Malden Mills Case Study Analysis

The Malden Mills Company is faced with different problems since it was built. Aaron

Feuerstein, the CEO of Malden Mills Company has experienced different problems, but because

of his intense decision making and enough skills in management, he is able to take some risk so

that his company gains competitive advantage in different states. The major problems

experienced include; bankruptcy, fire, and rebuilding of the company. Feuerstein realized that,

public defeat was not a usual experience to him given that he was the CEO, and hence he was

determined in filing for the second bankruptcy to protect his family’s business, Malden mills

after experiencing the first bankruptcy in 1981 when all of his mainstay product, and fake fur at

one time went out of fashion. After the Malden Mill was built, there are other subsequent

problems that followed such as fire. In 1995, fire destroyed Malden Mills complex in Lawrence

threatening the life of 31workers. Feuerstein could not believe that but only inquired whether his

people managed to get all his workers out and if they were a live (Feuerstein, 2003).

There was a problem of rebuilding the Mill which again generated. Feuerstein made a

quicker decision of rebuilding the place again, although the decision he made was not the same

with his managers’ decisions. His managers tried to express skepticism by suggesting that, only

the profitable part of Malden Mill Company should be rebuilt, and that was the polartec apparel

division. He wanted not only the mill alone to be rebuilt but also his employees to be called back

to work. This actually shows how Feuerstein is a man driven by his duties and decision made.

Even though the task of rebuilding the Malden Mills commenced immediately, the focus as well

as goal of rebuilding still remained the topic of the debate for the managers (Feuerstein, 2003).
Stakeholders have become the important players within the Malden Mills Company. The

stakeholders in this case include; the customers, suppliers, shareholders and the lenders.

Customers are determined to be the stakeholder of the company since they are the one

determining the success or the failure of the organization. According to the case study,

Feuerstein reassures his customers at the International Furniture Exhibition, this shows how

much he valued his customers being the stakeholder of his business. Suppliers on the other hand

are determined to be the stakeholder of the company given that, without them, there will be no

production within the company. Suppliers help in distributing the products from one point to

another point while persuading customers to buy the products (Weiss, 2008).

The suppliers give partinent information on how the product should be used as well as its

importance hence improving productivity in the company. Lenders are also stakeholders in any

given companies. Lenders or creditors are accountable for offering loans to the company when

the company seeks for it. In the case study, in the year 2003; creditors try in deciding whether

they can approve the loan for the Malden Mills Company so that, Feuerstein will be able to pay

about $ 92 million that has been owed to creditors in order to regain his control of the Company.

The last stakeholder in regards to the case study is the shareholders. Shareholders helps in

decision making in the organization since they also have some shares within that company. They

are important in a long term planning as well as finding solutions to any of the problems which

might have been affecting the company in general. All the above mentioned players are

determined to be the stakeholder of the Malden Mills Company because they all contribute to the

productivity and success of the company in terms of decision making, offering of loans, sales

and marketing as for the suppliers as well as selling of goods and services in regards to the

customers (Weiss, 2008).

1994, Feuerstein established new mill in Gorlitz and Germany to serve the European community.

After the mill was burnt down, Feuerstein wanted to rebuild a new mill while focusing on the top

priorities such as supporting his workforce as well as getting the polartec and woven back online

to serve the European community. This is very significant since he could only gain the

competitive advantage by his workers getting back to job and his customers to continue getting

services from them.

The management is an important part of the organization. Effective management system is

important for the success of any organization. There are various roles of management within an

organization this include; decision making, this is a crucial role of the management since the

decisions that are made will have a positive or negative impact on the organization and business

at large. Therefore sound decisions have to make to ensure that the business registers profits.

Aaron Feuerstein made various decisions as the CEO of Malden Mills such decisions were; he

made the decision to rebuild Malden Mills but not the way it was initially before the fire he opted

to build it ensuring that everything was the latest and best (Feuerstein, 2003).

During the rebuilding process after the fire he made a decision to get Polartec and woven

divisions back up and running. This was an important decision since these divisions were high-

profit and it would mean that Malden Mills would make profits even when the unfinished

products from its sister mills in New Hampshire and Maine could not be shipped to consumers

until the finishing departments based in Lawrence were rebuilt. He also made the decision to

rebuild the flock operation though it was the least profitable part. His decision was based on the

fact that this division was labor intensive and the fact that it was the traditional core of the

business. He also made the decision to support his workforce, he made decided that he would
pay the workers even after they were left idle after the fire. This decision was not made when

considering the fact that these workers would either be recalled back or not.

