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6.7 Cases and Problems

Learning on the Web (AACSB)

Mission “Improvisable”

A mission statement tells customers, employees, and stakeholders why the organization exists—its purpose. It can be concise, like the one from Mary Kay Cosmetics—“To enrich the lives of women around the world”—or it can be more detailed, such as the following from FedEx:

“FedEx is committed to our People-Service-Profit Philosophy. We will produce outstanding financial returns by providing totally reliable, competitively superior, global, air-ground transportation of high-priority goods and documents that require rapid, time-certain delivery.”

Mission statements are typically constructed to communicate several pieces of information: what the company strives to accomplish, what it’s known for, and how it serves its customers (and perhaps its employees and shareholders as well). Here are a few examples:

America West: America West will support and grow its market position as a low-cost, full-service nationwide airline. It will be known for its focus on customer service and its high-performance culture. America West is committed to sustaining financial strength and profitability, thereby providing stability for its employees and shareholder value for its owners.

Saturn: Our mission is to earn the loyalty of Saturn owners and grow our family by developing and marketing U.S.-manufactured vehicles that are world leaders in quality, cost, and customer enthusiasm through the integration of people, technology, and business systems.

American Diabetes Association: The mission of the organization is to prevent and cure diabetes, and to improve the lives of all people affected by diabetes. To fulfill this mission, the American Diabetes Association funds research, publishes scientific findings, provides information and other services to people with diabetes, their families, health care professionals and the public and advocates for scientific research and for the rights of people with diabetes.

Hershey Foods: Our mission is to be a focused food company in North America and selected international markets and a leader in every aspect of our business. Our goal is to enhance our #1 position in the North American confectionery market, be the leader in U.S. chocolate-related grocery products, and to build leadership positions in selected international markets.

Assignment

Create hypothetical mission statements for each of these four companies: Outback Steakhouse, Tesoro, Got Junk?, and Staples. To find descriptions of all four, go to the Web site for each of the companies: http://www.outbacksteakhouse.com, http://www.tesorocorp.com, http://www.1800gotjunk.com/us_en, http://www.staples.com.

In composing your four mission statements, follow the format suggested previously: each statement should be about two or three sentences long and should provide several pieces of information—what the company strives to accomplish, what it’s known for, and how it serves its customers (and perhaps its employees and shareholders, too).

One last thing: your statements should be originals, not duplicates of the companies’ official statements.

Career Opportunities

To Manage or Not to Manage?

Are you interested in a career that pays well and offers power, prestige, and a feeling of accomplishment? A career in management may be for you, but be forewarned that there’s a downside: you have to make tough decisions, other people will be after your job, and it can be lonely at the top. To find out more about the pros and cons of a management career, go to http://management.about.com/cs/yourself/a/ManagementForMe.htm to link to the About.com Web site and read the article “Is Management for Me?” Then, answer the following questions, being sure to provide an explanation for each of your answers:

  • Which of the pros of being a manager are important to you? Which are not?
  • Which of the cons might discourage you from pursuing a management career? Which might not?
  • Considering balance, does a career in management appeal to you? Why, or why not?

Ethics Angle (AACSB)

Sugarcoating the News at Krispy Kreme

According to Krispy Kreme’s “Code of Ethics for Chief Executive and Senior Financial Officers,” the company’s top executives are expected to practice and promote honest, ethical conduct. They’re also responsible for the health and overall performance of the company. Recently, however, things have gone wrong in the top echelons of the doughnut-shop chain.

First, a little background. Founded as one small doughnut shop in Winston-Salem, North Carolina, in 1937, the brand became increasingly popular over the next six decades, taking off in the 1980s and 1990s. By 2003, Krispy Kreme (which went public in 2000) was selling more than a billion doughnuts a year. That’s when things started to go stale. (For more details on the company’s ups and downs, go to http://www.detnews.com/2005/business/0501/22/business-66936.htm to link to the Detroit News Web site and read the article “Krispy Kreme: The Rise, Fall, Rise and Fall of a Southern Icon.”)

