Management Company Porfile

COMPANY OVERVIEW

     Martella Paper Products, Inc. is a paper products producer and distributor to many offices and office supply stores.  The company was established in 1979 by Michael Martella.  Michael Martella saw the need for a paper company and believed that he could fill that need.  Martella Paper Products Inc. has been in business for over 15 years.  The company has expanded tremendously in that time.  When the company was first established, Mr. Martella could not even afford to employ a secretary.  Today Martella Paper Products has divisions on both the East and West Coasts and employs over fifty individuals.  It is still owned and operated by Mr. Michael Martella, a sharp business man with the sense and know how to remain competitive throughout the past fifteen years. 

ABOUT THE INTERVIEWEE

Mr. Jonathan Martella is the younger brother of Michael Martella.  Jonathan graduated from CW Post in 1983 and has played a significant role in Martella Paper products ever since.  Jonathan's official title at Martella Paper is Vice-President.  Along with his older brother Michael, the two control all aspects of the company.  Jonathan's responsibilities at the company include, but are not limited to, overseeing sales, purchases, and marketing.  Jonathan has always played a large part in the day to day activities of Martella Paper, and he hopes to continue to do so throughout the rest of his career.

I chose to interview Mr. Martella because I one day hope to own and operate my own successful business.  Upon interviewing Mr. Martella I discovered that it is extremely difficult to operate ones own business.  There are many different factors and problems that need to be dealt with on a daily basis.

THE INTERVIEW

The primary factor essential for the success of Martella Paper Products Inc. is the volume of sales.  The second most important factor is the inventory level which is what determines the cash flow.  The third factor is controlling overhead.  Of the three, sales is the most crucial.  Without sales the other factors are irrelevant. 

Marketing is also an important factor in the day to day operations of the company.  In order to be competitive with regard to the competition, Martella must advertise their lower prices and seek out business.  The target market consists of restaurants and offices.  Martella sells products that both these types of companies use on a daily basis.

The production process begins in the design and merchandising departments.  Personnel in these departments research different markets, decide which products to produce and what quality of paper or cardboard should be used.  The samples are then shown to a select group of customers whose feedback on the sample designs is collected.  Once the selections of the samples are made, the purchasing department begins to price the selections.  Purchasing is responsible for getting bids from paper manufacturers and determining how much to spend.  Different customers will want different grades of product and Martella must cater to each customer.  The paper is then bought in mass quantity for a large production.  By buying in bulk, Martella gets a substantially lower price than they would otherwise. The paper is then sent to the factory where it is manufactured into end user product.

The main factor in deciding the quantity produced is the projection made by the company salespeople.  Martella has its own salespeople and market researchers who offer projections on sales of new items.  While forecasting, the salespeople take into account the reaction of the small, random select consumers that have seen the sample item. However, this method can sometimes be misleading.  The selected consumer is shown the item three months before the item is seen by the public.  Following a positive reaction from the selected consumer, the product is produced. 

The inventory control process is done manually. As a result of manually counting the inventory, many mistakes are likely to occur. These mistakes can have serious adverse affects on the inventory quantity. Mistakes in the counting process can cause the inventory to seem in excess, when in actuality the inventory is in shortage. The need for more inventory is ignored and as a result there is not a sufficient amount of merchandise which can be sold to retailers. The reverse also occurs  where the inventory is mistakenly counted as being in shortage, but in fact there is a surplus of goods. This miscalculation of goods results in the harmful ordering of unnecessary goods.

    Having excess inventory in the warehouse will force Martella to pay storage, interest and handling charges. The warehouse, too, is an operation and an expense to maintain. Therefore, merchandise stored for six months will accumulate interest and storage charges. After six months interest and storage costs reach a point where they begin to disrupt the company's sales and cut into the company's profit.

