Enager Industry Inc. Case Study
Company Bio
Enager Industries Inc. is a young company whose growth was profound up to 1993 when it amassed sales over $222 Million. This company is comprised of three main divisions that are all considered to be independent from one another. The first and oldest division of the company is the Consumer Products Division which designs, manufactures, and markets a variety of kitchenware. The Industrial Products Division focuses its efforts on creating machinery that is uniquely and specifically designed in a job shop environment. The Professional Services Division adds a different aspect to the company in comparison to the other two product-based divisions. Professional Services provide a variety of planning and consulting services including: land planning, landscape architecture, structural architecture, and consulting engineering services. There are only a few corporate level managers and general staff available to carry on the varying degrees of operation between all divisions.
Strategy
Enager has experienced rapid growth in its early stages, which has contributed towards its current success. As of 1992, they attained a gross return on assets of 9.3 percent. In the eyes of Henry Hubbard, the Chief Financial Officer, gross return on assets for Enager should be reaching levels of above 12 percent for all divisions of the company. In 1992 the company changed the objectives and performance evaluations of each division from profit centers to investment centers. This was done to better able to relate each division’s profit to the assets the division used to generate its profits; at least that is what the top management believed. As well, each division was measured as based on its return on assets starting in 1992 – on Hubbard’s belief that this method “made the sum of the [divisional] parts equal to the [corporate] whole.”
With return on assets in mind moving into the future, top management concluded that any new investment proposals would have to show a return
Enager Industries Inc. is a young company whose growth was profound up to 1993 when it amassed sales over $222 Million. This company is comprised of three main divisions that are all considered to be independent from one another. The first and oldest division of the company is the Consumer Products Division which designs, manufactures, and markets a variety of kitchenware. The Industrial Products Division focuses its efforts on creating machinery that is uniquely and specifically designed in a job shop environment. The Professional Services Division adds a different aspect to the company in comparison to the other two product-based divisions. Professional Services provide a variety of planning and consulting services including: land planning, landscape architecture, structural architecture, and consulting engineering services. There are only a few corporate level managers and general staff available to carry on the varying degrees of operation between all divisions.
Strategy
Enager has experienced rapid growth in its early stages, which has contributed towards its current success. As of 1992, they attained a gross return on assets of 9.3 percent. In the eyes of Henry Hubbard, the Chief Financial Officer, gross return on assets for Enager should be reaching levels of above 12 percent for all divisions of the company. In 1992 the company changed the objectives and performance evaluations of each division from profit centers to investment centers. This was done to better able to relate each division’s profit to the assets the division used to generate its profits; at least that is what the top management believed. As well, each division was measured as based on its return on assets starting in 1992 – on Hubbard’s belief that this method “made the sum of the [divisional] parts equal to the [corporate] whole.”
With return on assets in mind moving into the future, top management concluded that any new investment proposals would have to show a return