Leadership and Decision-Making: ACI Case Study Analysis

This case study examines the leadership challenges faced by George Anderson, the new CEO of Astratech Communications International (ACI), a leading supplier of fiber optic transceiver components. The company struggled with declining growth, profitability, and quality issues, leading to order cancellations and market share loss. The study details the issues of lack of focus, poor business systems, and inadequate cost accounting. Anderson implemented a task force, brought in a new CFO, and emphasized product quality and employee skill development to address these problems. The case highlights the importance of strategic leadership, decisive action, and ethical considerations in navigating business downturns and improving overall company performance. The case also explores the steps taken to reduce costs, including employee layoffs and the ethical implications of such actions. The study provides insights into how companies can overcome challenges and improve their position in the market through effective leadership and strategic decision-making.

Leadership in Business

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Contents
Introduction...........................................................................................................................................1
About the case.......................................................................................................................................1
Description............................................................................................................................................1
Elaboration of the issues........................................................................................................................2
Solution to the problem.........................................................................................................................4
Recommendation...................................................................................................................................6
Conclusion.............................................................................................................................................6
Bibliography..........................................................................................................................................7

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Introduction
All across the globe, management of different companies faces challenges that need to be
dealt with appropriate importance. It depends on the leader and their approach about they are
going to deal with different situations. In this the role of his leadership skills is very
important. This is also essential for construction of strategies which plays a critical role in
dealing with different situations and problems. For the firms that are operational at multiple
locations across the globe, this becomes a much greater challenge. This case study is
designed to understand the challenges that is faced by Astratech Communication
International (ACI) and the steps that is taken by the George Anderson.
About the case
Astratech Communications International was a leading supplier in the fiber optic transceiver
components. They sold their products to major firms like Northern Telecom, Alcatel, and
Ericsson who uses this company’s product into their light weight product. This company’s
annual sales were around $500 million with 2,500 workers in Scotland and Mexico. This
company faced many problems such as growth and issues such as general weakness in the
business systems which were required in the fast-paced industry. There were many teams that
were cancelling their new orders of acquiring new equipment. There was also decrease in the
quality and due to this they were losing to their rivals. George immediately after becoming
the CEO had to face all these challenges and accordingly he had to make quick decisions to
find out the reasons for the challenges and the ways to overcome these challenges. The case
study also depicts the manner in which they wanted to reduce the cost of their operations
which also included actions like cutting off the numbers of employees within the firm at its
different units. This also raised the question of ethics.
Description
The global challenges for firms have increased and in the technology industry these
challenges have taken the worst of its form. It is the time when the survivals of only those
firms are possible that has proper set of plans for their development. Any downfall in quality
may have serious impact on the growth of the company. For enhancing the profitability, it is
critical that firms thinks from base and take actions on it. ACI which has a large market share
in the fiber optics transceiver component’s industry needs to work on the areas like

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innovation. Business system which has become an integral part of the modern day business
has to be strong enough to support the overall operations of the company. In the lack of
business systems there is a quite a bit chance that they can fail in the market. For a company
that is working at the global levels these business systems becomes extremely critical. In the
time when the management of operations are done through the help of technology, it is
critical that business systems utilises most advanced technologies that can give competitive
advantage over the rivals. ACI also needs to have a plan for improving the skills of the people
for which they need to have a proper training plan. It is also the fact that there is an urgent
need of improving the quality of the products that is delivered by the firms. This can be an
excellent strategy to deal with the challenges like reducing sales of the company as well as
removing the order cancellation processes of different firms. Cost cutting measures could
only help the company to some extent but it is not the permanent solution1.
Elaboration of the issues
As discussed above there were many issues faced by the ACI. These problems were
illustrated below:
 Growth and profitability: There is continuous decrease in the growth and profitability
margins of the company. This decrease in the profitability and growth of the
organisation did not allow improving their position in the market. Even though there
was no significant reason for it still it was found that there were many areas like team
management within the organisation, product development along with marketing and
sales that created challenges for the company. It was seen that there was lack of
efficiency from the side of the employees and there was serious gap in the decision
making capacity of the management that could lead them into new direction2.
 Lack of focus: It was also seen that there was lack of focus from the side of the
employees. This is also true in terms of the fact that people within the organisation did
not take their responsibility towards their job roles. There was also weakness in the
business systems which was utilised within the organisation. This is not good in the
fast-paced industry where the competition is increasing at much faster rate3.
1 Tomasi Mutya, "Cost Control: A Fundamental Tool Towards Organisation Performance" (2018)
07(03) Journal of Accounting & Marketing.
2 Turan G. Bali et al, "Growth Options And Related Stock Market Anomalies: Profitability, Distress,
Lotteryness, And Volatility" [2019] Journal of Financial and Quantitative Analysis.
3 Theresa Cogswell, "Challenges And Opportunities In Improving Profitability By Managing Costs And
Innovation." [2013] (AACCI 2013 Annual Meeting) CFW Plexus.

