In the past decade, your company's business has grown very rapidly, particularly in the United States and Europe where your products have proved to be very popular with tourists. However, in the past year, your profits were slightly down, and as a result you need to make a number of cuts in different areas. It has been estimated that in order to remain competitive (and to avoid laying off staff) the company's budget needs to be cut by around $4 million.
At the meeting you will have to discuss the ways in which you can cut the company's budget by around $4 million. Each member of the group is likely to put forward different ideas and suggestions. Your job at the meeting is to examine the pros and cons of the possible cuts (see the table on the following) and, on the basis of your discussion, decide on a plan which is in the best interests of your company. Although ideally you would obviously prefer not to make any cuts at all (indeed, you are fortunate that you will be able to avoid job losses at the moment), you will nevertheless have to make some cuts which to some extent are likely to harm the company's employees and development. Your task is to ensure that the cuts that you decide to make will cause the least amount of pain.
You should now read only the information relevant to your role (Participant A, B, C or D). When you have finished your preparation notes, you should hold the meeting. One member of the group should act as informal organizer of the meeting. It will be the organiser's job to ensure that the meeting is well managed. e.g. by making sure everyone sticks to the point, by allowing everyone the chance to contribute, and by summing up the decisions made
Possible Cuts
Savings
Staff training/development
$500,000
Research & development
by 5% $500,000
by 10% $1 million
Sponsorship of educational institutions in HK (e.g. scholarships)
$750,000
Christmas party
$100,000
Chinese New Year dinner
$100,000
Annual bonus
$2 million
Salary reduction
by 5% $750,000
by 10% $1.5 million
Information technology
$500,000
Advertising
by 5% $200,000
by 10% $400,000
Travel/hotel expenses
$250,000
Housing allowances
$500,000
Medical/dental insurance
$250,000
Entertainment allowances
$150,000
PARTICIPANT A
You have looked at the areas where savings can be made. Since you have overall responsibility for research and development in your company, you are strongly opposed to any cuts in this area. These are the main reasons for your opposition to cuts in this area:
The success of the company in the past decade has largely stemmed from its innovative designs. These have been the result of work in the area of research and development. The company has traditionally devoted large sums of money to research and development, and this policy has clearly paid off.
The company is facing increasing competition from other producers of souvenirs. If the company wants to maintain its dominant position, it must continue its strong emphasis on research and development.
You are also opposed to cuts in information technology and staff training/development. You will need to make up your own arguments for these two aspects.You should now prepare for the discussion. Make a list of the points you wish to make to support your view that cuts should not be made in research and development, information technology and staff training/development. You should also work out some points to support cuts in some of the other areas in the table above.
PARTICIPANT B
You have looked at the areas where savings can be made. Since you have overall responsibility for sales and marketing in your company, you are strongly opposed to any cuts in the advertising budget. These are the main reasons for your opposition to cuts in this area:
One of the main factors in the company's success in the past decade has been its appealing and imaginative advertising campaigns. Quality advertising is expensive. However, in light of the company's success (especially in America and Europe), the large sums which the company has devoted to advertising is clearly money well spent.
Other companies producing high-quality souvenirs are running aggressive advertising campaigns. If the company wants to maintain its strong position in a very competitive market, it cannot afford to cut its advertising budget.
You are also opposed to cuts in entertainment allowances and travel/hotel expenses. You will need to make up your own arguments for these two aspects.You should now prepare for the discussion. Make a list of the points you wish to make to support your view that cuts should not be made in advertising, entertainment allowances and travel / hotel expenses. You should also work out some points to support cuts in some of the other areas in the table above.
PARTICIPANT C
You have looked at the areas where savings can be made. Since you have overall responsibility for public relations in your company, you are strongly opposed to any cuts in the sponsorship of educational institutions both in Hong Kong and overseas. These are the main reasons for your opposition to cuts in this area:
The company's support for various educational institutions has been an important factor in helping the company to develop a very positive image in Hong Kong and overseas. If the company stops its sponsorship of educational institutions (e.g. through the provision of scholarships for students studying design, through funding for school-based information technology projects etc), it is possible that the excellent image that the company has built up over the past decade will gradually diminish.
Other souvenir makers are now copying Happy Memories' sponsorship programmes, particularly in the United States, which is the company's biggest market.
You are also opposed to cuts in information technology and research and development. You will need to make up your own arguments for these two aspects.You should now prepare for the discussion. Make a list of the points you wish to make to support your view that cuts should not be made in sponsorship, information technology and research and development. You should also work out some points to support cuts in some of the other areas in the table above.
PARTICIPANT D
You have looked at the areas where savings can be made. Since you have overall responsibility for staff-management relations in your company, you are strongly opposed to salary cuts. These are the main reasons for your opposition to cuts in this area:
One of the main factors in the company's development in the past decade has been the high quality of its workforce, which is renowned for its dynamism and talent. Relations between management and members of staff at various levels have traditionally been very good. You think that if the company makes salary reductions, it will have a very damaging impact on staff morale.
It is possible that some of the company's most talented staff would leave if salaries were reduced. Other souvenirs makers would be quick to snap up key members of staff (especially those in the design team). At a time when other souvenir makers are competing very aggressively against Happy Memories, the loss of key members of staff could be highly damaging.
You are also opposed to cuts in the annual bonus and housing allowances. You will need to make up your own arguments for these two aspects.You should now prepare for the discussion. Make a list of the points you wish to make to support your view that cuts should not be made to salaries, annual bonuses and housing allowances. You should also work out some points to support cuts in some of the other areas in the table above.
Roleplay
You may wish to roleplay the following meeting in groups. You have to discuss the cost cutting in a meeting in group. Before planning your meeting, you may wish to watch an abbreviated example of the same situation on video.