Decisiveness; the management should make decisions and stick to them. Aaron

Feuerstein made the decision to retain his workforce instead of heading to the pressure that he

was getting to incorporate machines into the production process. He believed that workers did a

better job as compared to machines since they have allegiance. He also stood his ground when it

came to the rebuilding process as he had decided not to rebuild the company the same way it was

before the fire. This was amidst the questioning from other managers.

A business has several strategies issues that have to be considered so that a business can do well.

Some of these issues include; expansion a business should put up strategic plans for expanding

or reaching new areas. This will ensure a greater customer base, increased production and high

profits in the long run. Malden Mills had a strategic plan to expand its territories. There were

polartec companies build in Germany as well as warehouse and sales offices in five states and

two other European countries (Feuerstein, 2003).

Restructuring is another strategy this is done to make the business competent or realize

more profits than it did before. This should be done to make the company have a new set of

objectives that will have a positive impact to the company in terms of profitability. Aaron

Feuerstein made a decision to drastically restructure the mill putting focus on the polartec and

polar fleece that were newly developed products. His persistence was a resounding success since

the new products were purchased by other companies in large amounts. This restructuring made

Malden Mills become steered to the forefront of the textile industry.

Another strategic issue is the incorporation of new technology in the production process

of a company. This ensures efficiency and increased quality of the produced goods. The products
will be up to standard and the production process will take less time as compared to when

workers are in place since machines are faster. The management of Malden Mills ought to

implement some changes in the production process this includes the automation use so that they

would cut costs in the manufacturing process.

Every business has to take risks so that it can be successful. The measure of success is the ability

of the business to take a risk and overcome it in the activities of the business. Some of the risk

factors Malden Mills was involved in were Rebuilding the decision to rebuild had both positive

and negative implications to the business. The positive implication was the fact that the new

company that was put in place was latest in terms of structure and technology. This meant that it

became more competitive in the market. The rebuilding also included restructuring and inclusion

of new divisions that meant that would make the company more profits. There was a negative

side to the rebuilding; the entire rebuilding process would be quite costly to the business. The

decision to make a complete change would stretch Malden Mills financially since the insurance

company would only cover the expense to rebuild the company as it was before the fire. The fact

that the CEO had decided to continue paying the employees was also going to strain the

company economically when rebuilding since the fund available would not be enough to cater

for all this needs.

Expanding is another risk factor since this means that the company will go to new areas

where it had not existed before. The advantage of taking this risk is the fact that the customer

base will be increased. More clients will be sought in these new regions. A downside of taking

this risks the fact that it is quite expensive to expand and the uncertainty factor of the new area.

The business may not exactly do well in the new area when a comparison is made with its initial

location.
 Another risk factor is the fact that the CEO made a decision to continue paying the

workers even after the fire. The positive side of this is that loyal workers will be retained after

the completion of the rebuilding and this means that they will work diligently when they come

back. On the other hand the negative implication of this risk is the fact that it is quite expensive

to continue paying them at this crucial time since no profits are being made and only expenses

are being incurred.

Malden Mills should consider making a reduction in its workforce and use new machines. This is

because the use of machines will be inexpensive as compare to employing workers. Automation

also means that the production process will be efficient and standard.

The decisions made within Malden Mills should not be made by one person i.e. the CEO

rather the stakeholders should have a role in the decisions. This is because some of the decisions

that he makes are not good like the fact that he refuses to reduce the workforce and incorporate

machines. It is evident that machines are efficient; this is therefore a bed decision to the business

as a whole.

The success and the failure of the companies are determined by stakeholders of the company

such as the customers. Managers should therefore be ready to serve their customers with a lot of

loyalty. Workers should also be treated well given that they are the one increasing the

productivity of products in the company. In the case study, Feuerstein is very dedicated to his

customer that is why, he is ready to get his workers back to work and even increase their salaries.

Feuerstein is ready to pay the idled workers to motivate them, and when there are problems like

in the case of fire, he do not think about his products whether had been destroyed by fire but he

is much concerned with his workers whether they were able to be rescued.
References:

1. Thomsen, Steven R; Rawson, Bret (1998). "Purifying a tainted corporate image:

2. Mallen Baker. 1998. Corporate Social Responsibility News and Resources, London.
Retrieved on October 3, 2012.