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In the world of sports (regardless of level) balancing revenueand expenses is critical to the success of the department. Withinthe level of sports you represent, or wish to go into, explain indetail what some of your department's major expenses and revenueswould be? What does God teach us about money and how would thoseteachings apply to this discussion topic?

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Jarrod Robel
Jarrod RobelLv2
28 Sep 2019

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Please read below case and answer following question: -

Q:- Assume that you have been asked to provide advice to Ken Vincent, what would you tell him? Why?

CASE:- It Isn’t So Simple: Infrastructure Change at Royce Consulting*

The lights of the city glittered outside Ken Vincent’s twelfthfloor

office. After nine years of late nights and missed holidays,

Ken was in the executive suite with the words “Associate

Partner” on the door. Things should be easier now, but the

proposed changes at Royce Consulting had been more challenging

than he had expected. “I don’t understand,” he

thought. “At Royce Consulting our clients, our people, and

our reputation are what count, so why do I feel so much tension

from the managers about the changes that are going to

be made in the office? We’ve analyzed why we have to make

the changes. Heck, we even got an outside person to help us.

The administrative support staff are pleased. So why aren’t

the managers enthusiastic? We all know what the decision at

tomorrow’s meeting will be—Go! Then it will all be over. Or

will it?” Ken thought as he turned out the lights.

Background

Royce Consulting is an international consulting firm whose

clients are large corporations, usually with long-term contracts.

Royce employees spend weeks, months, and even

years working under contract at the client’s site. Royce

consultants are employed by a wide range of industries,

from manufacturing facilities to utilities to service businesses.

The firm has over 160 consulting offices located in

65 countries. At this location Royce employees included

85 staff members, 22 site managers, 9 partners and associate

partners, 6 administrative support staff, 1 human

resource professional, and 1 financial support person.

For the most part, Royce Consulting hired entry-level

staff straight out of college and promoted from within.

New hires worked on staff for five or six years; if they

did well, they were promoted to manager. Managers were

responsible for maintaining client contracts and assisting

partners in creating proposals for future engagements.

Those who were not promoted after six or seven years

generally left the company for other jobs.

Newly promoted managers were assigned an office,

a major perquisite of their new status. During the previous

year, some new managers had been forced to share an

office because of space limitations. To minimize the friction

of sharing an office, one of the managers was usually

assigned to a long-term project out of town. Thus, practically

speaking, each manager had a private office.

Infrastructure and Proposed Changes

Royce was thinking about instituting a hoteling office

system—also referred to as a “nonterritorial” or “free- address”

office. A hoteling office system made offices available to

managers on a reservation or drop-in basis. Managers are

not assigned a permanent office; instead, whatever materials

and equipment the manager needs are moved into the

temporary office. These are some of the features and advantages

of a hoteling office system:

• No permanent office assigned

• Offices are scheduled by reservations

• Long-term scheduling of an office is feasible

• Storage space would be located in a separate file room

• Standard manuals and supplies would be maintained in

each office

• Hoteling coordinator is responsible for maintaining

offices

• A change in “possession of space”

• Eliminates two or more managers assigned to the same

office

• Allows managers to keep the same office if desired

• Managers would have to bring in whatever files they

needed for their stay

• Information available would be standardized regardless

of office

• Managers do not have to worry about “housekeeping

issues”

The other innovation under consideration was an

upgrade to state-of-the-art electronic office technology. All

managers would receive a new notebook computer with

updated communications capability to use Royce’s integrated

and proprietary software. Also, as part of the electronic

office technology, an electronic filing system was

considered. The electronic filing system meant information

regarding proposals, client records, and promotional

materials would be electronically available on the Royce

Consulting network.

The administrative support staff had limited experience

with many of the application packages used by the managers.

While they used word processing extensively,

they had little experience with spreadsheets,

communications, or graphics packages. The

firm had a graphics department and the managers

did most of their own work, so the administrative

staff did not have to work with those

application software packages.

Work Patterns

Royce Consulting was located in a large city in the Midwest.

The office was located in the downtown area, but it was

easy to get to. Managers assigned to in-town projects often

stopped by for a few hours at various times of the day.

Managers who were not currently assigned to client projects

were expected to be in the office to assist on current

projects or work with a partner to develop proposals for

new business.

In a consulting firm, managers spend a significant

portion of their time at client sites. As a result, the office

occupancy rate at Royce Consulting was about 40 to

60 percent. This meant that the firm paid lease costs for

offices that were empty approximately half of the time.

