Saturday, April 05, 2008

Learning about Wooster at INSEAD

As one of the few Americans at INSEAD, I often get a lot of flack from my other compatriots, because I come from the midwest, while nearly everybody else is from the coasts. But recently, coming from the midwest has been advantageous. Believe it or not, we actually had two case studies about companies in Ohio.. I was completely shocked, because I knew about both of them. The first case was about Lincoln-Electric, a welding supply company in Cleveland where my friend Mike Ohlsen did an internship during college. The case discussed LE's unique compensation strategy, where employees on the factory floor are "paid for performance", based on piecework. Apparently, many business school cases have been written about LE's unique compensation program. The professor even showed a clip from an early 90's episode of 60 minutes, where they went to Cleveland, interviewed the factory workers and the CEO. One of the clips showed the old-school Ohio auto plates... it made me homesick.

The second case that was covered, was about... RUBBERMAID! My dad's employer, the company that gave me scholarships to CWRU, and what was the proudest company in Wooster, Ohio, my hometown. Rubbermaid pretty much collapsed in the 90's after raw material costs rose rapidly, and they were unable to pass the cost to their largest customer, Wal-Mart. The accounting professor was talking about Wal-mart's ability to pressure its suppliers, and showed this excellent clip from Frontline, where they went to Wooster to interview Rubbermaid executives and visited the plant where all the machinery were being sold off to Chinese competitors. It was an interesting discussion, because in class, I explained that I was actually from Wooster, and that my family has a close connection to Rubbermaid. To which the professor said "I feel bad for your town... I think it's better in Singapore. I grew up in Bethelhem, PA (home of Bethlehem Steel), and it's a similar situation there".

This week, we'll be studying Newell, which acquired Rubbermaid around the late 90's, and as an assignment, we have to decide whether Newell should acquire Rubbermaid or not... a very touchy subject for somebody from Wooster.

I'd really suggest watching the clip #2 about Rubbermaid on PBS's website, it's a part of a series asking "Is Wal-mart good for America?"

Now, someone may ask, why is Ohio suddenly a hotspot for b-school cases, when everybody else in the world (and perhaps even in the US) thinks that the midwest is all boring and farmlands? Probably because the Midwest has a lot of examples of companies that were the top of their industry years ago, but with global competition, have been under a lot of pressure to survive, which makes for great b-school cases.

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