Homework Assignment 3, Kranworth Chair Corporation Case Study-Pratistha Das

TO: Kevin Wentworth, CEO, Kranworth Chair Corporation
FROM: Das Consulting Associates
DATE: September 11, 2015
RE: Effectiveness of Decentralization of organizational structure in Kranworth Chair Corporation, Evaluation of its new performance measurement and incentive system and analysis of decentralization of R&D

Kranworth Chair Corporation (KCC) was co-founded by Weston Krantz and Kevin Wentworth in 1987. In early years, KCC specialized in a broad line of high quality and fashionable portable, folding chairs, which were branded as various models of Fold-it! Brand and were sold exclusively to distributors. Over the years, KCC diversified its product range and produced chairs of various sizes, models, designs, chairs with various add-on features, of different prices and even of different materials. KCC also introduced some related products like ottomans, tripods, cots and stadium seats. It employed screen-printing artists and seamstresses to customize certain products. It kept track of its Stock Keeping Units. To boost sales volume KCC invested in advertising, added other distribution channels and tied up with major retail chains like Walmart, target, K-Mart, etc. in order to lower labor costs, KCC moved its manufacturing facilities to Mexico and China, except for some customizing and assembling facilities in Denver. Initially, the company faced very little competitions, had 20 design patents to its name and sales margins were high in the range of 40-50%. However, towards late 1990s, sales flattened and profits dropped due to higher competition from new players in the market (especially cheaper comparable products mostly from Asian countries) and the economic recession of 2000. In the late 1990s, the