With the planned growth over the next ten years, assigning

permanent offices to every manager, even in doubled-up

arrangements, was judged to be economically unnecessary

given the amount of time offices were empty.

The proposed changes would require managers and

administrative support staff to adjust their work patterns.

Additionally, if a hoteling office system was adopted,

managers would need to keep their files in a centralized

file room.

Organizational Culture

Royce Consulting had a strong organizational culture, and

management personnel were highly effective at communicating

it to all employees.

Stability of Culture

The culture at Royce Consulting was stable. The leadership

of the corporation had a clear picture of who they were and

what type of organization they were. Royce Consulting had

positioned itself to be a leader in all areas of large business

consulting. Royce Consulting’s CEO articulated the firm’s

commitment to being client-centered. Everything that was

done at Royce Consulting was because of the client.

Training

New hires at Royce Consulting received extensive training

in the culture of the organization and the methodology

employed in consulting projects. They began with a

structured program of classroom instruction and computer-

aided courses covering technologies used in the various

industries in which the firm was involved. Royce Consulting

recruited top young people who were aggressive and who

were willing to do whatever was necessary to get the job

done and build a common bond. Among new hires, camaraderie

was encouraged along with a level of competition.

This kind of behavior continued to be cultivated throughout

the training and promotion process.

Work Relationships

Royce Consulting employees had a remarkably similar outlook

on the organization. Accepting the culture and norms

of the organization was important for each employee. The

norms of Royce Consulting revolved around high performance

expectations and strong job involvement.

By the time people made manager, they were aware of

what types of behaviors were acceptable. Managers were

formally assigned the role of coach to younger staff people,

and they modeled acceptable behavior. Behavioral norms

included when they came into the office, how late they

stayed at the office, and the type of comments they made

about others. Managers spent time checking on staff people

and talking with them about how they were doing.

The standard for relationships was that of professionalism.

Managers knew they had to do what the partners

asked and they were to be available at all times. A norms

survey and conversations made it clear that people at

Royce Consulting were expected to help each other with

on-the-job problems, but personal problems were outside

the realm of sanctioned relationships. Personal problems

were not to interfere with performance on a job. To illustrate,

vacations were put on hold and other kinds of commitments

were set aside if something was needed at Royce

Consulting.

Organizational Values

Three things were of major importance to the organization:

its clients, its people, and its reputation. There was a

strong client-centered philosophy communicated and practiced.

Organization members sought to meet and exceed

customer expectations. Putting clients first was stressed.

The management of Royce Consulting listened to its clients

and made adjustments to satisfy the client.

The reputation of Royce Consulting was important

to those leading the organization. They protected and

enhanced it by focusing on quality services delivered by

quality people. The emphasis on clients, Royce Consulting

personnel, and the firm’s reputation was cultivated by

developing a highly motivated, cohesive, and committed

group of employees.

Management Style and Hierarchical Structure

The company organization was characterized by a directive

style of management. The partners had the final word on

all issues of importance. It was common to hear statements

like “Managers are expected to solve problems, and do

whatever it takes to finish the job” and “Whatever the

partners want, we do.” Partners accepted and asked for

managers’ feedback on projects, but in the final analysis,

the partners made the decisions.

Current Situation

Royce Consulting had an aggressive five-year plan that was

predicated on a continued increase in business. Increases in

the total number of partners, associate partners, managers,

and staff were forecast. Additional office space would be

required to accommodate the growth in staff; this would

increase rental costs at a time when Royce’s fixed and variable

costs were going up.

The partners, led by managing partner Donald Gray

and associate partner Ken Vincent, believed that something

had to be done to improve space utilization and the productivity

of the managers and administrative personnel.

The partners approved a feasibility study of the innovations

and their impact on the company.

The ultimate decision makers were the partner group

who had the power to approve the concepts and commit

the required financial investment. A planning committee

consisted of Ken Vincent; the human resources

person; the financial officer; and an outside consultant,

Mary Schrean.

The Feasibility Study

Within two working days of the initial meeting, all the

partners and managers received a memo announcing the

hoteling office feasibility study. The memo included a brief

description of the concept and stated that it would include

an interview with the staff. By this time, partners and managers

had already heard about the possible changes and

knew that Gray was leaning toward hoteling offices.

