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Transcript of General Management
AEREN FOUNDATION’S Maharashtra Govt. Reg. No.: F-11724
MARKS : 80 COURSE : GDM
SUB: GENERAL MANAGEMENT
N. B.: 1) Attempt any Four Cases 2) All cases carries equal marks.
Case: 1
TRI – STATE TELEPHONE
John Godwin, Chief executive of Tri – State Telephone, leaned back in his
chair and looked at the ceiling. How was he ever going to get out of this
mess? At last night’s public hearing. 150 angry customers had marched in to
protest Tri – State’s latest rate request. After the rancorous shouting was
over and the acrimonious signs put away, the protesters had presented state
regulators with some sophisticated economic analyses in support of their
case. Additionally, there were a number of emotional appeals from elderly
customers who regarded phone service as their lifeline to the outside world.
Tri – State Telephone operated in three states and had sales of over $3 billion.
During the last five years, the company had experienced a tremendous
amount of change. In 1984, the AT & T divestiture sent shock waves
throughout the industry, and Tri-State Telephone had felt the effects, as
pricing for long distance telephone service changed dramatically. The
Federal Communications Commission instituted a charge to the effect that
customers should have “access” to long – distance companies whether or not
they were in the habit of making long distance calls. Consumer groups,
including the Consumer Federation of America and the Congress of Consumer
Organizations, had joined the protest, increasing their attention on the
industry and intervening in regulatory proceedings wherever possible. The
AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL
FCC was considering deregulating as much of the industry as possible, and
congress was looking over the commissioner’s shoulder. Meanwhile, the
Department of Justice and Judge Harold Greene both of whom were
responsible for monitoring the AT & T divestiture) continued to argue about
what business companies like Tri – State should be engaged in.
In addition, technology was changing rapidly. Cellular telephones,
primarily used in cars, were now hand-held and could be substituted for
standard phones. Digital technology was going forward, leading to lower
casts and requiring companies like Tri – state to invest to keep up with the
state of the art. Meanwhile, rate increases negotiated during the inflationary
1970s were keeping earnings higher than regulators would authorize. New
“Intelligent” terminals and software developments gave rise to new uses for
the phone network (such as using the phone for an a arm system), but as
long as customers paid one flat fee, the phone company could not benefit
from these new services.
Godwin’s company has recently proposed a new pricing system
whereby users of local telephone services would simply pay for what they
used rather than a monthly flat fee. All of the senior managers were
convinced that the plan was fairer, even though some groups who used the
phone with netable frequency (like real estate agents) would pay more. It
would give the company an incentive to bring new services to their
customers, and customers would be able to choose which ones to buy. None
of them had anticipated the hue and cry from the very customers who would
save money under the new plan. For instance, Godwin’s studies showed that
the elderly were very light users of local service and could save as much as
20 percent under the new plan.
After the debacle at the hearing the previous night, Godwin was unsure
how to proceed. If he backed off the new pricing plan, he would have to find
a different way to meet the challenges of the future – may be even different
businesses to augment company income. Alternatively, the company could
not stand the negative press from a protracted battle, even though Godwin
thought that the regulators were favorably disposed toward his plan. In fact,
Godwin himself believed the company should help its customers rather than
fight with them.
Questions:
1. Who are the stakeholders in this case?
2. Which stakeholders are most important?
3. What are the critical trends in Tri – State’s environment?
4. Why do you think Tri – State’s customers are so upset?
5. What should John Godwin do?
CASE NO. 2
FRESH IDEAS AT FRESH FIELDS
Fresh Fields may be a supermarket, but what it’s super at selling is its image:
“Good for you foods.”
