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Govt. Regd No. GBBSD/234
National Academy of Management Studies
ISO 9001: 2008 certified first international B School
MARKS : 80 COURSE : N. B.: 1) 2) Attempt any Four Questions All questions 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
Godwin’s studies showed that 2 . In addition.service changed dramatically. None of them had anticipated the hue and cry from the very customers who would save money under the new plan. Consumer groups. including the Consumer Federation of America and the Congress of Consumer Organizations. 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). Meanwhile. increasing their attention on the industry and intervening in regulatory proceedings wherever possible. but as long as customers paid one flat fee. All of the senior managers were convinced that the plan was fairer. leading to lower casts and requiring companies like Tri – state to invest to keep up with the state of the art. and congress was looking over the commissioner’s shoulder. For instance. 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. technology was changing rapidly. the phone company could not benefit from these new services. and customers would be able to choose which ones to buy. rate increases negotiated during the inflationary 1970s were keeping earnings higher than regulators would authorize. even though some groups who used the phone with netable frequency (like real estate agents) would pay more. 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. Meanwhile. primarily used in cars. The FCC was considering deregulating as much of the industry as possible. had joined the protest. Cellular telephones. 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. It would give the company an incentive to bring new services to their customers. were now hand-held and could be substituted for standard phones. Digital technology was going forward.
2. Questions: 1. the company could not stand the negative press from a protracted battle. If he backed off the new pricing plan.the elderly were very light users of local service and could save as much as 20 percent under the new plan. Who are the stakeholders in this case? Which stakeholders are most important? What are the critical trends in Tri – State’s environment? Why do you think Tri – State’s customers are so upset? What should John Godwin do? 3 . even though Godwin thought that the regulators were favorably disposed toward his plan. Alternatively. 4. he would have to find a different way to meet the challenges of the future – may be even different businesses to augment company income. After the debacle at the hearing the previous night. In fact. 3. Godwin was unsure how to proceed. Godwin himself believed the company should help its customers rather than fight with them. 5.
Fresh Field’s locally grown organic produce can even cost less than produce sold at other supermarkets. but what it’s super at selling is its image: “Good for you foods. and seafood and deli selections. The team included 33 year old Mark Ordan. a full grocery department. baked goods. seafood. founder of Staples. meats. rather than what is present. According to a 1992 survey by Health Focus. 90 percent of shoppers say that health has become a factor in determining the food they buy. the Fresh Fields premium tends to hover closer to 5 percent. What distinguishes Fresh Fields from supermarkets lies in what is absent from the shelves. a Pennsylvania – based research firm. such as Jell – O and Oreos. This perhaps accounts for why many Americans are willing to pay up to 20 percent more for natural foods. What Fresh Fields offers is “ organic and conventional produce.CASE NO. for Fresh Fields shoppers will not find foods containing lots of preservatives and artificial flavorings. skin enriching cosmetics and natural health care products and environmentally friendly household goods. It is not merely a health food store. an extensive selection of supplements. and the company has not hesitated in taking advantage of consumers’ new whopping preferences resulting from the trend. a wide array of cheese. 2 FRESH IDEAS AT FRESH FIELDS Fresh Fields may be a supermarket. A team of entrepreneurs began Fresh Fields in 1991. because it carries a wider variety of foods including fresh pasta. dairy products.” A New Age grocery store. health – conscious trend of the 1990s. Actually.” The arrival of Fresh Fields coincides with that of the New Age. and when in season. 75 years Old Leo Kahn. the prosperous office – supply 4 . that they can purchase at other supermarkets. baked goods from an in – store bakery. deli items gourmet and vegetarian prepared foods. Fresh Fields falls somewhere between a health food store and a traditional supermarket. former Goldman Sachs investment banker as CEO and President.