Interviews with the Partners

All the partners were interviewed. One similarity in the

comments was that they thought the move to hoteling

offices was necessary but they were glad it would not affect

them. Three partners expressed concern about managers’

acceptance of the change to a hoteling system. The conclusion

of each partner was that if Royce Consulting moved

to hoteling offices, with or without electronic office technology,

the managers would accept the change. The reason

given by the partners for such acceptance was that the

managers would do what the partners wanted done.

The partners all agreed that productivity could be

improved at all levels of the organization: in their own

work as well as among the secretaries and the managers.

Partners acknowledged that current levels of information

technology at Royce Consulting would not support the

move to hoteling offices and that advances in electronic

office technology needed to be considered.

Partners viewed all filing issues as secondary to both

the office layout change and the proposed technology

improvement. What eventually emerged, however,

was that ownership and control of files

was a major concern, and most partners and

managers did not want anything centralized.

Interviews with the Managers

Personal interviews were conducted with all

ten managers who were in the office. During

the interviews, four of the managers asked Schrean whether

the change to hoteling offices was her idea. The managers

passed the question off as a joke; however, they expected

a response from her. She stated that she was there as an

adviser, that she had not generated the idea, and that she

would not make the final decision regarding the changes.

The length of time that these managers had been in

their current positions ranged from six months to five years.

None of them expressed positive feelings about the hoteling

system, and all of them referred to how hard they had

worked to make manager and gain an office of their own.

Eight managers spoke of the status that the office gave them

and the convenience of having a permanent place to keep

their information and files. Two of the managers said they

did not care so much about the status but were concerned

about the convenience. One manager said he would come in

less frequently if he did not have his own office. The managers

believed that a change to hoteling offices would decrease

their productivity. Two managers stated that they did not

care how much money Royce Consulting would save on

lease costs; they wanted to keep their offices.

However, for all the negative comments, all the managers

said that they would go along with whatever the

partners decided to do. One manager stated that if Royce

Consulting stays busy with client projects, having a permanently

assigned office was not a big issue.

During the interviews, every manager was enthusiastic

and supportive of new productivity tools, particularly the

improved electronic office technology. They believed that

new computers and integrated software and productivity

tools would definitely improve their productivity. Half the

managers stated that updated technology would make

the change to hoteling offices “a little less terrible,” and

they wanted their secretaries to have the same software

as they did.

The managers’ responses to the filing issue varied. The

volume of files managers had was in direct proportion to

their tenure in that position: The longer a person was a

manager, the more files he or she had. In all cases, managers

took care of their own files, storing them in their offices

and in whatever filing drawers were free.

As part of the process of speaking with managers, their

administrative assistants were asked about the proposed

changes. Each of the six thought that the electronic office

upgrade would benefit the managers, although they were

somewhat concerned about what would be expected of

them. Regarding the move to hoteling offices,

each said that the managers would hate the

change, but that they would agree to it if the

partners wanted to move in that direction.

Results of the Survey

A survey developed from the interviews was

sent to all partners, associate partners, and

managers two weeks after the interviews were conducted.

The completed survey was returned by 6 of the 9 partners

and associate partners and 16 of the 22 managers. This is

what the survey showed.

Work Patterns. It was “common knowledge” that managers

were out of the office a significant portion of their

time, but there were no figures to substantiate this belief, so

the respondents were asked to provide data on where they

spent their time. The survey results indicated that partners

spent 38 percent of their time in the office; 54 percent

at client sites; 5 percent at home; and 3 percent in other

places, such as airports. Managers reported spending

32 percent of their time in the office, 63 percent at client

sites, 4 percent at home, and 1 percent in other places.

For 15 workdays, the planning team also visually

checked each of the 15 managers’ offices four times each

day: at 9 a.m., 11 a.m., 2 p.m., and 4 p.m. These times

were selected because initial observations indicated that

these were the peak occupancy times. An average of six

offices (40 percent of all manager offices) were empty at

any given time; in other words, there was a 60 percent

occupancy rate.

Alternative Office Layouts. One of the alternatives

outlined by the planning committee was a continuation of

and expansion of shared offices. Eleven of the managers

responding to the survey preferred shared offices to hoteling

offices. Occasions when more than one manager was

in the shared office at the same time were infrequent. Eight

managers reported 0 to 5 office conflicts per month; three

managers reported 6 to 10 office conflicts per month. The

type of problems encountered with shared offices included

not having enough filing space, problems in directing telephone

calls, and lack of privacy.

