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Case Study 6 - Expansion
of a Cooperative Business
A successful grain-marketing cooperative with a strong and experienced
general manager (Mr. Johnson) has decided to enter the fertilizer and
chemical business by purchasing an existing private company (FertX Inc.) in
town. The acquisition deal is set and ready to proceed.
The manager (Mr. Blum) of FertX, Inc. is very popular in the community.
Many of the cooperative's members have been purchasing their fertilizer and
chemicals from FertX, Inc. over the years.
Mr. Blum is very knowledgeable about fertilizer and pesticides, but does
not fully understand how cooperatives operate. Mr. Johnson, the
cooperative's general manager, has experience in the fertilizer and
chemical business from when he previously managed a different cooperative.
The general consensus of the board of directors is to try to retain the
popular manager of FertX, Inc., and the employees, if possible. The
directors think the employees can be used in other parts of the
cooperative's operations.
Questions
1. How was the decision made for the cooperative to acquire FertX, Inc.?
2. Who develops the cooperative's overall goal for completing the
acquisition? What is that goal? Are there any
sub-goals that should be defined? If so, what are
they?
3. What
issues/problems might arise from trying to bring the manager and all the
employees of FertX, Inc. into the cooperative when the acquisition
takes place (identify the pros and cons)?
4. Who makes the decision as to what employees from FertX, Inc.,
should be retained by the cooperative when
the operations of the two businesses are combined?
5. What other actions should take place to ensure an effective and
efficient blending of operations, employees,
and member services?
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