Leadership Studies

Posted: December 10th, 2013

Review the M&D Supply Case B “Adopt an Attitude” and answer the enhancement two question. Read M&D Supply Case C “Son’s Up”. Answer the question as directed in the case.M&D Supply

Case C

“Son’s Up”

Case Description

Here’s your ticket for a ride on the Texas Cyclone!  Second generation owners of family businesses inherit a unique set of problems, experiencing crucibles of their own down the line. Things get out of control quickly for young Jeff Dyson, who as second generation owner/ manager of M&D Supply, climbs aboard his Texas Cyclone for the adventure of his life!

In 2010, M&D Supply is one of the premier hardware and industrial supply stores in Southeast Texas, with four outlets.  During its forty-three years, the company has succeeded against heavy odds.  These include changes in the market, recessionary trends, competition from national chains and personal tragedy. 

A series of case studies highlights the entrepreneurial spirit and business acumen that has enabled M&D Supply to overcome its challenges.  M&D Supply case C focuses on strategies and tactics that were employed as the business dealt with a severely declining market. The case features a successful defensive strategy of operational execution employed to survive a downturn and position a business for future growth.   It examines a family’s path to business success despite overwhelming professional and personal odds.

Secondary issues focus on entrepreneurial behavior in response to challenge and adversity, as the protagonist deals simultaneously deals with business and family, including personal tragedy.  This case has a difficulty level that is appropriate for senior level free standing or capstone course in entrepreneurship or small business management. The case shows focus, flexibility, learning, commitment and resilience as key ingredients for success.  

Case Synopsis

On a balmy fall evening in 1982, Jeff Dyson sat in the parking lot of M&D Supply in his tan GMC pickup and enjoyed a moment of self-congratulation.  His first three years as owner/ manager had been financially successful, and he had just completed the expansion of M&D’s facilities from 10,000 to 25,000 square feet.  At the age of 27, he commanded one of the largest independent hardware stores between Houston, Texas and New Orleans, Louisiana.  He’d even won an argument with the company’s banker, who had cautioned him about using too much of M&D’s reserve cash to fund the expansion.  “I’ve grown the company three straight years,” he mused.  “With more square footage and additional inventory, I’ll drive sales through the roof!” Grinning like a Cheshire cat, he drove home to his beautiful wife Pat, seven-year son Scott, and newborn son Brent, feeling great about his accomplishments.

Unexpectedly, market forces changed.  The region’s economy sustained a huge blow.  Oil prices collapsed, petrochemical plants began aggressive layoffs and local economic conditions deteriorated rapidly.  The entire state of Texas experienced an economic tailspin.  Jeff’s sister,  Cassie, and her new husband, Bob lost their jobs.  Jeff’s mother Bernice, M&D’s major stockholder, informed Jeff she had hired Cassie to work in the office and decreed that Jeff employ Bob to help “co-manage” the business.  Bob, older, impulsive, strong-willed, and a big risk taker, couldn’t have been more different than Jeff.  Problems between the two arose from Day One.  On the personal front, Jeff joyfully welcomed his new son Blake. Soon after, the state announced the beginning of a three-year road construction project in front of M&D Supply.  Sales plummeted as the ills of the consumer increased, resulting in curtailed spending.  Road construction affected access down the main arterial road that led to M&D.  Jeff, feeling very much in over his head and reflecting on mistakes he’d made in structuring the expansion, decided he needed professional development in the form of an MBA.  He began his course work and developed particular interest in how businesses in the retail hardware industry were beginning to automate.

Jeff was determined the company would succeed through the tough economic time.  M&D carried so many items, he needed to better manage its inventory, get rid of dead items, increase stocks of better sellers, price some items competitively and increase blind items, among other things necessary to survive.  Jeff wanted to promote more intelligently and with better results.  He wanted to know how much the company had invested in inventory.  He wanted to establish timely accounting and improved financial management.  Only a computer could make those goals a practical reality.

In the midst of Jeff’s big plans, tragedy struck. Jeff’s youngest son Blake, only three and a half, contracted a strain of bacterial meningitis so vicious that it snuffed out his young life in the space of a few hours.  The shock and grief over Blake’s sudden death devastated Jeff and Pat.  A few days after Blake’s funeral, Jeff got up to return to work, but Pat cried and clung to him, begging him not to go.  Through the terrible sleepless nights, Jeff agonized over the once-rosy future that now seemed so uncertain. He wanted desperately to fix things – to comfort his grieving wife, to be a responsible business owner, to set an example for his surviving sons.  He reviewed his list of challenges, drawing strength from the example his parents set when they faced tough times. He couldn’t let his family or the business go under.  His responsibility to save his family was foremost.  Then there was his M&D family, all the employees who depended on him for a job.  And his mother, who looked to him for leadership.  He harkened back to the challenges his parents had faced.   His father bravely dodged bullets on Iwo Jima and battled terminal cancer without complaint.  His mother, despite overwhelming odds, had overcome the loss of her husband, lack of experience, and gender inequalities to become a successful entrepreneur.

Jeff yearned to automate the business.  Considering M&D’s weak balance sheet and market conditions, he was tentative about making the hundred-thousand dollar capital investment.  He felt that the business should take a patient, defensive posture until the road project was completed.  Viewing the complexity of inventory management in Hardware retailing, one would expect that this industry would have been one of the first to utilize computer technology to gather information of all types.  However, this was far from the truth.  Automation came late to the retail hardware industry.  For example, at the end of 1984, less than five percent of the industry was automated and by 1987, it was less than fifteen percent.  If M&D computerized, it would be part of the first wave of independent hardware retailers to fully automate its business processes.  Hardware retailing is a specialized business with specific needs.  Jeff knew that successful automation required a significant capital investment and a long-range implementation plan.  A strategic approach to inventory control, pricing, and overall operating efficiency was a necessity.  M&D needed to choose a find a reasonably priced computer vendor with a successful track record.  Few companies offered industry specific solutions for hardware stores.  Ace Hardware offered an affordable bare-bones system using a Texas Instruments mainframe and a Sweda cash register.   This system required data to be batched between the cash register and the main frame at the end of each business day.   Ace created and supported the software, TI and Sweda each supported their hardware.  Triad systems offered its fully integrated point of sale system as a turn-key solution at a much higher price.  Triad supported both hardware and software and provided installation, training, and consultation.  Triad generated most of its business through referrals from existing customers.  If M&D was to survive, it had to improve its operational controls quickly, and automation could help.

Using the Seven Habits in the Realm of Relationships

Assignment Questions:

1. Consider Jeff’s personal situation.  He is looking to you for personal and professional advice and counsel.  How can you employ the habits of private victory to elevate Jeff’s thinking?  Consider the four human endowments.  Limit your response to two pages.
2. Are failures, disappointments and crucibles requirements for people to become effective leaders?  Why or why not?

Epilogue

The region’s economy improved but never regained its 70’s momentum.  The contractor finished the road in 1988, a few months after Blake died.  Business improved, affording Jeff the opportunity to make additional investments in inventory and physical plant.  Jeff completed his MBA by writing his thesis on automation in the retail hardware industry.  Jeff, Brent and Scott built Pat a nice new home, working nights and weekends.  The business rhythm M&D Supply had enjoyed in the 70’s began to return, but it wouldn’t be easy to maintain. Big box hardware stores had their eyes on the Southeast Texas market. Jeff and Pat drew closer, determined they wouldn’t split up, as bereaved couples often did.  They embraced their surviving sons and tried to make a life without the little brown-eyed boy they would never stop missing.