Managers agreed that having a permanently assigned

office was an important perquisite. The survey confirmed

the information gathered in the interviews about managers’

attitudes: All but two managers preferred shared offices

over hoteling, and managers believed their productivity

would be negatively impacted. The challenges facing Royce

Consulting if they move to hoteling offices centered around

tradition and managers’ expectations, file accessibility and

organization, security and privacy issues, unpredictable

work schedules, and high-traffic periods.

Control of Personal Files. Because of the comments

made during the face-to-face interviews, survey respondents

were asked to rank the importance of having personal

control of their files. A 5-point scale was used, with 5 being

“strongly agree” and 1 being “strongly disagree.” Here are

the responses.

Respondents Sample Rank

Partners Managers: 6 4.3

0–1 year 5 4.6

2–3 years 5 3.6

4_ years 6 4.3

Electronic Technology. Royce Consulting had a basic

network system in the office that could not accommodate

the current partners and managers working at a remote

site. The administrative support staff had a separate

network, and the managers and staff could not communicate

electronically. Of managers responding to the survey,

95 percent wanted to use the network but only 50 percent

could actually do so.

Option Analysis

A financial analysis showed that there were significant cost

differences between the options under consideration:

Option 1: Continue private offices with some office sharing

• Lease an additional floor in existing building; annual

cost, $360,000

• Build out the additional floor (i.e., construct, furnish,

and equip offices and work areas): one-time cost,

$600,000

Option 2: Move to hoteling offices with upgraded office

technology

• Upgrade office electronic technology: one-time cost,

$190,000

Option 1 was expensive because under the terms of

the existing lease, Royce had to commit to an entire floor

if it wanted additional space. Hoteling offices showed an

overall financial advantage of $360,000 per year and a

one-time savings of $410,000 over shared or individual

offices.

The Challenge

Vincent met with Mary Schrean to discuss the upcoming

meeting of partners and managers, where they would

present the results of the study and a proposal for action.

Included in the report were proposed layouts for both

shared and hoteling offices. Vincent and Gray were planning

to recommend a hoteling office system, which would

include storage areas, state-of-the-art electronic office technology

for managers and administrative support staff, and

centralized files. The rationale for their decision emphasized

the amount of time that managers were out of the

office and the high cost of maintaining the status quo and

was built around the following points:

1. Royce’s business is different: offices are empty from

40 to 60 percent of the time.

2. Real estate costs continue to escalate.

3. Projections indicate there will be increased need for

offices and cost-control strategies as the business

develops.

4. Royce Consulting plays a leading role in helping organizations

implement innovation.

“It’s still a go,” thought Vincent as he

and the others returned from a break. “The

cost figures support it and the growth figures

support it. It’s simple—or is it? The

decision is the easy part. What is it about

Royce Consulting that will help or hinder

its acceptance? In the long run, I hope we

strengthen our internal processes and don’t

hinder our effectiveness by going ahead with these simple

changes.”

Scott Mcnealy and Sun Microsystems

Abstract:

Scott McNealy had been the CEO of Sun Microsystems, a company that he had co-founded in 1984, for 22 years. In April 2006, he announced his decision to step down in favor of Sun's president and COO Jonathan Schwartz.

This case study discusses the various events at Sun under McNealy's leadership. It traces the company's growth from a small startup in the mid 1980s to one of the driving forces behind the internet economy in the 1990s. It also talks about the events that led to Sun's decline in the early 2000s, and McNealy' failure to arrest this decline. The case concludes with a discussion of the leadership change at Sun and whether Schwartz was the right person to give the ailing company a new lease of life.

Questions:

1.What is the role of its founder in its initial success and later troubles?

2.Why developing cutting edge products does not automatically translate into financial success?

3.What is the importance of flexible business models, especially in markets with rapidly evolving technologies?

INTRODUCTION

"Scott (McNealy) is kind of like Moses. (He) led the world to the land of milk and honey, but he got left behind."

- Paul Saffo, director, Institute for the Future,1 in 2004.2

"Sun has been a labor of love for me for since 1982 and it has been an honor and privilege to serve as its CEO for the past 22 years. We've helped shape the industry as it is today, and the opportunities before us are immense."2

- Scott McNealy, co-founder, chairman and former CEO of Sun Microsystems, in 2006.3

The End of an ERA

In April 2006, Scott McNealy (McNealy), the co-founder of Sun Microsystems, Inc. (Sun), announced that he would step down as the CEO of Sun in favor of the company's president and Chief Operating Officer (COO) Jonathan Schwartz (Schwartz). This was significant news for the IT industry, as McNealy had been at the helm of Sun for the last 22 years and had steered the company through a series of ups and downs in the industry.