A New Age grocery store, Fresh Fields falls somewhere between a
health food store and a traditional supermarket. It is not merely a health food
store, because it carries a wider variety of foods including fresh pasta, baked
goods, and seafood and deli selections. What distinguishes Fresh Fields from
supermarkets lies in what is absent from the shelves, rather than what is
present, for Fresh Fields shoppers will not find foods containing lots of
preservatives and artificial flavorings, such as Jell – O and Oreos, that they
can purchase at other supermarkets. What Fresh Fields offers is “ organic
and conventional produce, meats, seafood, dairy products, baked goods from
an in – store bakery, deli items gourmet and vegetarian prepared foods, a
wide array of cheese, a full grocery department, an extensive selection of
supplements, skin enriching cosmetics and natural health care products and
environmentally friendly household goods.”
The arrival of Fresh Fields coincides with that of the New Age, health –
conscious trend of the 1990s, and the company has not hesitated in taking
advantage of consumers’ new whopping preferences resulting from the trend.
According to a 1992 survey by Health Focus, a Pennsylvania – based research
firm, 90 percent of shoppers say that health has become a factor in
determining the food they buy. This perhaps accounts for why many
Americans are willing to pay up to 20 percent more for natural foods.
Actually, the Fresh Fields premium tends to hover closer to 5 percent, and
when in season, Fresh Field’s locally grown organic produce can even cost
less than produce sold at other supermarkets.
A team of entrepreneurs began Fresh Fields in 1991. The team
included 33 year old Mark Ordan, former Goldman Sachs investment banker
as CEO and President, 75 years Old Leo Kahn, founder of Staples, the
prosperous office – supply sores, as chairman and 44 year old Jack Murphy,
former manager of the Heartland supermarket chain in New England, as Chief
operating officer.
Within the first 19 months, five Fresh Fields locations opened in
Maryland and Virginia. Expanding into Pennsylvania and Illinois, by mid –
1994 Fresh Fields had opened a total of 14 stores in the four states, with
more in the planning stages.
Much of Fresh Field’s success can be attributed to the fact that the
company offers only the freshest produce, often from local growers. The
company screens growers to find those who use natural methods of pest
management and apply the least amount of agricultural chemicals. In
addition, Fresh Fields seeks meat and poultry from farms, not factories, to
avoid the growth – promoting drugs often used. Fresh Fields also makes an
effort to get to know the people who catch the seafood, and seeks out fish
caught in deep, clean waters, not from coastal waters threatened by
pollution.
According to Kahn, though, the key to Fresh Field’s success lies in
pleasing the customer. “Everybody says the same things please the
customer – but while everybody says it, not too many practice it. The
customer is smarter than all of us. Here we’re building an organization that
zeroes in and keeps customer satisfaction in mind.”
Instilled in Fresh Fields is a warm, friendly caring culture that begins
with Kahn and travels through to all stakeholders: employees, suppliers,
customers, community members. Whereas at other stores, such as Wal –
Mart, there is a single, symbolic greeter by the door, every employee at Fresh
Field is a sort of “greeter”, and he or she looks up, smiles and says “hello” to
shoppers as they pass by. Within the company, there are no employees,
there are only “associates” many of whom Kahn knows by name.
Much of what Fresh Fields is about is relationship building. The warm
relationship between the company and associates lies at the heart. From
there, associates build relationship with suppliers to add the personal touch
that is integral to the Fresh Fields quality image.
As shoppers walk through the stores, numerous samples are offered.
“Originally, I bought organic produce and spent $25 to $30 every week or
two.” Says Merri Mukai, a homemaker in Annandale, Virginia. “Then I tried
the baked goods and upped my spending by $60. Now I’m buying meats and
eyeing the fish. They’ve definitely got me hooked.”
Says Fresh Fields, “We guarantee your satisfaction unconditionally. You
can consider our guarantee as an opportunity to be adventurous and to try
new products, without risk. If for any reason you are less than completely
satisfied with something you purchase at Fresh Fields, we will cheerfully offer
you a full refund.”
Questions:
1. What economic and social factors should Fresh Fields managers
watch?
2. Suppose you manage a local supermarket and Fresh Fields
comes to town. How would you reinvent your organization to
meet the challenges posed by Fresh Fields?
