Uhuru Candle Company Ltd.

,
Mr. Joseph Ziggundu, who had recently joined the Kengolia Industrial Development
Board (KIDB) as a management trainee, received his first operating assignment in the
following terms. His immediate superior, Mr. John Traino, called him into the office one
morning and said, “Joseph, you know that we have recently been told to take over and
operate a number of businesses which have previously been in private hands. One of
these is the Uhuru Candle Company (UCC), on Industrial Road about 6 km from Capital
City. You know the area; there are several car repair shops out that way, and on the
same plot as the candle company are a vegetable oil mill and a maize mill. I want you to
go out as soon as possible and get the candle factory going again. George K. and Frank
W. are assigned to the two mills. Although the owner’s family operated the three
businesses together, there is no reason why that should be so now. The three buildings
share an entry drive and turn around area, but you shouldn’t be too crowded under
present conditions. Just stay on friendly terms with George and Frank and everything
will be all right”.

Joseph asked, “what information do we have about the candle company – its production
or sales volumes, profitability, raw material needs, sales outlets – that sort of thing?”.

“As you know, the circumstances under which this business and many others came to
be our responsibility were such that we have no records, unless you find some out there.
We don’t even have keys. If you need to do so, break any locks and replace them with
new ones you can draw from central stores.

“What is my operating budget?”

“We are hoping that there will be enough raw materials and supplies on hand for you to
get started. There are no other candle makers in the country, and the demand has
always been brisk. Once you get started, you will probably be able to keep going out of
self-generated funds. We have not accepted liability for any debts of the previous
owners, not even for wages which might be due to workers, so you do not need to
concern yourself with funds until wages are due at the end of the first month or you
need raw materials, whichever comes first. Your own salary will continue to be paid by
KIDB as it has been during your training. It will appear eventually as a book-keeping
charge against UCC. If you need any cash account at all, it will need fairly detailed
justification; since our total KIDB budget was established long before we were saddled
with all these extra businesses, we have no excess funds after getting some of the larger
businesses off the ground.”

As Joseph thanked his boss for the opportunity and turned to leave, Traino said, “I’m
sure you will do just fine. It is my impression that management can be summed up
pretty much in this way :way: a manager is a man who comes in the morning and says
‘all right, chaps, get on with it’. As soon as you have UCC running smoothly we’ll find a
couple of other businesses for you to watch over. We have about six businesses per
manager on our plate right now.”
Joseph Ziggundu drove to the UCC premises, where he asked the first person he saw,
“which building is the candle factory?”. The factory proved to be a converted bungalow
(see floor plan, exhibit 1) nestled against one outer wall of the compound. He was
somewhat relieved to find that he did not immediately need to break a lock to enter the
house to look around. But he was at a bit of a loss to figure out just how to take the next
step.

Luckily, the man who had directed him to the factory had added the gratuitous
information that, “Mary Y. used to work there, for a long time. She knows all about it”.
As Joseph wandered from room to room, he became aware of a woman who seemed to
be hanging around, just outside the circle of his direct gaze. She did not avoid his
confrontation when he turned to look at her, finally. She proved to be Mary Y., who had
not found other employment after the UCC had closed, and apparently returned every
day in hopes that something would turn up.

From Mary, Joseph learned how the production process worked, and also that a group
of about 15 women had constituted the labourlabor force. She pointed out a room where
“the boss used to sit”. That door hung ajar, its lock having previously been broken by
some volunteer. A glance at the office furnishings convinced Joseph that he would not
find useful records there. Apart from scraps and shreds of paper on the floor, the files
and drawers had been cleaned out. The room Mary pointed out as the “storeroom” had
fared better, its lock was intact. It later proved as Traino had hoped, the sufficient raw
materials were on hand to begin operations. This Ziggundu started to do, believing that
the quickest way he could learn the business of managing a candle factory was to get it
going and observe the process. Most of the previous employees soon showed up when
Mary Y. put the word around that UCC was open again, and Joseph had an opportunity
to experience what it was like to say, “all right, get on with it”. The former owners of the
UCC and others of their countrymencompatriots had a reputation for being good
businessmen, and Joseph reasoned that the methods and processes they had established
would be worth his study and understanding.

