Case Study: Proposal Fee Structures (Steelkor)
The year is 1996. You are the head of the internal Organisation Development consultancy within Steelkor, an international steel products manufacturing concern with divisions situated throughout Southern Africa. Your consultancy is a designated profit centre. Prior to 1994, Steelkor had been partially owned and funded by the government of the Republic of South Africa. Thereafter it was privatised and its shares are now quoted on the All-Africa Stocks & Commodities Exchange.
You have just received a telephone call from Margaret Mkhize, the General Manager of the indestructible cooking pots division. She has related a tale of woe which, if your consultancy is given the opportunity to conduct an in-depth diagnosis, could probably be resolved over a prolonged intervention of at least twelve months at her division.
However, Margaret is one of the new sceptics within Steelkor’s general management. She is a strong believer in free enterprise and an upholder of the Total Quality doctrine. It is difficult for her to accept that if she uses your consultancy to resolve the division’s problems she must then “pay for the use of our own group resources. If I have to pay, then I shall only pay for the best. You must submit a competitive proposal along with the external consultancies which I shall be talking to. The consultancy whose proposal offers us the most effective cost-benefit from an objective standpoint will be selected to undertake the intervention.”
You told her that you would formulate a proposal and would be getting back to her by Wednesday next week.
Assignment
Considering the above circumstances;
Final Assessment
After you have completed all of the reading & assignment , there is still an opportunity to determine whether or not it is worth proceeding with the proposal.
It may seem like we are continuously considering whether we go ahead and this is true for complex and long assignments. For smaller assignments, we either do not do this or do it intuitively.
