A Report on
‘Iggy’s Bread of the World’
Submitted to Prof. Madhushri Shrivastava In partial fulfillment of the requirement of the Written Analysis and Communication Course By Neha Bhomia Section B 2013PGP248
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3 March, 2014
LETTER OF TRANSMITTAL
Mrs. Madhushri Shrivastava Professor, WAC IIM Indore 3rd March 2014
Analysis of the case ‘Iggy’s Bread of the World’ Dear Madam, As per your instructions following the preliminary discussions in the class, I am submitting a report on ‘Iggy’s Bread of the World’ for the partial fulfillment of the course ‘Written Analysis and Communication as a part of the MBA Curriculum. The case analyzes the dilemma faced by Ivanovics while deciding whether to accept McRae’s proposal of higher compensation and become peaceful with the existing work culture. The following pages will give a detailed situation analysis, options available, recommendations and the action plan.
Sincerely, Neha Bhomia 2013PGP248 Indian Institute of Management, Indore
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EXECUTIVE SUMMARY
The case study ‘Iggy’s Bread of the World' , talks about a couple who incorporated their love and passion for baking into a business. Igor and Ludmilla created a warm and productive culture for employees and influenced them to have positive and optimistic attitude at work. The popularity of their bread reached skies and the huge demand soon became difficult to handle. McRae was hired to handle the business aspect of bakery who in turn developed a new management team affecting the work culture adversely. Now with McRae demanding huge compensation, prerogative lies with Igor wherein he needs to decide whether to retain him by accepting his proposal or to let him go keeping the organizations work culture in mind. It is recommended that considering the vision of company, Igor should ask McRae to leave the firm and entrust the responsibility of firm to Nikole.
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TABLE OF CONTENTS Situation Analysis ................................................................................................................................................. 1 Problem Statement............................................................................................................................................... 2 Options ...................................................................................................................................................................... 2 Criteria for Evaluation ......................................................................................................................................... 2 Evaluation of Options .......................................................................................................................................... 2 Recommendation .................................................................................................................................................. 4 Action Plan............................................................................................................................................................... 4 Contingency Plan................................................................................................................................................... 4
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SITUATION ANALYSIS
Igor Ivanovic and his wife Ludmilla decided to start a bakery for a living and thus shaping their dreams and passion. Initially they started with Pain’ the Avignon bakery along with two other partners, but due to rift between the Igor and partners regarding the use of organic foods, Ivanovics decided to sell their share of business and scout a new venue for opening a bakery. And thus after discovering a potential market they set up Iggy’s Bread of the World in Boston with a threefold objective; firstly to provide superior quality bread, secondly to involve employees in the process and making it healthy and fun business, and thirdly to create long-lasting relationship with customers. The couple put in all their efforts towards the growth and success of this bakery. They brought foreign labour experts in baking, state of art oven and used high-quality organic ingredients. Iggy’s became very popular with the employees due to their involvement in every aspect of business and friendly atmosphere. Soon Iggy was supplying quality bread to most esteemed accounts in Boston. The growing business and the family became difficult to manage together and thus Ludmilla became less involved in the process. Nikola, Igor’s younger brother started looking after the finances of the business. Even though they did not advertise, the quality of their bread was talk-of-the-town and within a year their business had grown to such an extent that they were unable to take on any new accounts. With a fear of losing out on business opportunity, and thus to cope up with increasing administrative burden they moved to Cambridge, took strategic decisions to buy seven new delivery vans, increase kitchen by 15, and took loans for the first time. The overwhelming situation compelled them to hire Matthew McRae as COO. McRae took the charge and started assembling his own management team which steered the company away from the original culture of community to a corporate culture leading to employee discontentment. On Igor’s confrontation regarding some hiring decisions, McRae presented a vindictive letter of resignation which he later retracted with demands of increase in his compensation.
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PROBLEM STATEMENT What decision should Ivanovics take regarding the proposal put forth by McRae demanding stunning compensation?
OPTIONS 1. Accept the proposal put forth by McRae 2. Reject the proposal and hire new management team 3. Reject the proposal and continue with existing organization structure 4. Negotiate and retain McRae – Ask McRae to revise the proposal and arrive at a mutual understanding after negotiating raise and bonus 5. Reject the proposal and let Nikola create a support team
CRITERIA FOR EVALUATION 1. Impact on Business operations 2. Impact on Iggy’s reputation 3. Impact on Work culture and employees
EVALUATION OF OPTIONS
Accept the proposal: A business needs experienced professionals to run smoothly and efficiently. The strategic decisions for the expansion of company needed a mind like McRae who also promised increasing the profit levels of the company. But McRae persona did not match the employee friendly culture of Iggy’s. McRae is demanding higher compensation for essentially lowering the morale and increasing tension throughout the organization. And thus the proposal should not be accepted. Reject the proposal and hire new management team: To find someone passionate about the business and who will be successfully be able to absorb the work culture of Iggy’s is a challenging task. Also whether the new management team will be able to mix with the employee and fuel the growth of the organization is uncertain.
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Reject the proposal and continue with existing organization structure: Igor experience is in baking and training the employees to bake breads but he is not experienced when it comes to managing the business. Initially also his wife was the one who looked the operations and younger brother Nikola looked after finances. A simple ‘baker’ like Igor might not be able to retain the business profitable in the long run. Revise the proposal: McRae was hired taking into consideration his prior experience, remarkable knowledge, strategic thinking and passion for the company. Though he took many decisions without consulting to Igor but his objective was Company’s profitability. Finding someone wh o is dedicated and attached to business like him is a rigorous task. Also compensation and bonus is prerequisite for employee satisfaction. His demand is mammoth and thus his raise and bonus must be discussed and a consensus should be reached on the same. But again his working might not be in sync with other employee contentment. Reject the proposal and let Nikola create a support team: Nikola was acting as General Manager at Iggy’s. He was involved with the firm from the time it was instated and was well aware of the working culture. He played an important role in keeping the firm on the path of growth. Nikola is a credible individual and with more support from other employees and few experience new hires, he will be able to manage the business, and also take the company in the direction they envisioned. He has the experience to find the right people in financial, logistical and strategic roles who can provide expert opinions while maintaining vision of the company.
Options Criteria
Accept the proposal
Reject and continue with existing process X
Negotiate and retain
Reject and let Nikola create support team
✓
✓
X
Reject and hire and new management team Maybe Maybe
Business impact Company’s reputation Work Culture and Employees
✓
✓
X
✓
X
Maybe
✓
X
✓
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RECOMMENDATION I recommend that Igor should let go McRae and entrust the responsibility of firm to Nikola with his decision to hire professionals who could support him throughout the process of company’s growth.
ACTION PLAN The following steps should be taken by Igor:
Reject McRae proposal of higher compensation and ask him to resign again. Ask Nikola to take on higher responsibility while keeping the work culture intact as it was before McRae was hired Along with Ludmilla and Nikola conduct interview to hire professionals and consultants who will help sustain the profitability and assist in business expansion plans.
CONTINGENCY PLAN If Nikola feels that he cannot take the additional responsibility due to the burden of his already existing work, Ivanovics can go ahead to create a support team by hiring new employees as well as including internal employees that could guide the decisions on financing, operations and expansion plans. Ivanovics must continue to instill the unique culture they created in order to meet the vision and objective of the firm.
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