Role of the Us Financial System

Productivity and Cost Paper

Tina Hines

September 21, 2007

ECO361Economics for Business II

Greg Gotches

Productivity and Cost Paper

In this paper, describe a company that has made a strategic decision based on productivity, wages and benefits, and other fixed and variable costs. I then will analyze the decision and its expected outcomes. Incorporate the law of diminishing marginal productivity and the relationship between productivity and cost in your paper.

Justice-Based Management

The purpose of Justice-Based Management is to help empower people and raise their human dignity and quality of life, both inside and outside the workplace. Its principal economic means for achieving this end is expanded capital ownership.

Justice-Based Management offers every worker the most effective tools to become a co-owner of the place where he works. The Employee Stock Ownership Plan (ESOP) was created to provide workers with access to capital credit-previously available only to those with significant accumulated assets-and to pay for their shares out of future corporate profits which they help the company to earn.

But in terms of Justice-Based Management, the ESOP by itself is insufficient. Without a clear articulation of shared moral values and the systematic dispersion of power and accountability in a company, the ESOP can be used as a tool to exploit workers and deprive them of their ownership rights, thus violating the fundamental principles of justice underlying Justice-Based Management. In contrast, an ESOP based on JBM principles respects the property rights of every shareholder.

It has often been said that building an ownership culture is more of an ongoing process than a single event. One example of how various elements of Justice-Based Management are being incorporated in this process can be seen in the case of Allied Plywood Corporation.

Allied Plywood Corporation, a 100% employee-owned company headquartered in Alexandria, Virginia, can sum up the secret of its phenomenal success in a single sentence: "Working together to give customers the highest quality service." But what makes this phrase real for Allied's customers and employees, and more than just empty advertising, is Allied Plywood's incentive system, today widely acknowledged as a model of ownership sharing. Underlying its unique incentive system is a justice-based philosophy and management system called the "Allied Way."

Ed and Phyllis Sanders, a husband-and-wife team who moved their business to Virginia in 1956, founded primarily a wholesale distributor of wood and related products, Allied Plywood in 1951 in Ohio. Allied Plywood's business includes selling softwood plywood, hardwood plywood, interior paneling, particleboards, sheathing, kitchen laminates, adhesives, cabinets and hardware, solid surfaces, and hardwood lumber. Their market is primarily new homebuilders, remodelers, cabinetmakers and sign shops, from Baltimore, Maryland to Atlanta, Georgia (Justice-Based Management 1998).

Productivity as measured in sales per full-time employee is impressive, close to $350,000 in 1997. This record was achieved despite a major slowdown in the home building industry and the normal productivity declines associated