suppliers. there is a single. smiles and says “hello” to shoppers as they pass by. to avoid the growth – promoting drugs often used. “Everybody says the same things please the customer – but while everybody says it. In addition. 5 . Much of Fresh Field’s success can be attributed to the fact that the company offers only the freshest produce. community members. customers. clean waters. as Chief operating officer. and seeks out fish caught in deep. often from local growers. Within the company. the key to Fresh Field’s success lies in pleasing the customer. five Fresh Fields locations opened in Maryland and Virginia. The company screens growers to find those who use natural methods of pest management and apply the least amount of agricultural chemicals. not factories. not from coastal waters threatened by pollution. with more in the planning stages. The warm relationship between the company and associates lies at the heart. Within the first 19 months. not too many practice it. former manager of the Heartland supermarket chain in New England. as chairman and 44 year old Jack Murphy. though. there are no employees. every employee at Fresh Field is a sort of “greeter”. Fresh Fields seeks meat and poultry from farms. there are only “associates” many of whom Kahn knows by name. The customer is smarter than all of us. symbolic greeter by the door. Expanding into Pennsylvania and Illinois. From there. by mid – 1994 Fresh Fields had opened a total of 14 stores in the four states. and he or she looks up. such as Wal – Mart. friendly caring culture that begins with Kahn and travels through to all stakeholders: employees. Much of what Fresh Fields is about is relationship building.sores.” Instilled in Fresh Fields is a warm. Fresh Fields also makes an effort to get to know the people who catch the seafood. According to Kahn. Here we’re building an organization that zeroes in and keeps customer satisfaction in mind. Whereas at other stores.
2. “Originally. 6 . many managers have redesigned their company’s cultures to reflect and encourage multiculturalism. At Denny”s for example. without risk. Virginia. They’ve definitely got me hooked. we will cheerfully offer you a full refund. You can consider our guarantee as an opportunity to be adventurous and to try new products. promoting multiculturalism required a reworking of its corporate culture from top to bottom. numerous samples are offered. Now I’m buying meats and eyeing the fish. “We guarantee your satisfaction unconditionally. Changing a company’s culture. however. With both the marketplace and the workforce becoming more and more diverse. 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.associates build relationship with suppliers to add the personal touch that is integral to the Fresh Fields quality image. If for any reason you are less than completely satisfied with something you purchase at Fresh Fields. I bought organic produce and spent $25 to $30 every week or two.” Says Merri Mukai. “Then I tried the baked goods and upped my spending by $60. is often more difficult than managers might first believe. a homemaker in Annandale. As shoppers walk through the stores.” Questions: 1.” Says Fresh Fields. What economic and social factors should Fresh Fields managers watch? Suppose you manage a local supermarket and Fresh Fields comes to town.
1993. Furthermore. and his actions seemed to support his words. 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. Maryland. There were also allegations that Denny’s restaurants would close if there were too many black customers. Denny’s parent company. “Our company does not tolerate discrimination of any kind. Flagstar. until a suit was filed on March 24. six black Secret Service agents filed suit against Denny’s for allegedly having denied them service at a Denny’s in Annapolis. but not from white customers. others said that they were forced to pre-pay for their meals while white customers in the restaurant were not. Black customers asserted that they were not receiving the same treatment at Denny’s as white customers. In addition. Richardson admitted. In response to these charges. however. “Hearing the allegations 7 .” Richardson assured all. 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. formally apologized to the customers. 1993. California. by both customers and employees. who made the all – too – familiar allegation that Denny’s had required cover charges and prepayment of meals from minority customers.In the early 1990s. Denny’s found itself the target of numerous allegations of racism. that he had been unaware that the cover charge and prepayment policies even existed within the company. Richardson began talks with civil rights groups such as the NAACP. their white counter parts were served in a timely fashion. The six men claimed that while they received deliberately slow service. Some complained that they were either forced to wait for their food longer than white customers or denied service entirely. Then. on May 24. however. by a group of minority customers in San Jose. 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.
