Case Study (cont) - Home Specialties Intensive Search
An intensive search for sites followed the conference and lasted for four months. The evaluation of each site about which information was received was a three-phase process. First, the branch manager or another member of the central management group looked at the initial information that was available from the advertisements, phone calls, or cursory visits to the site to decide whether the site was worth further inspection. At least 18 sites were rejected at this stage because they all failed to meet one of a small set of requirements. The most important considerations at this stage were: (1) whether the site could be rented (the company did not want to purchase), (2) whether the site was located near the companyís existing facilities (something within 10 minutesí driving distance was preferred), and (3) whether the site was approximately the right size (sites with 15,000 to 25,000 square feet were preferred). One or more of these three factors caused the rejection of eleven of the eighteen sites in this early phase. Of the remaining seven, one was rejected because of problems of access, one because of an unsatisfactory layout, and five for unknown reasons.
The second phase consisted of a more detailed evaluation of the site potential. Four sites were given detailed consideration. Members of the Home Specialties Department staff estimated the expenditures required to make the necessary heating, lighting, and ventilation installations. One of the four sites was rejected after the detailed inspection because the branch manager found it liable to frequent flood damage and because the company would have had to buy other leases on the property.
There were, then, three sites that management thought good enough to prepare bids on. Site number 2, the first one for which a bid was prepared, had an area about the same as the specifications called for; but site number 14 and site number 10 were both smaller than the specifications required. Site number 10 was at the distance limits set by management and site number 14 was beyond the distance limits set by management. Management expected to get by on site number 2 with a bid of $10,000 to $15,000 for 24,000 square feet of space; the bid on site number 14 was $12,000 for 18,500 square feet. On site number 10, the third one for which a bid was prepared, management considered offering $17,500 for 15,500 square feet of space, excluding yard space which had to be obtained separately.
The bids on sites number 2 and number 14 were turned down by the agents for the properties, but the bid on site number 10 was never submitted. The President refused to approve the bid because he thought it offered too much money for too little space. The search for a new site for the Home Specialties Department apparently ended with the Presidentís refusal to approve the bid for site number 10.
This case is based on Cyert, Dill and March (1958).
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