Case: 3
RESPONDING TO ALLEGATIONS OF RACISM :
FLAGSTAR AND THE PLEDG
The 1990 s have witnessed an increased emphasis on valuing diversity. With
both the marketplace and the workforce becoming more and more diverse,
many managers have redesigned their company’s cultures to reflect and
encourage multiculturalism. Changing a company’s culture, however, is often
more difficult than managers might first believe. At Denny”s for example,
promoting multiculturalism required a reworking of its corporate culture from
top to bottom.
In the early 1990s, Denny’s found itself the target of numerous
allegations of racism, by both customers and employees. Black customers
asserted that they were not receiving the same treatment at Denny’s as
white customers. Some complained that they were either forced to wait for
their food longer than white customers or denied service entirely, others said
that they were forced to pre-pay for their meals while white customers in the
restaurant were not. There were also allegations that Denny’s restaurants
would close if there were too many black customers. In addition, Denny’s
was accused of discriminatory hiring practices as well as preventing blacks
and other minorities from reaching management and franchise positions.
None of this garnered much attention, however, until a suit was filed on
March 24, 1993, by a group of minority customers in San Jose, California, who
made the all – too – familiar allegation that Denny’s had required cover
charges and pre-payment of meals from minority customers, but not from
white customers.
In response to these charges, Denny’s parent company, Flagstar,
formally apologized to the customers, and Flagstar CEO Jerry Richardson
dropped the cover charge and pre-payment policies and explained that they
had been intended to prevent late night “ dine – and – dash” theft and that
any discriminatory implementation of them was in direct violation of
corporate policies. Richardson admitted, however, that he had been unaware
that the cover charge and pre-payment policies even existed within the
company. Furthermore, Richardson began talks with civil rights groups such
as the NAACP. Flagstar also signed a consent decree issued by the Justice
Department that required spot testing of Denny’s restaurants for
discriminatory practices as well as an anti-discrimination training program for
all Denny’s staffers. “Our company does not tolerate discrimination of any
kind,” Richardson assured all, and his actions seemed to support his words.
Then, on May 24, 1993, six black Secret Service agents filed suit
against Denny’s for allegedly having denied them service at a Denny’s in
Annapolis, Maryland. The six men claimed that while they received
deliberately slow service, their white counter parts were served in a timely
fashion. “Hearing the allegations made yesterday by Six African – American
Secret Service agents on national television that they were not treated fairly
at Denny’s was a painful experience for our company,” Richardson admitted.
The highly publicized suit served as a catalyst that set off a whirlwind of
changes throughout Flagstar. In a late May Richardson issued an internal
memo that marked the beginning of Richardson’s pledge to change. “I am
distressed that some people in our company haven’t gotten the message that
we will not tolerate unfair treatment of customers,” he wrote. “ The past year
has been a trying experience, particularly for many of our African – American
employees who are embarrassed by what happened. This is my personal
pledge to them to restore their pride in Denny’s.
Richardson stopped promising change and started creating it. On July
1, 1993, Flagstar reached an historic agreement with the NAACP. The
agreement, which was the most far-reaching arrangement the civil – rights
organization had ever signed, represented a breakthrough in relations
between minorities and businesses. The plan targeted several specific
problem areas within Flagstar. For example, of Flagstar’s more than 120,000
workers, 20 percent were black, but only 4.4. Percent of its managers were
black. Under the agreement, at least 12 percent of Flagstar’s managers will
be black by the 2000. The company also wanted to increase the number of
black-owned franchises; only one of Denny’s 405 franchises was owned by a
black person as of 1993, but Flagstar planned to have at least 53 black-owned
franchises by 1997. Flagstar also agreed to direct more marketing funds
toward minority advertising and to begin purchasing more goods and services
from minority – owned businesses. In addition, Flagstar promised to appoint
at least one minority to its board of directors. In the entire plan will direct
more than one billion dollars in jobs and economic benefits to minority
workers and companies by the year 2000.