4. but Flagstar planned to have at least 53 black-owned franchises by 1997. 20 percent were black. 1993. Flagstar also agreed to direct more marketing funds toward minority advertising and to begin purchasing more goods and services from minority – owned businesses. In a late May Richardson issued an internal memo that marked the beginning of Richardson’s pledge to change. “The Pledge” was the 8 . On July 1. In addition. Percent of its managers were black. which was the most far-reaching arrangement the civil – rights organization had ever signed. At the forefront of his efforts was “The Pledge”. The agreement. 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. “I am distressed that some people in our company haven’t gotten the message that we will not tolerate unfair treatment of customers. represented a breakthrough in relations between minorities and businesses. Flagstar promised to appoint at least one minority to its board of directors. particularly for many of our African – American employees who are embarrassed by what happened. The highly publicized suit served as a catalyst that set off a whirlwind of changes throughout Flagstar.” he wrote. only one of Denny’s 405 franchises was owned by a black person as of 1993. Flagstar reached an historic agreement with the NAACP. “ The past year has been a trying experience. The plan targeted several specific problem areas within Flagstar. Richardson stopped promising change and started creating it.” Richardson admitted.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. but only 4. This is my personal pledge to them to restore their pride in Denny’s. at least 12 percent of Flagstar’s managers will be black by the 2000.000 workers. of Flagstar’s more than 120. Richardson also undertook efforts to restore Denny”s reputation as well as his own. The company also wanted to increase the number of black-owned franchises. For example. Under the agreement.
diginity.C. had taught Flagstar that mere policy statements do little good in the absence of training and monitoring. “Our phone has been ringing off the hook since Denny’s aired this ad. Flagstar made significant management changes during the summer of 1993 by installing three executives considered particularly sensitive to diversity in the workplace: Norman Hill. and Hill came on board to oversee field hiring. which aired in 41 television markets and on the Black Entertainment Television network during a two-week period in June 1993. In it. Overall.000 employees endorsed a solemn pledge to treat customers with “respect. “ And then there are enlightened companies that say. response to “The Pledge” was favorable. D. I’m going to conduct my business the same way I’ve always conducted my business. president of the NAACP in Rockville.” Explained David Hurwitt. “ There are companies that bury their heads in the sand and say.name given to a 60 – second TV spot. Maryland. Russell was appointed head of the diversity training program. “There are opportunities outside of the way we’ve normally done business. With this in mind. We chose television for this special campaign because we felt it was important to show people exactly who the Denny’s employees are”.area. however. “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. Jerry Richardson and a representative sample of Flagstar’s 46.” “The whole idea for the ‘pledge’ started with our desire to express support for our own employees. Experience. “These people have been very much under the gun. the largest branch in the Washington. Gregory Wims. and Ron Petty. and fairness.” said W. Joe Russell.” 9 . 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. Flagstar’s senior vice president of marketing.” said Petty. In addition.
but also because of Flagstar’s own holdings. 1. Employees in each department are well aware of their objectives and the parameters established to meet those objectives. But in conjunction with the predetermined responsibilities. Food and Recreation Service accounts. including 530 Hardee’s fast food units. control over the animators who create and design beloved characters and adventurous scenarios . How would you describe the organizational culture at Flagstar ? How does Flagstar deal with diversity? 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. 2. The over all control over each department is 10 . it is not too strong a grip.000 Canteen Corp. not only because of the model the company has set for other companies.The steps taken by Flagstar have been significant. managers at Disney encourage independent and innovative thinking. adventurous ideas. Although control pervades the 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 . 120 El Pollo Loco outlets and more than 2. People at the company have adopted the phrase “Dream as a Team” as a reminder that whimsical thoughts. The community’s response to the allegations against Denny’s confirm that multiculturalism can no longer be ignored. Questions : 1. control over the engineers who construct the fabulous theme – park rides. and all – out dreaming are at the core of the company philosophy. and control over the talent that brings the many concepts and characters to life. 3. 200 Quincy’s steak houses.400 Denny’s family restaurants.
