Case Name :      Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision.

Authors :           Erica Berte, Christine Vujovich

Source :             North American Case Research Association (NACRA)

Case ID :            NA0308

Discipline :        Strategy

Case Length :    16 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

In 1998, the United States Environmental Protection Agency (EPA) and US manufacturers of heavy-duty diesel engines signed a consent decree which included among other things, pulling forward (“pull ahead”) by 15 months a new nitrogen oxide (NOx) emission standard. By early 2002, Caterpillar and Detroit Diesel were requesting EPA to delay the “pull ahead”. Cummins was being pressured by its competitors to join in this request. On the other side, the Environmental Protection Agency (EPA) and several environmental organizations wanted Cummins to adhere to the requirements of the consent decree. Cummins was navigating through a very difficult economic time and could not afford to make a mistake. Joe Loughrey, Cummins Engine Business President and his team needed to make a strategic decision. Would they a) agree with the competitors’ position asking EPA to delay the consent decree which required the company to pull ahead an expensive environment requirement, thus allowing manufacturers to continue using the established engine technology that had customer support, or b) accept the terms of the consent decree and continue to develop a new engine technology against the wishes of many in the industry and thus face possible market retraction. Both strategic decision options had substantial consequences and needed to be carefully evaluated. Not only was the future of Cummins Engine Business in jeopardy, but as we learn later, this decision impacted the future of the whole industry.