Corwin Corporation
CASE – 3 Corwin Corporation
By June 1983, Corwin Corporation had grown into a $150 million per year corporation with an international reputation for manufacturing low-cost, high-quality rubber components. Corwin maintained more than a dozen different product lines, all of which were sold as off-the-shelf items in department stores, hardware stores, and automotive parts distributors. The name Corwin was now synonymous with "quality." This provided management with the luxury of having products that maintained extremely long life cycles. Organizationally, Corwin had maintained the same structure for more than fifteen years (see Exhibit I). The top management of Corwin Corporation was highly conservative and believed in using a marketing approach to find new markets for existing product lines rather than exploring for new products. Under this philosophy, Corwin maintained a small R&D group whose mission was simply to evaluate state-of-the-art technology and its application to existing product lines. Corwin's reputation was so good that it continually received inquiries about the manufacturing of specialty products. Unfortunately, the conservative nature of Corwin’s management created a "do not rock the boat" atmosphere opposed to taking any type of risks. A management policy was established to evaluate all specialty-product requests. The policy required answering yes to the following questions: What is the total projected profitability to the company in terms of follow-on contracts? Will the specialty product provide the same profit margin (20 percent) as existing product lines? Can the specialty product be developed into a product line? Can the specialty product be produced with minimum disruption to existing product lines and manufacturing operations? Organizational chart for Corwin Corporation
President
Exhibit I.
VP Marketing Gene Frimel Market Support Contracts Project Mgmt
VP Engrng Dr. Royce
VP Manufact.
R&D Dr. Reddy
Engnrng Support
By June 1983, Corwin Corporation had grown into a $150 million per year corporation with an international reputation for manufacturing low-cost, high-quality rubber components. Corwin maintained more than a dozen different product lines, all of which were sold as off-the-shelf items in department stores, hardware stores, and automotive parts distributors. The name Corwin was now synonymous with "quality." This provided management with the luxury of having products that maintained extremely long life cycles. Organizationally, Corwin had maintained the same structure for more than fifteen years (see Exhibit I). The top management of Corwin Corporation was highly conservative and believed in using a marketing approach to find new markets for existing product lines rather than exploring for new products. Under this philosophy, Corwin maintained a small R&D group whose mission was simply to evaluate state-of-the-art technology and its application to existing product lines. Corwin's reputation was so good that it continually received inquiries about the manufacturing of specialty products. Unfortunately, the conservative nature of Corwin’s management created a "do not rock the boat" atmosphere opposed to taking any type of risks. A management policy was established to evaluate all specialty-product requests. The policy required answering yes to the following questions: What is the total projected profitability to the company in terms of follow-on contracts? Will the specialty product provide the same profit margin (20 percent) as existing product lines? Can the specialty product be developed into a product line? Can the specialty product be produced with minimum disruption to existing product lines and manufacturing operations? Organizational chart for Corwin Corporation
President
Exhibit I.
VP Marketing Gene Frimel Market Support Contracts Project Mgmt
VP Engrng Dr. Royce
VP Manufact.
R&D Dr. Reddy
Engnrng Support