Performance Goals at Tractors, Inc.
1 Pages Posted: 14 Oct 2020
Abstract
This case presents the coming year's performance goals as established by Marietta Austin, the new president of Tractors, Inc. (a subsidiary of AA Equipment Corporation [AAEC], a fictional company), along with data pertaining to several years of actual financial performance. Austin has asked her direct reports to come to a meeting with specific ideas for actions that they plan to pursue in order to help the business unit achieve those performance goals. Students are tasked with creating their own ideas for action to meet the stated goals.
Excerpt
UVA-C-2443
Sept. 25, 2020
Performance Goals at Tractors, Inc.
It had been a good prior year for Tractors, Inc., one of four business segments of AA Equipment Corporation (AAEC). Marietta Austin was finally beginning to feel comfortable in her new role as president of Tractors, Inc. She had been with the company for 10 years, first serving as controller and then CFO. Early this year, upon the unexpected death of the prior president, she had been tapped for that position. As she put the final touches on next year's goals for her business unit—her first full year at the helm of the company—she wondered if those goals, in combination and individually, were: (a) too aggressive, (b) easily understood, (c)likely to prompt potentially risky behaviors as her direct reports strove to deliver their respective parts of the targeted results, and (d) better off being prioritized. Certainly, stretch goals were admirable but not if they were incompatible, too daunting, and/or too vague.
Tractors, Inc.
Tractors, Inc., manufactured tractors in two general categories—subcompact models (three distinct models) for the homeowner who generally had between 2 and 25 acres, and full-sized, heavy-duty tractors (four distinct models) for commercial farmers/ranchers whose livelihood depended on reliable, powerful, and rugged equipment. All models of tractors were sold through a worldwide network of affiliated dealers and partnering retailers. Market share had slowly, but steadily, increased over the past several years.
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Keywords: accounting, performance goals, financial performance, decision-making, strategy
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