Faculty of Business, Economics & Accounting

Department of Business Studies

HELP Bachelor of Business (Hons) Year 1 HELP Bachelor of Management (Hons) Year 1

HELP Bachelor of Economics (Hons) Year 1

CASE STUDIES

Semester 3, 2014

Subject: MGT 101 Principles of Management

Subject Lecturer/ Tutor: Puan Norzan Abdullah

CASE STUDIES FOR GROUP PRESENTATIONS) CASE STUDY 1: FASTER FOOD AT THE CHEESECAKE FACTORY The name says it all, Cheesecake Factory. Who would not want to go somewhere where the main export is cheesecake? When you think of a factory, you think of a large room filled with lots of equipment and employees all with very specific duties. The Cheesecake factory is no different. The restaurant is set up to run just like a factory using classical approaches of organization. The case in point is that the Cheesecake factory is a very successful business, constantly growing. Everything about it is large, from the portions to the amount of employees working for them. The reason for their success is due to their high expectations of workers, their managerial set up to ensure customer satisfaction, and their ability to combine several aspects of organizational structure with technology effectively. Even though the Cheesecake Factory might seem as though it runs like a well-oiled machine, there are still areas of improvement when it comes to communication. The Cheesecake Factory has very high expectations for their workers. They spend a lot of time and money training them. The firm spends an average of $2,000 on training per hourly worker each year. Everyone within the organization benefits from training and development initiatives. Servers get two weeks of on-the-job training. Candidates vying for a managerial position receive 12-week development courses. Even dishwashers are included in training initiatives. They want standardization but not on the level that employees are easily replaceable so they create an environment where employees want to keep their jobs. They are able to pay employees top dollar because they do not spend money on constantly replacing and training new employees. Cheesecake Factory employees receive above-industry-average pay and a benefits package that includes health insuranceeven for hourly workers. General managers, who run all aspects of a restaurant, receive a new BMW on their first day on the job. Salaries for general managers can be in the six-figure range, according from $150,000 to $200,000, by some accounts. This sounds like the perfect place to work but there is always room for improvement to make sure that the employees are able to keep an open flow of communication not only with each other but with other franchises and corporate. This way, if there are any concerns within a particular field that cannot be settled by managers, they can be addressed by the management. After all, it was the vice president of performance and development, Chuck Wensing that said, One of our biggest challenges is the notion of how to get big, but remain small. My recommendation for this would be to hold quarterly and annual events that allow the executives to mingle with the employees so that they may hear their thoughts and opinions in person. It would allow for idea sharing between franchises and offer more training that can lead to higher pay or recognition. This would also help to bolster employee morale and overall performance. Another thing the Cheesecake Factory does that works well is create a simple managerial set up that follows the principles of organizational structure. There is unity of command among the employees, meaning that employees receive orders regarding a particular task from only one supervisor. This way you will not have the kitchen managers telling the host