The production process

The production process started with the twisting of single threads of cotton into a
multiple-strand candle wick, which was done by two women in the area shown as “A”
in exhibit 1. Mary Y. explained that the factory had originally imported the wick already
twisted together and that the boss had seemed to prefer the imported wick, which she
believed had cost Sh.3 (three shillings) per kilogram (kg). In the last few months of
operation, however, the factory had been winding its own wicks form thread produced
by a local cotton spinning mill. The process was a simple one, and the two women could
keep up with the need for wicks except for rainy days, when a leak in the roof over
area. A made it difficult to keep the thread dry. Mary pointed out that when the wicks
were wetwet, they failed to take up the proper amount of candle wax.

The next step in the process was to wind the wick on one half of an iron frame which
when married with the other half frame, made up a mould into which 12 candles could
be poured (see exhibit 2). Mary explained that the boss had been particularly strict about
the frames. “Those frames cost Sh-300 each, more than 20 years ago”, he would say,
“today I don’t know whether we could replace them at any price. Be careful.” Joseph
found 48 complete frames, each of which weighed about 5 kg.

When the wicking had been strung in the frames, and the two halves of each frame
joined together by two women working at a bench in area B, one or two women carried
the frames into the filling room, area C. There they set the frames upright, end to end on
benches along the walls or in the centrecenter of the room. In area C two women with
tea kettles filled with hot paraffin walked from frame to frame, pouring them just to
overflowing; it took two passes, the second after a short interval for the first wax to
settle, to assure that each candle would be complete and round. A tea kettle filled with
wax weighed about 3 kg.

The two wax pourers drew their tea kettles of wax from spigots near the bottoms of two
drums of hot wax in the next room (area D). These drums were heated by burners
fuelledfueled with bottled gas. Mary Y. explained, and Joseph observed, that she was
responsible for lighting the gas burners at 8 a.m. when the women reported to work.
When the drums contained all new blocks of paraffin, it seemed to take about 2 ½ hours
for the wax to reach the right consistency for candles. When it was just a matter of
reheating wax left over from the day before, perhaps with just a block or two of new
wax, pouring could begin after 1 ½ hours.

After the filled moulds had set for a few minutes – Mary Y. saitsaid it took about 20
minutes after the last wax had settled, and this seemed to Joseph to be about right –
women carried the frames to area E, where two women opened them and lifted the
candles out, to harden for a few more minutes in the air on benches in that area. Next a
group of women “finished” and packed the candles. Finishing consisted of cutting off or
smoothing any unsightly mould marks, trimming flat the candle bottoms and cutting
the wicks to the proper length. During this processprocess, any broken or imperfectly
moulded candles were rejected and set aside for remelting and reuse of the paraffin.
Mary Y. told Joseph that, “when everything is going well, the wicks are dry and the wax
is at the right temperature, we almost never have any damaged candles”. During the
first few days of operations Joseph observed that such damage seemed to average about
300 candles per day, with the heaviest incidence of damage during the first pouring
around when, he judged, the women were anxious to get started, some times before the
wax was hot enough.

After finishing, candles were packed in area F. First the packers placed 6 candles in a
thin cardboard box; then they packed 12 boxes in a corrugated carton. Then they stacked
the cartons in area G ready for sale.

