1

THE MUSHROOM FACTORY
The following case is an in-depth look at the events in the Accessories D e p a r t m e n t of the Esco Company, a Midwest manufacturer, during a period of rapid change.

Source: This case was prepared by Alex G. Dompkowski, Otto A. Gearhart, Jr., and Roberta P.
Marquette, under the supervision of Theodore T. Herbert. The case is not intended to reflect either effective or ineffective administrative or technical practices, but was prepared as a basis for class discussion.

Overview The Accessories Department of the Esco Company produces specialty industrial items which complement the company ' s high volume standard products. The department was originally structured on a product basis, with Accessories having complete control and responsibility over its products from their inception through production, including customer service and customer relations. During 1972 this arrangement was changed and two groups were forme d--pr oduct engineering, and manufacturing engineering. T h e product engineering group maintained responsibility for product inception, production of prototypes, and production start-up. They also handled customer service and relations. T h e manufacturing group handled the products during the production stage. To complicate problems further, in 1973 the company purchased three small manufacturing plants and began phasing the manufacturing process out of the home plant. T h e manufacturing group had responsibility for transferring operations to the newly acquired factories, essentially phasing themselves out of their jobs. During this period a great deal of damage was done to the morale and working efficiency of the original parties involved. In 1971, approximately one year later, the original decision was reversed and the Accessories Department was put back on a product-oriented basis. Unfortunately, before events had a