what to do. The Cheesecake factory has several different managerial positions. There is, a restaurant manager, (responsible for all the front-of-the house functions) a production supervisor, (responsible for all production activity) a kitchen manager, (responsible for overseeing the operations, and running the shift of an assigned work group within the kitchen), and a quality assurance supervisor (who is responsible for the activities involved in assuring the quality of all products produced in a shift). All of these managers work harmoniously to ensure customer satisfaction. The only thing I recommend is that since the employees and managers work in shifts that the employees work at least one shift with each manager. This way they know the manager, feel comfortable with them, and know what they expect. One employee who typically works the day shift with one manager might have to work evening one night with a different manager, which can cause some anxiety. Switching off the managers can also help decide which employees work well with which managers. The last thing I believe makes the Cheesecake Factory successful is its ability to combine several classical approaches of management. The cheesecake factory uses division of labor, and span of control to keep production flowing. For example, there are kitchen managers that only serve for the chefs, then there are oversee the host. They have modernized the ability to stay organized with new technology, using computerized systems that route customer orders to seven different cooking stations, each station staffed by two chefs. They also, envision a future day when ProHost32[their current computer system] might contribute dynamic wait estimates and additional actionable data related to labor flow and other aspects of guest experience, such as the time between the clearing of the dessert dishes and the presentation of the check. Keeping up with technology is a great way the factory can stay at the top of the food service chain. The factory divides its labour up so that they have expediters, managers, waiters, hostess, chefs, etc, each play a key role, one that only they can do dividing specialized tasks to specific people. Several other food chains try to follow these organizational structures but are unable to be as successful as the cheesecake factory. What I would recommend to the Cheesecake Factory is to the guests know how things work, this way if a guest gets upset about something, they can direct it to the correct person rather than taking up the wrong persons time. The other recommendation I would have is to keep the customer involved at all times, it can be confusing to come into a restaurant and see so many people running around. Let them know up front that their waiter may change during the course of their meal due to shift changes so that it is less unexpected. The Cheesecake Factory is an everyday growing business. New locations are popping up everywhere. They can afford to continue to expand because of their customer satisfaction that ensures return visitors. They ensure this through high expectations of workers, their managerial set up to ensure customer satisfaction, and their ability to combine several aspects of organizational structure with technology effectively. As knowledge of communication and technology grow, I can only assume the Cheesecake factory will grow with them. QUESTIONS

1. Identify and explain the relevance of Scientific management in the Cheesecake Factory. Provide examples.

2. Identify and explain the relevance of Administrative management in the Cheesecake

Factory. Provide examples.

3. Identify and explain the relevance of Bureaucratic management in the Cheesecake Factory. Provide examples.

CASE STUDY 2 - MERGER Peter Lundgren poured his fifth cup of coffee down the drain and checked his watch. More caffeine was just going to make matters worst at this point. He needed to be calm for the meeting with Ashton if they were going to reach any sort of agreement at all. Stanley Ashton and Peter Lundgren were trying something new by serving as co-CEOs of Arlington Inc., which resulted as a merger of Arlington Oil with Dunsford Petroleum Co. The merger, announced as a marriage of equals, created a corporation with nearly $40 billion in assets better able to compete with huge corporations in the rough-and-tumble oil industry. It was expected that the merger would result in significant cost savings in refining, marketing and transportation, as well as more capital to fund worldwide exploration and production. The media and stock market had both responded favourably, but the euphoria had faded and the hard work of integrating the two organisations had begun. The most difficult aspect was proving to be merging two culture and creating an effective human resource integration strategy. It had been widely reported in the press that cost savings would come from operating deficiencies rather than widespread job cuts, but that told only part of the story. The merger had left Arlington with two managers for almost every available position at the upper and middle management levels. The very top levels had been selected prior to the merger, with Lundgren and Ashton negotiating so that each could keep his most trusted executives on board. Ashton had brought the director of human resource, head of global marketing, and chief information officer from Dunsford. Lundgren kept his chief operating officer, chief financial officer, and head of R & D. Both Lundgren and Ashton knew they were facing some tough decisions concerning the other positions. Of course, the managers knew it too, and several of the best from both companies had already taken other jobs because of the uncertainty. Lundgren has always preferred making personnel decisions based largely on gut instinct. He likes to talk to people face-to-face, look them in the eye, find out what they care about and what their personal and professional goals are, and decided if they would be a good fit with the organisation. He is naturally biased toward some of his own executives because he knows them, but he is more willing to negotiate just as he did with the top slots. In fact, there are several managers he would just as soon get rid of, and this presents a good opportunity. Ashton, on the other hand, except for the few high-level positions he has argued for, does not seem to have much of a personal interest in whether Dunsford managers stay on. He wants to put all executives through an outside evaluation and appraisal process that includes personality testing, IQ and emotional intelligence testing, and all sorts of other tests, in addition to looking at their performance and business results. Lundgren realizes an objective process would take the bias and emotion out of the decision making, but he is concerned that Ashtons plan will take too long

and that the best executives will leave the company rather than go through all the testing and evaluation. In addition, it has been his experience that the best managers are those who just feel right for the company, rather than those who look good on paper. He can feel a headache coming on as the time for meeting Ashton nears. QUESTIONS 1. Identify and describe the type of decision (programmed or non-programmed) faced by the

Lundgren and Ashton. 2. Based on the information in the case study, explain Lundgrens dominant decision

making style according to the personal decision framework Cite evidences from the case study.

