Case Study 1 by Group 8 Section A

8/4/2019 Case Study 1 by Group 8 Section A

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Mrs. Fields Cookies was started in 1977 by DebbiSivyer and Randy Fields

The first store was opened in Pal Alto, California

After reaching the expected profits, the Companystarted their second store in San Francisco

By 1981, the Company had 14 stores.

Company Overview


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In 1982, the Company started expanding internationally

The Company targeted Japan, Hong Kong and Australia

In Japan it expanded without a partner

Sampling is encouraged in International Stores

Sampling in a tray is implemented rather than in a pilewhich worked out effectively

International Expansion


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By 1988, the Company has 416 CookieOutlets, 122 LPB Stores, 129 Jessica sCookies and 2 Jenessa s retail gift stores

The Company employed 8000 people, 140 instaff positions

The Company expanded to 25 states in 5countries on 4 continents

Contd..


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Debbi did not want to delegate authoritybut later had to.No formal business school training.Work and fun

Store designs closely controlledAgainst franchising

Management Philosophy


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Decided to go public, pay off thebanks and use the rest of the moneyto finance growth.Unsuccessful, therefore Randyannounced that future growth wouldbe funded by cash flow and debt.All the expenses incurred in a storewere charged to the store but nocorporate expenses were allocated tothe stores.

Financing Strategy


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Organization: Less hierarchy makingcommunication easy.

Staff: store clerks, management and districtand regional managers

Competitive salary and monthly bonus

Corporate: Store controllers reporting toDebbi summarizing sales, monitored unusualconditions, problems and trends as well asunder ages and overages


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Objective: To put as much decision making andintelligence into the store level PC as necessary sothat the mangers were left free to sell cookies.

The staff as small as possible as this kept jobsinteresting and helped in implementing decisionsfaster.

Saw information systems as a way to accommodategrowth without having to expand the employeeworkforce

MIS


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Communication system at theorganisation was very organised andpersonal. The store managers did not

simply read memos from Debbi, butoften personally heard her voice.

The system helped Debbi project herinfluence into more stores than shecould ever reach effectively without it.

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Mrs. Fields Holdings Inc. acquired fromPepsiCo a 119 store French bakery/sandwichchain, La Petite Boulangerie (LPB) in April 1987.

It presented an opportunity to carve out aniche, and the size of operation constituted aninvestment barrier to competition.

Mrs. Fields had earlier acquired another retailcookie chain, the Famous Chocolate Chip

Company, in 1984.

Diversification


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The expanded store strategy was anentirely new concept and hence requireddesigning new combination stores.

By the end all the diversification andexpansion had precipitated changes in

organisational and financial structure.

Control over the stores became a problem.

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IS Implementation


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CUSTOMER

People who work in stores (direct customerof work system)

People who buy cookies (indirect customersince they receive benefits of increasedcustomer service)


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PRODUCT

Consistent Quality on repetitiveoperational decisions.

Effective communication betweenheadquarters and stores.

Attention to customer rather than dataprocessing details.


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INFORMATION

Quantity of Each saleStore InventorySales HistoryMessages to and from headquarters

TECHNOLOGY

e-mail, v-mailTelecommunications

PARTICIPANTS

Store ManagersHeadquarters Staff


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Input data (work day characteristics) entered bymanager such as: Weather Conditions Day of the week Holiday / Working

Output :

projection for the sales the product mixResults : Got better with time resulted in profitability.

REAL TIME PRODUCTION ADVISE


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The IS picked Mrs Fields kind of peopleManager takes interview, enters to the systemand IS compares with previous recruits.

IS narrows the pool of potential candidates.Promising applicants recalled for computerbased interviews.

IS picked suitable candidates from whichmanagers could appoint or override thecomputers decision.

RECRUITMENT ADVICE


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Information System highly influential inscheduling the day to day activities ofemployees.

Work hours Work load projectionsThe IS grew into an expert system forlabour scheduling and aiding the staff torun the storeEven though Debby wasn t presentpersonally but the IS made her virtualpresence count.

LABOUR SCHEDULER


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Single database used for every store.Proper trackking of financialactivities.Daily sales management.Supplies management.

Inventory management.Idea about store making profits/loss.

REAL TIME FINANCING ACTIVITIES


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Managers can get in touch with Debbywhenever required.

E-mail and V-mail both served thepurpose.

Influence of Debby easily felt evenwhen she was not around.

IS ACTING AS COMMUNICATION MEDIA


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Issues inImplementation


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- Pre-requisite of Japanese partner.

- Cookies as per Japanese Palate.

- Positive Meeting.

- Started their stores on their own.

ENTRY IN JAPAN


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- Sampling when Business is down inHong Kong.

- Pile arrangement did not createinterest.

- Change in the arrangement ofCookies.

- Increase in number of passerbywilling to sample.

SAMPLING ISSUE


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- Second store of Mrs. Fields new issues.

- Debbi resisted delegating authority.

- Management Theory-It is wrong not todelegate authority to those who work for

you

- Debbi agreed so that business could grow.

DELEGATION IN AUTHORITY


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The Fields had resisted franchisingits stores due to following reason:

1. Against company s ideals - Noprofit motive.

2. Difficulty in carrying out the feelgood feeling of the product. 3. Controling store designs.

Franchising


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Regarded each outlet as an extensionof her original Palto Alto store.

She used to make efforts bycombining intense work withspontaneous wackiness.

Loss of touch with the customers.

Loss of direct control


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Initial public offering on the LondonStock Exchange in 1986 wasunsuccessful.

Presence of just one store in London.

English institutional buyers doubtedthe capabalities of the company.

Other Issues


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Acquisition of La Petite Boulangerie

Mrs. Fields Holdings Inc. acquired LaPetite Boulangerie (LPB) from PepsiCo

in April 1987.Reducing subsidiaries administrativestaff.

ISSUES ENCOUNTERED DURINGEXPANSION.


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The acquisition added real estate tothe company s portfolio with upscaleand sit down cafes combined with thefeel good element of Mrs. Fields . The focus of the company s Expandedstore strategy needed rationalizationof the real estate portfolio of thecompany.

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The real estate write down of $19.9million - considered as R&D expense.

The overall revenue generated by thecompany was nullified by the expensesincurred and was reported as recordlosses in 1988.

Contd..


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There was abundance of information whichwas required to be properly managed andmodified to address the issues.

As Mr. Fields always mentioned of twomasters to be served by MIS in thecompany

1) Control2) Information

MIS related issues


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The company experienced systemfailures.

One of the remaining two would act asa backup for critical functions.

PCs that had not transmitted theirdaily work would store the information

locally and transmit later.

Hardware issues


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THANK YOU !!!

Case Study 1 by Group 8 Section A

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Transcript of Case Study 1 by Group 8 Section A