Richardson also undertook efforts to restore Denny”s reputation as well
as his own. At the forefront of his efforts was “The Pledge”. “The Pledge”
was the name given to a 60 – second TV spot, which aired in 41 television
markets and on the Black Entertainment Television network during a two-
week period in June 1993. In it, Jerry Richardson and a representative sample
of Flagstar’s 46,000 employees endorsed a solemn pledge to treat customers
with “respect, diginity, and fairness.” “The whole idea for the ‘pledge’ started
with our desire to express support for our own employees.” Explained David
Hurwitt, Flagstar’s senior vice president of marketing. “These people have
been very much under the gun. We chose television for this special campaign
because we felt it was important to show people exactly who the Denny’s
employees are”. Overall, response to “The Pledge” was favourable. “Our
phone has been ringing off the hook since Denny’s aired this ad,” said W.
Gregory Wims, president of the NAACP in Rockville, Maryland, the largest
branch in the Washington, D.C.area. “About 90 percent of our members
approve of the commercials and the steps Denny’s has been taking to
improve relations with people of color.
Experience, however, had taught Flagstar that mere policy statements
do little good in the absence of training and monitoring. With this in mind,
Flagstar reaffirmed its commitment to its agreement with the Department of
Justice by steping up its multicultural training programs and agreeing to allow
the NAACP to conduct its own inspection of Denny’s restaurants. Denny’s
also set up a hot line for employees to use to report possible instances of
discrimination. In addition, Flagstar made significant management changes
during the summer of 1993 by installing three executives considered
particularly sensitive to diversity in the workplace: Norman Hill, Joe Russell,
and Ron Petty. Russell was appointed head of the diversity training program,
and Hill came on board to oversee field hiring. “ There are companies that
bury their heads in the sand and say, I’m going to conduct my business the
same way I’ve always conducted my business,” said Petty. “ And then there
are enlightened companies that say, “There are opportunities outside of the
way we’ve normally done business.”
The steps taken by Flagstar have been significant, not only because of
the model the company has set for other companies, but also because of
Flagstar’s own holdings, including 530 Hardee’s fast food units, 1,400
Denny’s family restaurants, 200 Quincy’s steak houses, 120 El Pollo Loco
outlets and more than 2,000 Canteen Corp. Food and Recreation Service
accounts. The community’s response to the allegations against Denny’s
confirm that multiculturalism can no longer be ignored.
Questions :
1. How would you describe the organizational culture at Flagstar ?
2. How does Flagstar deal with diversity ?
3. What challenges could Flagstar face in its near future ?
Case: 4
DISNEY’S DESIGN
The Walt Disney Company is heralded as the world’s largest entertainment
company. It has earned this astounding reputation through tight control over
the entire operation : control over the open – ended brainstorming that takes
place 24 hours a day ; control over the engineers who construct the fabulous
theme – park rides; control over the animators who create and design
beloved characters and adventurous scenarios ; and control over the talent
that brings the many concepts and characters to life. Although control
pervades the company, it is not too strong a grip. Employees in each
department are well aware of their objectives and the parameters established
to meet those objectives. But in conjunction with the pre-determined
responsibilities, managers at Disney encourage independent and innovative
thinking.
People at the company have adopted the phrase “Dream as a Team” as
a reminder that whimsical thoughts, adventurous ideas, and all – out
dreaming are at the core of the company philosophy. The over all control
over each department is tempered by this concept. Disney managers strive
to empower their employees by leaving room for their creative juices to flow.
In fact, managers at Disney do more than encourage innovation. They
demand it. Projects assigned to the staff “ imaginers” seem impossible at
first glance. At Disney, doing the seemingly impossible is part of what
innovation means. Teams of imaginers gather together in a brainstorming
session known as the “Blue Sky” phase. Under the “Blue Sky”, an uninhibited
exchange of wild, ludicrous, outrageous ideas, both “ good” and “ bad”,
continues until solutions are found and the impossible is done. By demanding
so much of their employees, Disney managers effectively drive their
employees to be creative.