3. Based on the information in the case study, explain Ashtons dominant decision making style according to the personal decision framework Cite evidences from the case study.

CASE STUDY 3 - H.I.D. Dave Collins, president of H.I.D., sat down at the conference table with his management team members Karen Setz, Tony Briggs, Dave King, and Art Johnson. H.I.D. owns 10 Holiday Inns in Georgia, 8 hotels of different types in Canada, and one property in the Carribean. It also owns two Quality Inns in Georgia. Dave Collins and his managers got together to define their mission and goals and to set strategic plans. As they began their strategic planning session, the consultant they had hired suggested that each describe what he or she wanted for ten years how many hotels it should own, where to locate them, and who the target market was. Another question he asked them to consider was what the driving force of the company should be that is, the single characteristic that would separate H.I.D. from other companies. The team members wrote their answers on flip charts, and the consultant summarised the results. Dave Collinss goal included 50 hotels in 10 years, with the umber increasing to 26 or 27 in 5 years. All the other members saw no more than 20 hotels in 10 years and a maximum of 15 or 16 within 5 years. Clearly, there was disagreement among the top managers about long-term goals and the desirable growth rate. With the consultants direction, the team members began to critique their growth targets. Dave King, director of operations and development, We just cant build that many hotels in that time period, certainly not given our current staffing, or any reasonable staffing we could afford. I dont see how we could achieve that goal. Art Johnson, the accountant agreed. Karen Setz then asked, Could we build them all in Georgia? You know weve centred on the medium-priced hotel in smaller towns now, such as Jacksonville, or add another to the one we have in Atlanta? Dave Collins responded, We have an opportunity out in California, we may have one in New Jersey, and we are looking at the possibility of going to Jacksonville. The consultant attempted to refocus the discussion. Well, how does this all fit with your mission? Where are you willing to locate geographically? Most of your operation is in Georgia. Can you adequately support a national building effort? Tony Briggs responded, Well, you know we have always looked at the smaller town hotels as being our niche, although we deviated from that for the hotel in Atlanta. But we generally stay in smaller towns where we dont have much competition. Now we are talking about an expensive hotel in California.

Dave Collins suggested, Maybe its time we changed our target market, changed our pricing strategy, and went for larger hotels in urban areas across the whole country. Maybe we need to change a lot of factors about our company. QUESTIONS

1. Define mission and describe H.I.D.s mission at present. How may this mission change over time?

2. In your view, what will H.I.D.s mission, strategic goals, and strategic plans likely to be at the end of this planning session? Justify your answer,.

