Briggs And Stratton Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Briggs And Stratton Case Study Solution

Incentive Plan Based on EVA

Simple incentive plan would be to give a bonus to management on the basis of the changes in EVA. But it has a problem, the management cannot provide negative bonuses in the situation where the EVA would decline. Therefore, it should consider a structure which could provide a fixed and a variable bonus in order to avoid negative bonuses and to avoid the management dissatisfaction. It should provide a fixed bonus on the total positive EVA, along with it, it should provision for a variable bonus on the basis of the change in EVA. Although, issuing call option to employees to link the employees performance with the shareholders’ value is also a good option, but this could not be suitable in long run. As the management could exploit the share prices for their benefit by performing better at the time of option purchase and ineffective performance at the time of sell.

Recommendations

A potential strategic plan would enable the company to come back in the market and ends up its struggle for survival. The company should focus on conservative approach in measuring the overall performance of the organization and the management team. It should include EVA in measuring the performance of its employees and the management team. The EVA approach would be efficient in measuring the performance of the employees, as it could be seen that even after having net profits in 1987 and 1988, the actual value added to the company is negative. EVA approach is an efficient tool for measuring the actual performance of the organization and its employees. Therefore, the company should make EVA, a part of its strategic plan, which is based upon measurement of the overall organizational performance frequently, and providing employee incentives on performance basis.

Conclusion

Although, the management had done efforts to make the company competitive in the market, but the current declining returns and the market share of the company implies that the overall performance of the company was low as compare to the considerations of the management. In this regards, a conservative approach for evaluating the organizational performance could be more beneficial for the company for its survival in the market. Therefore, the company should revise its strategic plan and include EVA in its plan..........

This is just a sample partical work. Please place the order on the website to get your own originally done case solution.