Case analysis

Topics: Vector Motors, Management, Vector W8 Pages: 6 (4084 words) Published: May 20, 2015
Case analysis:vector aeromotive corporation (evaluate the effectiveness of a board of directors and its actions)

John Pope, a member of the board of directors of Vector Aerarnotive Corporation, had a lot on his mind as he drove to his office, It was March 22, 1993, the day Vector's board had agreed to ask formally for the resignation of the company's president and founder, Gerald A, (Gerry) Wiegert, Gerry had already been informed that if he did not resign he would be fired, John hoped that Gerry would step down gracefully and not provoke a confrontation, Gerry had been the mastermind of the company for many years, but now John believed the board had little choice but to remove him because Vector was in a crisis. It was not able to pay either its employees or its payroll taxes; checks were bouncing; and outstanding accounts payable were being ignored, John and the other board members were convinced that the crisis was the result of Gerry's management style and excessive spending and that it was the board's moral and legal obligation to the shareholders to remove Gerry as president. When John reached vector headquarters, however, he was greeted by armed guards barring entry to the building, His efforts to enter the building through a rear entrance were futile because all the, locks had been changed, Gerry had barricaded himself inside. Cleanly this was not going to be an amicable management succession process. Gerry Wiegert had declared war.

Vector Aeromotive Corporation (hereafter Vector) designed, manufactured, and sold exotic sports cars. Cars are defined as exotic by their price range ($150,000-$500,000), their speed (in excess of 160 mph), their driving performance, their technologically superior, high performance components, their extensive use of hand manufacturing, and their appearance, Exotic sports cars are offered to a select, wealthy clientele. Vector management estimated the total worldwide market for erotic sports cars was approximately 5500 vehicles per year. The company's major competitors were Ferrari and Lamborghini, who together held a 75% market share. Vector, located in Wilmington, California, was the only US-based manufacturer of exotic sports cars. Gerry Wiegert's vision was to design an auto-mobile using the finest technology in America-aerospace technology. Indeed the Company's motto was "Aerospace Technology for the Road.” In designing cars, performance was paramount; cost was no object. Vector's standard model. the W8 Twin Turbo "luxury supercar", priced at. $448,000, had received considerable critical acclaim in automotive magazines such as Road & Track. The W8 was powered by a 6.0 liter, all-aluminum engine with twin turbo-chargers that generated over 600 horsepower at 5,700 rpm. It could accelerate from 0 to 60 mph in 3.9 seconds and reach speeds of 260 mph. The car made considerable use of aerospace technology, including advanced composite materials for body panels, military specification electrical systems, and advanced tactical fighter instrumentation and displays, It. also contained numerous safety and luxury features, such as an integrated rollcage, energy-absorbing crush zones, a spacious, "high- tech, jet-aircraft-like leather cockpit", and a custom, 10-disk compact disk changer. From 1978 to 1987 the company operated as Vector Car, a privately funded limited partnership founded by Gerry Wiegert, Vector Aeromotive Corporation was formed in September 1987, It completed its Initial Public Offering in November 1988, selling approximately 35% of the company's stock for $6 million. Vector delivered its first car to a paying customer in September 1990, and as of March 1993, it had sold a total of 13 cars, to an international clientele. In its peak month the company employed 45 people. Because of its low sues volumes Vector had reported substantial financial losses since its inception (see statements of operations in Exhibit. 1).In an...
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