3. Explain the goal-setting behaviour used in H.I.D. to reach agreement among H.I.D.s managers.

CASE STUDY4 LEADERS HIP AT McDONALDs Do you want fries with that? This ubiquitous phrase is heard by nearly 50million people in more than 119 countries each day. McDonalds has achieved the status of one of the most recognizable franchises across the globe through a mixture of successful marketing, consistent service and products, and strong leadership. Ray Kroc was a visionary leader. He saw the potential for standardizing an efficient, systematized restaurant model and replicating it across the country. He began as the distributor of the mechanized milk shake maker, the Multimixer. At the McDonalds hamburger stand in California, Kroc saw a restaurant that used not one, but eight Multimixers and served a record number of people in the shortest amount of time imaginable. He proposed the idea of opening up several such restaurants to the brothers Dick and Mac McDonald, and in 1955, Kroc opened the first McDonalds in Des Plaines, Illinois. The rest is history. Not only was Kroc a visionary leader who inspired others with his charisma, he possessed a strong initiating structure. He is quoted as saying, If youve got time to lean, youve got time to clean, which highlights his goal-oriented and task-focused leadership style that still exists today. McDonalds global business strategy ___ Plan to Win ___ encompasses five areas: place, products, price, promotion, and people. Part of the commitment to people is providing employees the resources to get their jobs done. This includes adequately staffing restaurants to allow for a good customer experience as well as to provide schedule flexibility, providing employees the proper tools to serve the customer, and training employees in job skills including customer service, responsibility, teamwork, time management, problem-solving, and communication at Hamburger University. Such a philosophy follows the Path-Goal theory of increasing employee motivation through clarifying desired behaviours and company goals. This philosophy has proven successful in producing future leadership for McDonalds, as over 40% of its top management started as crew members, including CEO Jim Skinner. Another side of McDonalds Plan to Win embodies the more people-oriented facet of consideration-based leadership. McDonalds espouses a commitment to investing in growth and job satisfaction of its employees so they can realize their full potential. This includes a commitment to an inclusive, supportive workplace environment that recognizes and rewards good performance. Managers are encouraged to treat employees as they would want to be treated, act as coaches as opposed to policemen, promote teamwork, and communication openly, listening to understand, and valuing others opinions. Like many successful organizations, McDonalds has found great success by promoting corporate leadership style that combines a high initiating structure and high consideration. Such a combination will allow them to weather the next 50 years of selling Big Macs.

QUESTIONS

1. Where does leadership at McDonalds fall on the Leadership Grid? Explain your answer. 2. As a leader in the first years of McDonalds, what types of power did Ray Kroc have? 3. What are two leader styles in the Path-Goal theory that may have been used by

McDonalds to motivate employees job satisfaction? CASE STUDY 5 - MOTIVATION AT TESCO Tesco is Britains largest retailer. It has over 2,200 stores. As well as food, it also sells other products such as insurance and banking. To support growth, Tesco needs staff who are motivated. It achieves this by increasing their knowledge, skills and job satisfaction through training and reward systems. A motivated person is keen to do a job well. Staff can be motivated through pay but also through praise. Responsibility and opportunities for challenge or promotion also help. Motivated staff are less likely to make mistakes. They are more efficient and so save the business money. They are also likely to be loyal and have less time off. Tesco knows its growth depends on two groups customers and staff. Its staff are supported to find a good work/life balance through flexible working. There are also rewards such as health or gym benefits and share options. Staff support each other in teams. Frederick Winslow Taylor thought people worked just for money. His view of Scientific Management set out a way of working where people were paid by how much they produced. This helped to increase production. It did not help to keep staff happy. Tescos Employee Reward Programme is similar in some respects to Taylors Scientific Management. Good pay is just one motivating factor. Tesco also looks after its peoples well-being with non-financial benefits. These include good working conditions and training and development. Every year Tesco staff complete a survey called Viewpoint to give their views on their jobs and the company. The results help Tesco to make sure it offers the right things to keep staff motivated. Benefits for staff include: Lifestyle break 4-12 weeks off work and the job back at the end; Career break 6 months to 5 years away with the right of return; and Pension scheme offering long term benefits. In the early 1930s theorist Elton Mayo suggested that motivation came from a number of factors. These include: good communication and teamwork; showing interest in others and letting them make decisions; looking after the well-being of others; and providing work that is interesting and non-repetitive. His research showed that boredom led to less

motivation. Staff who were given responsibility and freedom to choose were more motivated. Tesco uses clear communication channels to ensure that this happens. It also promotes motivation through training and development. All staff have access to both the training they need to do their job and leadership training. Each person has a Personal Development Plan to help them reach their potential. Maslow developed his hierarchy of needs. He said staff are motivated at five levels of need: to survive; to be safe; to be in a social group; to gain respect; and to reach career goals. Herzberg in his Two-Factor theory said that two sets of factors were central to motivation: Satisfiers ( promotion and responsibility); and Hygiene factors such as decent working conditions that caused dissatisfaction when they were absent but would not by themselves motivate people. Tesco recognizes good work and the value of its staff and provides good working conditions. Tesco motivates its staff in many ways, financially and non-financially. Good pay and conditions satisfy basic needs. Reviews and Personal Development Plans ensure that its staff are able to make progress and achieve higher goals. This benefits both staff and Tesco. QUESTIONS