When sales first started to decline in the fall of 2003, CEO Scott Livengood offered a variety of creative explanations, mostly for the benefit of anxious investors: high gas prices discouraged people from driving to doughnut shops; supermarket sales were down because grocery stores were losing business to Wal-Mart; people were cutting back on carbohydrates because of the popular Atkins diet. Unfortunately, other (more plausible) explanations were beginning to surface. To complete this exercise, you’ll need to find out what they were. Go to both http://www.businessweek.com/magazine/toc/05_02/B39150502manager.htm and http://www.usatoday.com/money/industries/food/2005-08-10-krispy-kreme_x.htm?POE=MONISVA to link to the BusinessWeek and USA Today Web sites, and then read these articles: “The Best and Worst Managers of the Year” and “Krispy Kreme Must Restate Earnings by $25.6M.” Once you have a good grasp of the company’s problems and you’ve read about the people who are responsible, answer the following questions, being sure to provide explanations for your responses:

  1. What factors contributed to the problems at Krispy Kreme? What happened to the company? Who was hurt?
  2. Should the firm’s problems be attributed to poor management, unethical behavior on the part of the executive team, or both?
  3. Judging from the lessons of the Krispy Kreme case, how important do you think it is for a firm to have strong top-down leadership?
  4. If you’d been the CEO of Krispy Kreme, what things would you have done differently?

Team-Building Skills (AACSB)

Assessing Your School’s Strengths, Weaknesses, Opportunities, and Threats

How can you and other members of your team help your college or university assess its fit with its environment? For one thing, you could apply SWOT analysis.

Begin by picking a member of the team to write down ideas generated by the group using brainstorming (a technique used to generate ideas that have no right or wrong answers and are accepted by the group without criticism). Pick a different member of the team to complete the SWOT analysis in the format listed below. Then follow these steps:

  1. Using brainstorming, identify internal factors, either positive or negative, that are unique to your school. List all items suggested by group members on a large sheet of paper or a blackboard.
  2. Based on your analysis of the items listed (in step 1), the team should select at least five factors that are strengths and five that are weaknesses.
  3. List the selected strengths and weaknesses in the SWOT analysis form.
  4. Using brainstorming, identify external factors that could influence your school in either a positive or a negative way. Include all items suggested by group members. List the ideas on a large sheet of paper or a blackboard.
  5. Based on your analysis of the items listed (in step 4), select at least five opportunities that could benefit your school and five threats to its success.
  6. List the selected opportunities and threats in the SWOT analysis form.
  7. Analyze the selected opportunities and strengths (which have been listed on the SWOT analysis form) and identify several ways in which your school can take advantage of opportunities by making the most of its strengths. Record your suggestions on the SWOT analysis form.
  8. Analyze the selected threats and weaknesses (which have been listed on the SWOT analysis form) and identify several ways in which your school can protect itself from threats and overcome its weaknesses. Record your suggestions on the SWOT analysis form.

    Team Members
    STRENGTHS WEAKNESSES
    OPPORTUNITIES THREATS
    • Ways in which your school can take advantage of opportunities by making the most of its strengths
    • Ways in which your school can protect itself from threats and overcome its weaknesses

The Global View (AACSB)

The Art and Science of Organizational Evolution

A company’s organizational structure defines the formal relationships among the people in it. It also reflects an arrangement of positions that’s most appropriate for the company at a specific point in time. As the business expands or changes directions, its organizational structure should also change.

With these principles in mind, let’s trace the evolution of a hypothetical company called High-Tech Cases, which manufactures and sells DVD cases made out of a special high-tech material.

Stage 1

When the company was founded, it operated under a functional organizational structure, with the following key positions and reporting relationships:

Position Reports to
CEO No one
VP of Sales and Marketing CEO
VP of Production CEO
VP of Finance CEO
Director of Sales VP Sales/Marketing
Director of Advertising VP Sales/Marketing
Director of Operations VP Production
Director of Engineering VP Production
Treasurer VP Finance
Controller VP Finance

In addition, two salespeople reported to the director of sales. The directors of advertising, operations, and engineering each had two assistants, as did the treasurer and the controller.

Stage 2

About three years after the company’s founding, the management team decided to expand sales into Asia. The director of sales retained responsibility for the United States, while a new director was added for Asia. The two salespeople who had been with the company since its beginning focused on U.S. sales, and two new salespeople were hired to handle Asia. No other position changed, and for the next two years, all personnel worked out of the U.S. headquarters.

Stage 3

By the beginning of the fifth year of operations, Asian and U.S. sales were about the same. At this point, management decided to set up two separate operations—one in the United States and the other in China. A senior VP was hired to head each operation—senior VP of U.S. operations and senior VP of Asian operations. Both would report to the CEO. Each operational unit would run its own production facilities, arrange its own financing, and be in charge of its sales and marketing activities. As a result, High-Tech Cases almost doubled in size, but management believed that the restructuring was appropriate and would increase profits in the long run.

Assignment

Create three organization charts—one for each stage in High-Tech’s development. Ideally, you should make your charts with some type of organization-chart software. To use the tool available in Microsoft Word, go to the Standard Toolbar in Microsoft Word, click on “Help,” and type in organization chart. Then select “create a chart.”