They demand it. no matter where it comes from. “If a good idea is there. As Disney president Frank Weds says. Disney managers effectively drive their employees to be creative. you know it. both “ good” and “ bad”. continues until solutions are found and the impossible is done. Projects assigned to the staff “ At Disney. Teams of imaginers gather together in a brainstorming session known as the “Blue Sky” phase. you do it. Current Disney leader Michael Eisner has established the “Dream as a Team” concept. ludicrous. Eisner realized that managers at Disney needed to let their employees brainstorm and create with support. outrageous ideas. Under the “Blue Sky”. managers at Disney do more than encourage innovation. How and where might the informal organization be a real asset at Disney ? 11 . you feel it. Disney managers strive to empower their employees by leaving room for their creative juices to flow. By demanding so much of their employees. 2. In fact. doing the seemingly imaginers” seem impossible at first glance. impossible is part of what innovation means. What environmental factors influenced management style at Disney ? What kind(s) of organizational structure seem to be consistent with “Dream as a Team” ? 3.” Questions : 1. an uninhibited exchange of wild.tempered by this concept.
Ten years later. Cin-Made was recognized by President Clinton as one of the best – run companies in the United States. Profit sharing is another. and absenteeism has virtually disappeared.” he realized. performed the duties required of their particular positions. he offered something no one expected : a 15 percent share of CinMade’s pre-tax profits. and pre-tax profits have increased more than five times. at the one day “Future of the American Workforce” conference held in July 1993. while profits were falling through the floor. On-time delivery of products has reached 98 percent.Made came to work each day. “ How did we achieve this startling turnaround ?” mused Frey. Frey decided to call a meeting with the union. Having recently suffered a pay cut. A solid quarter of the company’s shipments were late and absenteeism was high. He therefore 12 . Cin – Made is producing a new assortment of highly differentiated composite cans. There are even plans to form two spin – off companies to be owned and operated by Cin-Made employees. Labor costs had hit the ceiling. “To survive we needed to stop being worthy adversaries and start being worthy partners. Toward this end.Case: 5 “THAT’S NOT MY JOB” – LEARNING DELEGATION AT CIN-MADE When Robert Frey purchased Cin – Made in 1984. “ I do not choose to own a company that has an adversarial relationship with its employees. The Cincinnati. employees at Cin. Management and workers were at each other’s throats. He offered to restore worker pay to its previous level by the end of the year.” Frey proclaimed at the meeting. The Cin – Made workforce is both flexible and deeply committed to the success of the company. On top of that.” In the late spring of 1986. relations between management and labor had reached rock bottom. “Employee empowerment is one part of the answer. Ohi-based manufacturer of paper packaging had not altered its product line in 20 years. and returned home-nothing more. In fact. the company was near ruin. Frey could see that his company was suffering.
then instead Of telling them what to do. “ How can we cut the waste on his run ?” I’d say.” he asserted.” Managers within the company were among the first people to oppose Frey’s new idea of employee involvement. but they did not want to take responsibility for anything more than doing their own jobs the way they had always done them. It’s what made them good managers.” explained Ocelia Williams. “Once I had made my two grand pronouncements.” Frey recalled. and he eventually convinced the union to agree to his terms. They resisted. I asked them. did not give up.” But still ahead lay the considerable challenge of convincing employees to take charge : I made people meet with me. “ (Employees) wanted generous wages and benefits. or “How are we going to allocate the overtime on this order ?” 13 . certainly not in decision making. Moreover. I was determined to press ahead and make them come true. Employees were therefore skeptical of Frey’s overtures toward “employee participation. “ I wouldn’t take no for an answer. they were not used to participation in any form.” Frey noted.” “We thought he was trying to rip us off and shaft us. “My three managers felt they were paid to be worthy adversaries of the unions. however. Frey. one of many Cin-Made employees who distrusted Frey’s plans.proposed a new arrangement that would encourage a collaborative employeemanagement relationship “Employee participation will play an essential role in management. of course. It’s what they’d been trained for.” The workers also resisted the idea of extending themselves beyond the written requirements of their jobs.