4
 Decrease in quality: Due to some of the reasons there was decrease in the quality of
the products that is made by the company4. This is not because the firm has It was
also seen that the competitors started to make better products then the cited firm. This
was also because of the fact that company lacked focus. It was behaving like headless
chicken with no set of direction which elevated such flaws in the business.
 No clear vision: Any company needs to have a clear vision that could help them in
moving in a particular direction. It was seen that neither the company had clear vision
for their future operations neither they have communicated it well to its stakeholders.
Due to this there was serious gap in their strategies and hence the numbers of issues
also kept on increasing. It was also found that there was no acceptable plan with the
company so as to deal with different challenges they are facing as well as for reaching
to the goals they have set for them5.
 Lack of adequate cost accounting: It was seen that there was significant decrease in
the profitability and while evaluating different situations, it was found that there was
also lack in the adequate cost accounting as there were many loop holes and due to
this, they had to lose their significant amount of money which they could have
invested on their new projects. It was the failure of their accounting that they did not
knew the actual cost of their individual product costs6. This also played a major role
in defining the profits. Due to lack of proper accounting, it was seen that there was an
increment in the cost of operations and it was the major reason they had to move
towards lower-wage countries.
 Slowness in the acquisition: It was seen that there was significant decrease in the
acquisition by different companies. The company’s major purchaser was Alcatel who
also decreased their acquisition of new equipment. There were several reasons for it.
One of the most significant reasons that were behind it was the fact that ACI was
unable to meet the demands of their customers. At the same time there were many
competitors like their French competitors of the company who were producing
offering better products to their customers then ACI. It was also seen that due to the
confronting challenges ACI was losing reputation in the market especially in terms of
selling higher quality products. This lack of demand was spreading to their other
4 A. JARLIER and S. CHARVET-PROTAT, "Can Improving Quality Decrease Hospital Costs?" (2000)
12(2) International Journal for Quality in Health Care.
5 Ronald C. Beckett, "Collaboration Now A Strategic Necessity" (2005) 6(1) Handbook of Business
Strategy.
6 Martin P. Loeb, "A Call For Papers: Cost Management Concepts, Firm Performance, And Industrial
Competitiveness" (1997) 16(1) Journal of Accounting and Public Policy.