The optimum scenario is for merchandise to be kept for less than one month, so that storage and interest costs are accrued minimally. These interest and storage costs are canceled out by  profits made upon the selling of the merchandise. Since the amount of time stored is less than one month, which in turn results in low storage costs, the costs do not interfere with the company's profit and are no extra burden in the company's sales. The company can then invest a percentage of its profits in producing  and experimenting with new goods.

IMPORTANT ASPECTS

There are many key factors that are critical to the daily operations of Martella Paper Products.  These aspects include, but are not necessarily limited to: competition, decision making, social responsibilities, communication, and motivation.

In terms of competition, Martella Paper faces fierce competition from other paper product companies vying for the same sales.  Competition lowers overall profits because it forces companies to lower prices if they want to win over their competitors.  Another way to move ahead of the competition is through service.  A company can provide superior service over that of their competitors in order to gain business.

Regarding decision making, their is a clearly laid out organizational structure.  The decision making is mainly centralized, however, many decisions regarding production are made by the blue collar workers.

Socially,  Martella Paper does its best to portray itself as a caring company.  When called upon to do so, Martella has provided tons of paper products at discounted prices to non-profit organizations and food shelters

Mr. Martella also said that motivation was an integral key to a company's success.  Employers must communicate openly with their employees, and must not hide anything from each other.  Each employee has a direct supervisor above him with whom he must meet after each workday, in order to discuss the events of that day.  The Martella brothers believe in running a tight ship and not letting anything slip through the cracks.  They make sure that no funds or product are wasted.  They are also extremely meticulous regarding the taking of inventory.  They do not want to get stuck with excess product and they monitor their inventory to prevent this from happening.

Martella Paper Products foresees further growth in the coming years.  The increasing use of home computers and printers and fax machines, will increase the need for paper both in the home and in the office.  Martella continues to pick up new customers at an astounding rate and they do not foresee this trend stopping any time soon.  Mr. Martella explained how now matter what state the economy is in, there will always be a need for paper products.  Business cannot be conducted  without the use of printers and fax machines.

In order to keep up with their continuing growth Martella is in the process of installing a new computer system.  Their current computer network is made up of 80386 computers which are now out of date.  They are upgrading their machines to the Pentium processor, also known as P5.  While this is a costly investment (Mr. Martella estimates the cost at over $10,000), he believes that the benefits are far too numerous to pass up.  By purchasing these new computers, Martella Paper Products will be able to work more efficiently and effectively.  The new hardware will enable them to use the newest software programs like databases and spreadsheets.

When I asked Mr. Martella if his company had problems with any action groups, he said that there was extreme pressure from environmental groups.  These groups are lobbying to get his company to use recycled paper for all their products.  In order to get these groups off their backs, Martella has taken a sever loss in profits by using recyclable paper which costs more to produce.

Mr. Martella also said that his company was in the process of downsizing.  They are trying to get more work done with the use of less people.  Mr. Martella says that all companies are trying to become "leaner and meaner," and his company must follow suit if they want to be competitive.  Top management employees are sharing secretaries and other resources are being used more efficiently.  He also said that with the removal of middle management, more of the workload would be placed upon himself and the other managers.

When asked what methods he uses to keep employees happy, Mr. Martella replied that at his company, it is their philosophy to treat the employees as peers and not subordinates. "A happy employee is a productive employee," Mr. Martella said.

CONCLUSION

Throughout this interview I learnt and discovered many different things that I had not known before.  Running a business is an extremely difficult thing to do.  It involves many different aspects which must be covered.  Throughout the semester we learnt different theories from quality gurus like Peter Drucker, W. Edwards Deming, and Philip Crosby.  After talking to Mr. Martella I have discovered that the majority of the theories of these individuals, as well as the other items that we covered during the semester, were applicable in the real business world.  Without the focus on quality and planning, a business will not be able to successfully succeed in the real world.  As I stated earlier in the paper, I hope to own and operate my own successful business, and after this interview and semester of Management, I feel that I am now more capable to do so.