That’s your job. is responsible for interviewing applicants and deciding whom to hire. Williams is just one example of how job roles and duties have been redefined throughout Cin-Made. An employee committee performs both short – and long – term planning of labor. She still runs that same machine.” they’d say.” they’d say. Managers who were unable to work with employees left. ?” Gradually. Cin Made employees were taking responsibility for numerous tasks. still runs the punch press she always has. Empowerment began to happen. Frey was able slowly to expand the responsibilities workers would carry. materials. The hiring review team. The company’s scheduling team. president of the local union. Williams.“That’s not my job. used to operate a tin-slitting machine on the company’s factory floor.” 14 . By 1993. “We empower employees to make decisions. staffed by three hourly employees and two managers. and delivery. composed of one manager and five lead workers from various plant areas. “I just coach. but now also serves as Cin. but now is also responsible for ordering almost $ 100. “Because that’s not my job either.000 in supplies. and deciding when temporary help is needed. “How in the World can we have participative management If you won’t participate? “I don’t know.” Frey remarked. not just have input. Frey made progress. and union relations began to improve. is charged with setting hours. “But I need your input.” I’d say. packing. Joyce Bell.Made’s corporate safety director. Employees even meet daily in order to set their own production schedules. Managers began sharing more information with employees. equipment. designating layoffs. production runs. for example.
from entry-level employees all the way to the top.” Questions: 1. as workers.” he confessed. have a lot of opportunities. “If we want to take leadership. take part in running the company. on a day-to-day basis. company secrets have virtually disappeared. How were principles of delegation and decentralization incorporated into Cine – Made operations? 2. “We. 3.” said Williams. At Cin-Made. In fact.Under Frey’s new management regime. they are the way of doing business – good business. What are the sources and uses of power at Cin – Made? What were some of the barriers to delegation and empowerment at Cin –Made? 4. All Cin-Made employees. it’s offered to us. “I now know very little about what’s going on. empowerment and delegation are more than mere buzzwords. Frey has delegated so much of the company’s operations to its workers that he now feels little in the dark. What lessons about management in a rapidly changing marketplace can be learned from the experience of Cin – Made? 15 .
“Basically. “We were out of control because we didn’t know how to use space and didn’t have enough of it. Principal of NRM Systems. Rollerblade was able to increase the number of customer orders processed daily from140 to 410 and eliminate order backlog. Minnesota. based in St.000. The answer for Rollerblade was found in technology.” said Ian Ellis. Once they were found. With the help of layout Master IV simulation software. it matters a great deal for Rollerblade managers whether demand and inventory are in balance. Paul. Rollerblade Management was able to implement a new distribution design. Minnesota. Rollerblade was in a bind. the answer lies in making fewer goods. director for facilities and safety. that assist managers in generating effective facility designs.” added Ram Krishnan. a severe backlog of customer orders. the answer lies in making more goods. still prevented efficient shipping because the workers could barely manage to get the products out the door. overcrowded aisles. 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. When a manager finds that inventory exceeds demand. or not. High-tech companies have introduced a collection of computer simulations. and picking errors were clearly in the unacceptable range. in addition to other space constraints. they could not find the products. 6 HIGH-TECH ANSWERS TO DISTRIBUTION PROBLEMS AT ROLLERBLADE When a manger finds that demand exceeds inventory.000 to $30. 16 . ranging in cost roughly from $10.CASE NO. As a result of the distribution improvement. The product literally could not be shipped out the door. developed by NRM. there was no more useable space left in the warehouse. Rollerblade has been one of the leading firms in the fast growing high performance roller skate marketplace. the popular skate manufacturer based in Minnetonka. as a result of poor storage structures. The managers found that workers were not able to ship products because.
instead of simply roller skates ? 17 . “The new layout has taken us from being in a crunch. With retailers as their primary customers.” says Ellis. 3. to being able to plan. what customer competitive imperatives could be affected by Rollerblade’s inventory problems? How appropriate might a just – in – time inventory system be for a product such as roller skates?” What opportunities are there fore Rollerblade managers to see themselves? as selling services. 2.“Now we have a different business. Questions: 1.
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