1. Describe what is meant by motivation. What types of non-financial reward might a company use to motivate employees?

2. Describe the effects of an unmotivated workforce on a company. How does Tesco benefit from ensuring that its workforce is motivated?

3. Evaluate the two motivational theories in the study, demonstrating how each relates to Tesco.

CASE STUDY 6 - HUNTER WORTH Christmas was fast approaching. Just a short while ago, Chuck Moore, national sales manager for Hunter-Worth, a New York-based multi-national toy manufacturer, was confident the coming holiday was going to be one of the companys best in years. At a recent toy expo, Hunter-Worth unveiled a new interactive plush toy that was cuddly, high-tech, and tied into a major holiday motion picture expected to be a smash hit. Chuck had thought the toy would do well, but frankly, the level of interest took him by surprise. The buyers at the toy fair raved, and the subsequent preorder volume was encouraging. It had all looked so promising, but now he could not shake a sense of impending doom. The problem in a nutshell was that the Mexican subsidiary that manufactured the toy could not seem to meet the dateline. Not only were all the shipments late so far, but they fell well short of the quantities ordered. Chuck decided to e-mail Vicente Ruiz, the plant manager, about the situation before he found himself in the middle of the Christmas season with parents clamouring for a toy they could not lay his hands on. In a thoroughly professional e-mail that started with a friendly Dear Vicente, Chuck inquired about the status of the latest order, asked for a production schedule for pending orders, and

requested a specific explanation as to why the Mexican plant seemed to be having such difficulty shipping orders out on time. The reply appeared within the hour, but to his utter astonishment, it was a short message from Vicentes secretary. She acknowledged the receipt of the e-mail and assured him the Mexican plant would be shipping the order, already a week late, in the next ten days. Thats it, Chuck fumed. Time to take this to Sato. He prefaced his original e-mail and the secretarys reply with a terse note expressing his growing concern over the availability of what could well be this seasons must-have toy. Just what do I have to do to light a fire under Vicente? he wrote. He then forwarded it all to his supervisor and friend, Michael Sato, the executive vice president for sales and marketing. Next thing he knew, he was on the phone with Vicente --- and the plant manager was furious. Signor Moore, how dare you go over my head and say such things about me to my boss? he sputtered, sounding both angry and slightly panicked. It seemed that Michael had forwarded Chucks e-mail to Hunter-Worths vice president of operations, who sent it on to the Mexicans subsidiarys president. That turn of events was unfortunate, but Chuck was not feeling all that apologetic. You could have prevented all this if youd just answered the questions I e-mailed you last week, he pointed out. I deserved more than a formal letter and --- and from your secretary, no less. My secretary always answers my e-mails, replied Vicente. She figures that if the problem is really urgent, you would pick up the phone and talk to me directly. Contrary to what you guys north of the border might think, we do take datelines seriously here. Theres only so much we can do with the supply problems were having, but I doubt youre interested in hearing about those. And Vicente hung up the phone without waiting for a response. Chuck was confused and disheartened. Things were only getting worse. How could he turn the situation around! QUESTIONS

1. In your opinion, is the communication in Hunter-Worth effective or ineffective? Explain. 2. Based on the above case study, identify and explain three barriers that existed in

Hunter-Worth. 3. Provide two (2) proposals toward improving the communication problems in the

company. Explain the reasons for your proposals.