Tenneco’s Case Corporation Adopts a Customer Focus

Answer: The first problem of Case was that the managers had an inward focus rather than an outward focus. This meant that their focus was limited to production and completely ignored the customers. Their excess manufacturing capacity was used to produce irrelevant products. Another problem was its inefficiency in the production process. It had to produce components at high costs which could be easily outsourced for much cheaper prices. This was due to the large number of employees in the firm.

3. What did Case’s turnaround team do to deal with each problem you have identified?

Answer: The very first thing that the turnaround team did was to link the bonus of the existing managers in the company with the success of the turnaround. This way, each member of the management was motivated to make the turnaround successful. The next thing was the reduction of costs for which the company sold the entire excess inventory and the debt incurred was financed at lower rates of interest. Moreover, costs were reduced by reducing payrolls, shutting down plants and selling most of the company’s dealerships. Outsourcing components to suppliers after shutting down some plants were also helpful in reducing costs. Apart from reducing costs, the turnaround team also emphasized on making the company more customer driven so that their output is in accordance with demand and customers rather than their own perspective.

4. How did Case become customer driven?

Answer: During the turnaround, Case started getting customer feedback for its new products. They used scientists and marketing managers to get useful feedback from their customers as well as the customers of their competitors as to what they prefer and what they don’t. This feedback was used in designing their new models. Moreover, they also invited high valued customers to test drive their new model and provide feedback and suggest changes. They used the suggestions to modify the model which not only meant a model suitable to the customer but that they regard their customers as important part of the company. The demand was driven up and production could not keep up with it after these initiatives by the turnaround team.