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purchasers as well and due to this they had to lose their significant market share7. It is
seen that companies did cancel their previous backlogs but they were not giving new
orders which reduced the overall sales of the company.
 Lack of contingent leader: What this company was seriously missing was the lack of
contingent leader. A leader that was able to take decisions quickly and according to
different situations. There is also decrease in the collaboration among the employees
at different locations. In the time when ACI is facing so many problems, it became
necessary for the companies like ACI to have leader and employees that has the
potential to change the situation of the company and add value to the operations of the
firm. This value can be easily added once the managers and employees start to add
quality to their products8.
Solution to the problem
There were many steps taken by the ACI so as to control their operations. The first thing that
was done by the company was to make George Anderson, the new CEO of the company. This
gave them whole new fresh ideas for dealing with the challenges that were faced by the
company. It was seen that company needs to recruit the employees that are skilled and have
innovative ideas to deal with different situations9. George Anderson took many decisions to
confront the challenges that are faced by them. They are as follows:
In order to deal with the challenges related to lack of focus and poor business systems,
George implemented a task force made up of middle managers from all the different
disciplines as well as it also comprised executive team10. He himself took the charge as a
leader of that team but gave full autonomy to its team members as he believed that CEOs
should not delegate strategies. It’s the team that should do so.
In order to deal with the challenge of poor or inadequate business systems and the inadequate
cost accounting system, George brought in a new chief financial officer who will be
7 Alexei Alexandrov and Özlem Bedre-Defolie, "Sales Tax Competition And A Multinational With A
Decreasing Marginal Cost" [2010] SSRN Electronic Journal.
8 Joseph A. Maciariello, "The Importance Of Integrity In A Leader And Personal Relationships" (2009)
2010(S1) Leader to Leader.
9 Emmanuel Teitey Ph.D, "Corporate Risk Management A Measure To Enhance Increase In
Profitability" (2018) 2(5) Sociology International Journal.
10 Alan D. Smith and O. Felix Offodile, "Strategic Importance Of Team Integration Issues In Product
Development Processes To Improve Manufacturability" (2008) 14(5/6) Team Performance
Management: An International Journal.

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responsible for doing all the cost accounting. This can also be ensured that there is an
increase in the cost of the company which this chief financial officer will manage. The first
thing that this individual will have to do is that find out the actual cost or exact cost of each
product11. It was decided by George that they should place responsibilities of different
business systems to different individuals so that he could have more control over the business
operations.
Product quality is something which is one of the most challenging jobs for the company to
improve. In this regards the important to change the processes and procedures that are being
used within the firm. In order to do so he insisted on improving the team work within the
organisation. Product quality can also be improved within the firm by enhancing the skills of
the employees. Since it was found that many of the employees of this company did not take
things seriously. They needed empathy and support from the side of the management12. This
was necessary for improving their motivational level which can push them to enhance their
overall performance and be more committed towards the firm. There is also need of quality
mechanisms such as Total Quality management that needs to be implemented within the firm.
This will have significant impact on the order cancellation.
In order to motivate employees, George decided to provide four-day workweek to each of
their employees. This was done by them to make sure that employees do not feel burdened
and they can work with more focus within the organisation13. Four-day work week was also
done to make sure that company will have to do minimum of layoff which was a bit
unethical. However this did not worked well because employees thought that without
informing them company decided to implement this which means there would be only four
day’s pay.
In order to manage the increasing cost, this company decided to reduce the numbers of staffs
that are working at several locations. The major layoffs were in the branches where the cost
of operations is on the higher side. By making the calculations of the demand in the market
he thought that 900 employees will be more than enough for the operations at the firm. The
11 Erkki K. Laitinen, "Influence Of Cost Accounting Change On Performance Of Manufacturing Firms"
(2014) 30(1) Advances in Accounting.
12 "Why Is It Important For Businesses To Practice Quality
Control?", Smallbusiness.Chron.Com (Webpage, 2019) <https://smallbusiness.chron.com/important-
businesses-practice-quality-control-69340.html>.
13 Malcolm Carlaw, Peggy Carlaw and Vasudha K Deming, Managing And Motivating Contact Center
Employees (McGraw-Hill Professional Publishing, 2003).