The announcement was made on the same day that Sun announced a loss of $217 million4 for the quarter ended March 31st 2006, (taking the company's cumulative losses since 2002 to a staggering $4.5 billion).

It was not a surprise as Wall Street had been calling for McNealy's resignation since the early 2000s when Sun first went into decline following the bursting of the dotcom and telecom bubbles in 2000 and 2001 respectively. Between fiscal years 2001 and 20055, Sun saw its sales fall 39 percent and its share price plummet from a peak of $64 in mid 2002 to around $4 by 2005. Following the announcement of McNealy's exit, the stock gained 8.6 percent in extended trading and reached its highest level of the year at $5.41 (Refer Exhibit I for Sun's share prices).

McNealy said that the leadership change was a part of the company's succession planning efforts, and that he was looking forward to playing the role of 'chief evangelist' within Sun. However, some analysts felt that that the board had forced McNealy to step down under intense pressure from Wall Street over the company's poor financial performance.

McNealy was to continue as the chairman of Sun's board as well as chairman of the board of Sun Federal, Inc.6 McNealy was as well known in the IT industry for his visionary leadership of Sun in the 1980s and 1990s, as for his witty takes on competitors, especially Microsoft Corp. (Microsoft)...

He was one of the most controversial leaders in the industry, but even his harshest critics could not deny that he played a pivotal role in shaping the future of computing. It was not surprising therefore that when the leadership change at Sun was announced, analysts said it was 'the end of an era'in the history of the IT industry.

Background

McNealy was born on November 13, 1954 in Indiana. His father, William McNealy was vice chairman at American Motors Corp. (AMC).7 As a child, McNealy took an avid interest in the auto industry - an interest encouraged by his father, who often discussed business with the youngster and allowed him to accompany him when he went to play golf with people like Lee A. Iacocca.8

After attending Cranbrook Kingswood School, a preparatory school near Detroit, McNealy was accepted at Harvard University, from where he graduated with a degree in Economics in 1976. He then tried for a place at Stanford Graduate School of Business (Stanford) but was rejected.

While trying for an admission into Stanford, McNealy took up a job as foreman at the Rockwell International Corp. (Ohio), which made body panels for trucks. When he eventually got into Stanford in 1978, he chose to specialize in manufacturing rather than the more popular finance. He was not a dedicated student and later admitted that he spent more time 'goofing off' than in classes.

One of his classmates recalled that McNealy never bothered to attend any class that he did not think would help him get a job. At that point McNealy was not ambitious. Reportedly, his ambition was to start a small machine shop that he could leave to his children, and then, to retire early. After graduating in 1980, he worked in the manufacturing departments of FMC Corp. (which made tanks for the US army) and of minicomputer maker Onyx Systems. In 1982, Vinod Khosla (Khosla), McNealy's classmate at Stanford, asked him to join him, Andy Bechtolsheim (Bechtolsheim) and Bill Joy (Joy) in starting a computer manufacturing unit to make and sell workstations operating on UNIX.

The Golden Years

It was McNealy's dynamism and vision that were largely responsible for Sun's rapid growth in the first two decades of the company's existence. When McNealy first joined Sun, he was in charge of manufacturing, but later became responsible for sales as well. This helped him develop a good understanding of different areas of the business. After McNealy became CEO in 1984, he played an important role in shaping Sun's vision that 'The Network is the Computer'. Sun was committed to developing technologies that would allow computers to connect seamlessly over a network, thus increasing their power tremendously. Networking would allow computing to be provided like a utility, just like electricity and telecommunications..

The Decline

The beginning of the new millennium turned out to be inauspicious for the US economy. The collapse of several dotcom and telecom companies combined with the September 11 terrorist attacks on the US sent the economy into a decline, and one of the worst affected by these adversities was the IT industry...

Conclusion

According to analysts, Sun could have become one of the giants of the IT industry, on par with IBM and Microsoft. Many concepts that had become the standard in the early 2000s, like networking and open source, were first popularized by Sun. But the company took some missteps along the way, which did not allow it to take advantage of its resources. "They've (Sun) always had lots of great things on paper. But when it comes to execution, they're lacking. They always seem to be behind where they need to be" said Gary Feierstein, vice-president for information technology at Premier Inc., a hospital management company.

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