Current Disney leader Michael Eisner has established the “Dream as a
Team” concept. Eisner realized that managers at Disney needed to let their
employees brainstorm and create with support. As Disney president Frank
Weds says, “If a good idea is there, you know it, you feel it, you do it, no
matter where it comes from.”
Questions :
1. What environmental factors influenced management style at
Disney ?
2. What kind(s) of organizational structure seem to be consistent
with “Dream as a Team” ?
3. How and where might the informal organization be a real asset
at
Disney ?
Case: 5
“THAT’S NOT MY JOB” – LEARNING DELEGATION AT
CIN-MADE
When Robert Frey purchased Cin – Made in 1984, the company was near ruin.
The Cincinnati, Ohi-based manufacturer of paper packaging had not altered
its product line in 20 years. Labor costs had hit the ceiling, while profits were
falling through the floor. A solid quarter of the company’s shipments were
late and absenteeism was high. Management and workers were at each
other’s throats.
Ten years later, Cin – Made is producing a new assortment of highly
differentiated composite cans, and pre-tax profits have increased more than
five times. The Cin – Made workforce is both flexible and deeply committed
to the success of the company. On-time delivery of products has reached 98
percent, and absenteeism has virtually disappeared. There are even plans to
form two spin – off companies to be owned and operated by Cin-Made
employees. In fact, at the one day “Future of the American Workforce”
conference held in July 1993, Cin-Made was recognized by President Clinton
as one of the best – run companies in the United States.
“ How did we achieve this startling turnaround ?” mused Frey.
“Employee empowerment is one part of the answer. Profit sharing is
another.”
In the late spring of 1986, relations between management and labor
had reached rock bottom. Having recently suffered a pay cut, employees at
Cin- Made came to work each day, performed the duties required of their
particular positions, and returned home-nothing more. Frey could see that his
company was suffering. “To survive we needed to stop being worthy
adversaries and start being worthy partners,” he realized. Toward this end,
Frey decided to call a meeting with the union. He offered to restore worker
pay to its previous level by the end of the year. On top of that, he offered
something no one expected : a 15 percent share of Cin-Made’s pre-tax profits.
“ I do not choose to own a company that has an adversarial relationship with
its employees.” Frey proclaimed at the meeting. He therefore proposed a
new arrangement that would encourage a collaborative employee-
management relationship “Employee participation will play an essential role
in management.”
Managers within the company were among the first people to oppose
Frey’s new idea of employee involvement. “My three managers felt they
were paid to be worthy adversaries of the unions.” Frey recalled. It’s what
they’d been trained for. It’s what made them good managers. Moreover,
they were not used to participation in any form, certainly not in decision
making.” The workers also resisted the idea of extending themselves beyond
the written requirements of their jobs. “ (Employees) wanted generous
wages and benefits, of course, but they did not want to take responsibility for
anything more than doing their own jobs the way they had always done
them,” Frey noted. Employees were therefore skeptical of Frey’s overtures
toward “employee participation.” “We thought he was trying to rip us off and
shaft us,” explained Ocelia Williams, one of many Cin-Made employees who
distrusted Frey’s plans.
Frey, however, did not give up, and he eventually convinced the union
to agree to his terms. “ I wouldn’t take no for an answer,” he asserted.
“Once I had made my two grand pronouncements, I was determined to press
ahead and make them come true.” But still ahead lay the considerable
challenge of convincing employees to take charge :
I made people meet with me, then instead
Of telling them what to do, I asked them.
They resisted.
“ How can we cut the waste on his run ?” I’d
say, or “How are we going to allocate the
overtime on this order ?”
“That’s not my job,” they’d say.
“But I need your input,” I’d say. “How in the
World can we have participative management
If you won’t participate?
“I don’t know,” they’d say. “Because that’s
not my job either. That’s your job. ?”