Joseph soon found that Mr. Traino was right about demand for candles. Hardly had he
opened the factory on the first day before would-be customers were driving up in
trucks, jeeps, private cars and even on bicycles to buy at the factory door. Although
Joseph was too busy to spend time comparison shopping, he heard from his wife that
candles were still so scarce that they were often offered in Capital City shops at Sh.10
for a box, as against the suggested retail price of 75 cents (100 cents = 1 Shilling) per
candle. Two of his fellow KIDB manager-trainees, who had received assignments at
upcountry locations, wrote to ask him why his candles were never displayed for sale
up country. They said that the only available candles in their locations were those
smuggled in from neighbouring countries, and that a typical price was Sh.3 or more per
candle. In any event, Joseph usually had little trouble selling all his daily production
before noon of the following day, for cash at the price of Sh. 32.40 per carton of 72
candles, which was the allowed factory sales price under Kengolia government rules.

The product and its ingredients

UCC’s product was a white candle about 25 cm long and 2 cm in diameter, which
weighed about 45 grams. The candle “wax” was paraffin, which UCC bought from a
local affiliate of an international petroleum company for Sh. 5.60 per kg. The paraffin
came in blocks weighing 10 kg each, packed four blocks to a plastic bag package, which
was itself over-wrapped with gunny sacking.

The cotton threads for wicks came from a local cotton spinning mill, and the most recent
purchase made by the former owners had been at 50 cents per kg. Both the thin
cardboard boxes and the corrugated cartons had been imported, apparently at a cost of
15 cents per box and 60 cents per carton. Joseph found that he had about 50,000 boxes
and 4,000 cartons on hand. He made a note to check about potential local suppliers for
these items, since he believed it would be difficult to get foreign exchange entitlements
for paper supplies. The local sales representative of the petroleum firm told him not to
worry about continuing availability of paraffin or bottled gas. His firm had supplied fuel
to Kengolia’s armed forces for several years, and he had been assured of ample foreign
exchange to import any and all petroleum products. Although Joseph saw that he
started with 80 sacks of paraffin on hand, he was happy to know that supplies could be
replenished, albeit for cash, when needed.

The results of the first few days

Joseph was pleasantly surprised at the bustle of activity which resulted after he told
Mary Y. to “get on with it”. He had told the 15 women that they would be paid Sh.7 per
day, a fairly standard wage for unskilled labour in Capital City, and that they must be at
the factory promptly at 8 a.m. and not leave before 4 p.m. Although the women tended
to become somewhat specialized, nearly all could do any job if someone was late or
absent, which happened often. Only Mary Y. was allowed to light the gas burners,
however, and the jobs of carrying empty frames into the pouring room and bringing out
the sometimes hot full frames were relegated to the less-experienced and younger
women. One job which Joseph asked Mary about rarely seemed to get done. That was
scraping up the wax which spilled on the benches and the floor. She explained the
matter in the following terms.

“One time, several years ago, the boss experienced with coloured candles. By adding
some colour in the mix, we could scrape up and remelt almost all the wax from the
benches and the floor. The colour would hide the dirt. However, the coloured candles
could only be sold at a lower price (Joseph recognized the figure she gave as about 10%
below the previous price of white candles), and yet they cost more, since the cost of the
colour was extra. So the boss quit making coloured candles, and we only scrape off and
reuse the wax which sticks to the moulds, or occasionally some very clean wax from the
benches. The rest of the spills we get busy and clean up when it gets dangerous and
slippery”.
From the first day’s operations, Joseph had kept records. He could only estimate how
much paraffin had been caked in the two drums on the first day, and how much gas
remained in the two gas cylinders which had been hooked up when he arrived. He
found out quickly that it took only about two days to empty a full gas cylinder in normal
operation, and that refills cost Sh-55 each from his friendly petroleum supplier. Exhibit 3
shows a sample of the records Joseph wrote down as they occurred.

Although it seem to him that the women worked steadily, and at as fast a pace as was
safe, considering the bustle of movement back and forth through the doorway of the
pouring room, one afternoon he was surprised to have Mary tell him. “our old boss used
to insist that we must get 11 turns (full cycles of filling and emptying the 48 candle
moulds) per day, but we finally convinced him that 10 turns was all he could reasonably
expect. Don’t you think that is enough?” All Joseph could think of to say at the time was,
“You all seem to be working very hard, considering the conditions”.

