Wesco Case
Harvard Business School
9-598-021
Rev. February 9, 1998.
WESCO Distribution, Inc.
Late in June 1997, Jim Piraino, VP marketing for WESCO Distribution, Inc. (see Exhibit 1), was preparing for a yearly review meeting with his CEO Roy Haley. At the top of the agenda was the performance of the National Accounts (NA) program during the first half of 1997 (see Exhibit 2). Haley had ambitious plans for WESCO over the next five years. He had charted out a course that called for an annual growth rate of 6% to 8% in sales, and more important, an annual increase of 12% to 16% in profitability. "In 1996, we were a $2.2 billion company with an EBIT of around 3%. I want us to be a $3 billion company with an EBIT of over 5% by the year 2000. This target is very much achievable. In the last few years, our customers have made significant changes to their business processes. These changes provide us a unique opportunity to provide greater value to our customers while improving our market position and profitability. I want WESCO to be recognized as a leader in learning, adapting, and responding to changes in customer needs," said Haley. Although acquisitions of other companies were expected to contribute over half the revenue growth, most of this business was not expected to exceed current profitability levels. WESCO’s current NA program, which had been initiated in 1994 as a response to the changing market dynamics, was expected to deliver the additional revenue growth and obtain the desired increases in profitability. Yet, as of mid-1997, the NA program had not delivered the expected increases in sales and profitability. Haley had now asked Piraino to examine the NA program and present recommendations for improvements. “We need to get more out of our NA effort. This is our best growth avenue with existing customers and new prospects. We have to generate significantly better results with this program," Haley had told Piraino.
Preparing for the NA Review Meeting
In early
9-598-021
Rev. February 9, 1998.
WESCO Distribution, Inc.
Late in June 1997, Jim Piraino, VP marketing for WESCO Distribution, Inc. (see Exhibit 1), was preparing for a yearly review meeting with his CEO Roy Haley. At the top of the agenda was the performance of the National Accounts (NA) program during the first half of 1997 (see Exhibit 2). Haley had ambitious plans for WESCO over the next five years. He had charted out a course that called for an annual growth rate of 6% to 8% in sales, and more important, an annual increase of 12% to 16% in profitability. "In 1996, we were a $2.2 billion company with an EBIT of around 3%. I want us to be a $3 billion company with an EBIT of over 5% by the year 2000. This target is very much achievable. In the last few years, our customers have made significant changes to their business processes. These changes provide us a unique opportunity to provide greater value to our customers while improving our market position and profitability. I want WESCO to be recognized as a leader in learning, adapting, and responding to changes in customer needs," said Haley. Although acquisitions of other companies were expected to contribute over half the revenue growth, most of this business was not expected to exceed current profitability levels. WESCO’s current NA program, which had been initiated in 1994 as a response to the changing market dynamics, was expected to deliver the additional revenue growth and obtain the desired increases in profitability. Yet, as of mid-1997, the NA program had not delivered the expected increases in sales and profitability. Haley had now asked Piraino to examine the NA program and present recommendations for improvements. “We need to get more out of our NA effort. This is our best growth avenue with existing customers and new prospects. We have to generate significantly better results with this program," Haley had told Piraino.
Preparing for the NA Review Meeting
In early