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major layoffs were at the American units only. This is because the cost of operations was
higher at the American unit.
Another major change that could help the company in coming out of the problem of lack of
contingent leadership was the fact that company decided to make more managers at the local
levels14. This was necessary for improving the challenges that might be faced by the company
at the local levels. Leadership training becomes the most important factor in the training.
Recommendation
It is recommended that companies find those technologies that are missing within the
organisation. This is critical for the management as it enables them to bring more efficiency
in the work process. There are many advanced technologies such as data management
software and enterprise systems that could help the firms to have more control over the
operations15. This is also true for finding out the challenges that is faced by the company and
hence working on it to gain significant amount of benefits. It is recommended that this
company finds the best solutions to the challenges they are facing and in the long run this is
going to have impact on the operations of the firm. It is also recommended that firms have
long term approach towards sustainable development. It is critical for the management to
bring new team culture within the firm. This needs to be done with the help of team
development training. In the long run, this is going to have impact on the operations of the
firm as it will enable the firms to fill the gap that is in the individuals. There is also a need of
technologies like artificial intelligence that will ensure that process remains more controlled.
Conclusion
From the above based report it can be concluded that ACI is facing many issues such as
Growth and profitability Lack of focus, Decrease in quality, No clear vision, Lack of
adequate cost accounting, Slowness in the acquisition and Lack of contingent leader. In order
to control this, company had to make sure that they have effective technologies so as to deal
with the challenges that are faced by the organisations. They need to implement team
management skills that can improve the overall performance of the organisation. New
accounting officer will have the responsibility to calculate the actual cost of individual items
so that overall accounting of the cost involved in the firm is done accurately.
14 Andi Mann, George Watt and Peter Matthews, The Innovative CIO (Apress, 2013).
15 Thomas N Duening, Robert D Hisrich and Michael A Lechter, Technology
Entrepreneurship (Academic Press, 2015).

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Bibliography
"Why Is It Important For Businesses To Practice Quality
Control?", Smallbusiness.Chron.Com (Webpage, 2019)
https://smallbusiness.chron.com/important-businesses-practice-quality-control-69340.html
Alexandrov, Alexei and Özlem Bedre-Defolie, "Sales Tax Competition And A Multinational
With A Decreasing Marginal Cost" [2010] SSRN Electronic Journal
Bali, Turan G. et al, "Growth Options And Related Stock Market Anomalies: Profitability,
Distress, Lotteryness, And Volatility" [2019] Journal of Financial and Quantitative Analysis
Beckett, Ronald C., "Collaboration Now A Strategic Necessity" (2005) 6(1) Handbook of
Business Strategy
Carlaw, Malcolm, Peggy Carlaw and Vasudha K Deming, Managing And Motivating Contact
Center Employees (McGraw-Hill Professional Publishing, 2003)
Cogswell, Theresa, "Challenges And Opportunities In Improving Profitability By Managing
Costs And Innovation." [2013] (AACCI 2013 Annual Meeting) CFW Plexus
Duening, Thomas N, Robert D Hisrich and Michael A Lechter, Technology
Entrepreneurship (Academic Press, 2015)
JARLIER, A. and S. CHARVET-PROTAT, "Can Improving Quality Decrease Hospital
Costs?" (2000) 12(2) International Journal for Quality in Health Care
Laitinen, Erkki K., "Influence Of Cost Accounting Change On Performance Of
Manufacturing Firms" (2014) 30(1) Advances in Accounting
Loeb, Martin P., "A Call For Papers: Cost Management Concepts, Firm Performance, And
Industrial Competitiveness" (1997) 16(1) Journal of Accounting and Public Policy
Maciariello, Joseph A., "The Importance Of Integrity In A Leader And Personal
Relationships" (2009) 2010(S1) Leader to Leader
Mann, Andi, George Watt and Peter Matthews, The Innovative CIO (Apress, 2013)
Mutya, Tomasi, "Cost Control: A Fundamental Tool Towards Organisation Performance"
(2018) 07(03) Journal of Accounting & Marketing

10
Smith, Alan D. and O. Felix Offodile, "Strategic Importance Of Team Integration Issues In
Product Development Processes To Improve Manufacturability" (2008) 14(5/6) Team
Performance Management: An International Journal
Teitey Ph.D, Emmanuel, "Corporate Risk Management A Measure To Enhance Increase In
Profitability" (2018) 2(5) Sociology International Journal