face, based on her decision on joining one of the top lead addictive producers Octel & Associates. It narrows down to two questions. Does the company end production of the lead addictive, since there have been added pressure from the environmentalist? Or do she continue for the benefit of the company’s profits and earning? Although originally a gas and oil exploration company, Great Lakes has had it changes throughout the years, since being founded in the early 1930s. Today, there are they are a top lead addictive producer, ever since the purchase of the company Octel in 1997, which in fact never sat well with US environmentalist. The Case 1.) Perform an analysis of the social / demographic, technological, economic, environmental / geographic, and political / legal / governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. The Analysis of the Social/demographic- The primary consumers of the products produced by Great Lakes—especially lead additives—comes from developing/third world countries. Although the case study does not specifically comment on the demographics of these countries or the social status of their people, it is......

Words: 2253 - Pages: 10

Free Essay

Great Lakes: Great Decisions

...: Running head: Great Lakes: Great Decisions Great Lakes: Great Decisions Danelle A. Dancy April 15, 2012 Business Administration Capstone-BUS499 Prof. Christopher McGrath Great Lakes: Great Decisions 1. Perform an analysis of the social/demographic, technological, economic, environmental/geographic, and political/legal/governmental segments to understand the general environment facing Great Lakes. Describe how Great Lakes will be affected by each of these external factors. Corporate social responsibility is defined as a business’s concern for society’s welfare (Lambi, Hair & McDaniel, 2011). Corporations want to become more sustainable and remain sustainable by allowing management to focus on both long-range best interests of the company and the relationship to the society it operates in (Lambi, Hair & McDaniel, 2011). In the case of Great Lakes, the division manager Ellie Shannon was faced with making the recommendation to the company’s board of directors on which of three policy options she felt the company should pursue (Hitt, Hoskisson & Ireland, 2011). The pyramid of corporate social responsibility is an excellent standard to measure the outcome. Great Lakes, according to text is in an excellent position economically to “wash its hands of the leaded gasoline business and its repercussions” (Hitt, Hoskisson & Ireland, 2011). It would be too harsh to just......

Words: 1874 - Pages: 8