Sensormatic Electronics Corporation - 1995 Case Study

Sensormatic Electronics Corporation - 1995 Case Study

Introduction

From its inception, Sensormatic Electronic Corporation has witness exceptional growth in the robbery detection industry. It was founded after a burglary in the grocery store of its founder Ronald Assaf. He developed a device with the help of some scientists which could be attached to clothes. If someone tries to steal the clothes, a microwave signal is transmitted which sets of alarms thus notifying people that someone is stealing items from the store. This device can only be removed with the help of an instrument.

Since it began operations in 1968, it grew steadily but from 1995 onwards, the growth was phenomenal with a net income of $73 million during the year. These devices were subsequently being used in various stores to protect items such as shampoos, stereos, lumber etc.

Subsequently, the company started to diversify its business by acquiring various suppliers of surveillance equipments. It marketed three surveillance systems: Access Control systems, closed circuit television (CCTV), and electronic article surveillance (EAS).

The Electronic security industry comprised to two ways to prevent theft. The first was to monitor people and the second was to monitor the products. Sensormatic's products covered both these areas. Its EAS was used to monitor products while the access control system and CCTV is used to monitor people. The use of these systems helped stores to a great extent as the loss because of burglary usually accounted for up to 5% of sales.

One of the major competitors of Sensormatic was Checkpoint. Checkpoint used to manufacture and market a system whereby a tag was put on the items. These tags were deactivated when the sales took place. Unlike Sonsormaic's device that had to be removed and could not be deactivated, Checkpoints tags did not have to be removed since they were deactivated at the point of sale.

Decision Maker

The decision maker of Sensormatic Electronics Corporation is the CEO, Ronald Assaf. Since the company was expanding rapidly, he had to look into every aspect of the expansion to ensure that nothing is taking place in the company that will lead to adverse effects. Every major decision is taken by the CEO after consulting with his managers.

Problem

Sensormatic had a policy whereby its sales were recorded as soon as the customer took possession of the product. The receipt of payment was not important while recording sales since it sold its products ...