Planning - for the future :

Joseph recognized that while UCC was working through its starting inventory of raw
materials he was building up cash from sales, and that he would have no difficulty in
meeting his first payroll at the end of the month, or even of buying new stocks of
paraffin. He was anxious, however, to determine what his profits would be, since he
would eventually be evaluated on how well he managed this business. He realized that
a normal operation would have to pay his own salary of Sh. 1,600 per month, as well as
some overheads such as rent, insurance, electricity, telephone and the like, all of which
were somewhat in abeyance for the moment. He wondered whether he should plan
some capital expenditures, and whether the idea of depreciation on capital assets, even
though they had not been paid for by his Government, might have some relevance in
determining whether he was running a profitable business.

Finally, he wondered how he should take into account the underlying requirement,
which he knew ran through all KIDB operations, that businesses should serve all the
people of Kengolia. As the manager of the only candle factory in the country, did he
have any special responsibility to assure even distribution throughout the land?
Exhibit 3 : Sample of Joseph Ziggundu’s records

Beginning inventory of raw materials and supplies :

- Paraffin hardended in drums

(estimated) ……………………………………… 150 kg

- Paraffin in storeroom ………………………….. 80 bags (40 kg each)

- Cotton thread in storeroom ………………….. 200 spools (1 kg each)

- Candle boxes (hold 6 candles)

(approximately) ……………………………… 50,000

- Candle cartons (hold 12 boxes)

(approximately) ……………………………… 4,000

- Cylinders of bottled gas …………………….. 2 (partly used)

Comment : Condition of boxes and cartons on bottom of stack is uncertain ; may have
water damage.

Daily records :

Date Item Amount Comment

Mon., Began operations

16 Oct. Paraffin issued
from storeroom 4 bags
Cotton thread
issued 6 spools
Sales 16 boxes at Sold at retail
Sh. 4.50 each to workmen and
friends of Mary Y.
who dropped in

Cartons of Most of last

finished candles “turn” from
at 4 p.m 19 cartons moulds, several
hundred candles,
on benches
awaiting finishing
and packing
Date Item Amount Comment

Tues., Paraffin issued 6 bags

17 Oct. Threads issued 9 spools
Sales 19 cartons Customers
at Sh. 32.40 started coming
at 10 a.m. Sold
cartons finished
yesterday.

12 boxes at Perhaps should

Sh. 4.50 cease retail
sales – dishonesty
and confusion ?

Purchased 1 gas
cylinder to replace
one which went
empty at 1 p.m. Sh. 55 paid
cartons of
finished candles
at 4 p.m. 37 cartons

Wed., Paraffin issued 7 bags

18 Oct. Thread issued 8 spools
Sales 40 cartons Refused many
retail sales
requests

Purchases : 1 gas Sh-55 paid

Cartons of
finished candles
at 4 p.m. 45 cartons

Thurs., Paraffin issued 4 bags Rained three

19 Oct. Thread issued 2 spools hours; curtailed
Sales 28 cartons operations and
Cartons of discouraged
finished candles sales.
at 4 p.m. 60 cartons

Fri., Paraffin issued 7 bags

20 Oct. Thread issued 9 spools
Sales 75 cartons
Purchases : 1 gas Sh. 55 paid
Cartons of
finished candles
at 4 p.m. 46 cartons
Sat., (Decided to take physical inventory again)
21 Oct.,
(a.m.)

- Paraffin hardended in drums

(estimate) ……………………………………… 180 kg

- Paraffin in storeroom ………………………... 52 bags

- Thread in storeroom ………………………… 164 spools

- Boxes (approximately) ……………………… 47000

- Cartons (approximately) …………………… 3800

- Candles awaiting finishing and packing …. 743