Gradually, Frey made progress. Managers began sharing more
information with employees. Frey was able slowly to expand the
responsibilities workers would carry. Managers who were unable to work with
employees left, and union relations began to improve. Empowerment began
to happen. By 1993, Cin Made employees were taking responsibility for
numerous tasks. Williams, for example, used to operate a tin-slitting machine
on the company’s factory floor. She still runs that same machine, but now is
also responsible for ordering almost $ 100,000 in supplies.
Williams is just one example of how job roles and duties have been
redefined throughout Cin-Made. Joyce Bell, president of the local union, still
runs the punch press she always has, but now also serves as Cin- Made’s
corporate safety director. The company’s scheduling team, composed of one
manager and five lead workers from various plant areas, is charged with
setting hours, designating layoffs, and deciding when temporary help is
needed. The hiring review team, staffed by three hourly employees and two
managers, is responsible for interviewing applicants and deciding whom to
hire. An employee committee performs both short – and long – term planning
of labor, materials, equipment, production runs, packing, and delivery.
Employees even meet daily in order to set their own production schedules.
“We empower employees to make decisions, not just have input,” Frey
remarked. “I just coach.”
Under Frey’s new management regime, company secrets have virtually
disappeared. All Cin-Made employees, from entry-level employees all the
way to the top, take part in running the company. In fact, Frey has delegated
so much of the company’s operations to its workers that he now feels little in
the dark. “I now know very little about what’s going on, on a day-to-day
basis,” he confessed.
At Cin-Made, empowerment and delegation are more than mere
buzzwords; they are the way of doing business – good business. “We, as
workers, have a lot of opportunities,” said Williams. “If we want to take
leadership, it’s offered to us.”
Questions:
1. How were principles of delegation and decentralization
incorporated into Cine – Made operations?
2. What are the sources and uses of power at Cin – Made?
3. What were some of the barriers to delegation and
empowerment at Cin –Made?
4. What lessons about management in a rapidly changing
marketplace can be learned from the experience of
Cin – Made?
CASE NO. 6
HIGH-TECH ANSWERS TO DISTRIBUTION
PROBLEMS AT ROLLERBLADE
When a manger finds that demand exceeds inventory, the answer lies in
making more goods. When a manager finds that inventory exceeds demand,
the answer lies in making fewer goods. But what if a company management
finds that they just do not know which situation applies?
This is the situation that recently confronted management at
Rollerblade, the popular skate manufacturer based in Minnetonka, Minnesota.
Rollerblade has been one of the leading firms in the fast growing high
performance roller skate marketplace, it matters a great deal for Rollerblade
managers whether demand and inventory are in balance, or not.
Rollerblade was in a bind. The product literally could not be shipped
out the door. The managers found that workers were not able to ship
products because, as a result of poor storage structures, they could not find
the products. Once they were found, overcrowded aisles, in addition to other
space constraints, still prevented efficient shipping because the workers could
barely manage to get the products out the door. “We were out of control
because we didn’t know how to use space and didn’t have enough of it,” said
Ian Ellis, director for facilities and safety. “Basically, there was no more
useable space left in the warehouse, a severe backlog of customer orders,
and picking errors were clearly in the unacceptable range,” added Ram
Krishnan, Principal of NRM Systems, based in St. Paul, Minnesota.
The answer for Rollerblade was found in technology. High-tech
companies have introduced a collection of computer simulations, ranging in
cost roughly from $10,000 to $30,000, that assist managers in generating
effective facility designs. With the help of layout Master IV simulation
software, developed by NRM, Rollerblade Management was able to implement
a new distribution design. As a result of the distribution improvement,
Rollerblade was able to increase the number of customer orders processed
daily from140 to 410 and eliminate order backlog. “Now we have a different
business,” says Ellis. “The new layout has taken us from being in a crunch, to
being able to plan.
Questions: 1. With retailers as their primary customers, what customer
competitive imperatives could be affected by Rollerblade’s inventory problems?
2. How appropriate might a just – in – time inventory system be for a product such as roller skates?”
3. What opportunities are there fore Rollerblade managers to see themselves? as selling services, instead of simply roller skates ?