Running Head: MARKET BASKET ANALYSIS

Thelma Landeros
Research Paper I: Market Basket Analysis
Capstone II - ORG 4361
Rebecca Lynch, Ph.D.
May 24, 2019
Market Basket Analysis 2

ABSTRACT

The chain Market Basket Store Network and Organization was flourishing with customer

service, employee management, supplier relations, culture and speed of decision making. The

market was family owned, but a dispute between the family members separates the company. I

will analyze the impact on the organization workers, leadership, customers, and the future of all

involved. I will include the collective action by the Market Basket employees, explain the

dispute and how it obtained support from the public, along with the implications for business

organizations today. This paper is focused towards analyzing the ideas of leadership, change,

management, culture, and personality conduct about Market Basket.

Market Basket Analysis 3

Research Paper I: Market Basket Analysis

Leaders in todays’ business organizations have to respond positively, powerfully, and

ethically to the many situations arising in today’s industry. According to Z. Ton’s, et.al., (2015)

the article “We Are Market Basket,” CEO Arthur T. Demoulas empowered his organization

employees, including his supplier relations. This approach contributed to the employees,

business, and their communities. I will explain the dispute and how it obtained support from the

public, analyze the impact on the organization workers, leadership, customers, and the future of

all involved. This includes the collective action by the Market Basket employees, along with the

implications for business organizations today.

First, the Market Basket chain was family owned by two brothers George and

Telemachus (Mike). George died, and Mike took over the business until 2003. Mike’s son Arthur

T. Demoulas became the CEO in 2008, leading the Market Basket company, but the business

was registered as a Subchapter S corporation with nine family shareholders. An S corporation

has 100 or fewer shareholders and does not pay federal income taxes (McKee, 2014). The

dispute started when Georges’ son Arthur S., among other shareholders of his side of the family,

gained control, and considered firing Arthur T, because they opposed his management styles.

The problem affected the employees and community, when the board suspended his authority

including paying contractors working on the construction of new stores and the making of daily

decisions. Later, the new board made hard choices by establishing a line of credit and voted to

distribute a one-time shareholder divided of $300 million which is 60 percent of the company’

excess cash (Z. Ton’s, et.al., 2015).

One of the last decisions Arthur T. made in the end was to reduce the process of all items

by an additional four percent until the end of the year. The employees demanded Arthur T. to be
Market Basket Analysis 4

reinstated, but the board rejected the demand. All employees walked out on their jobs, which

shut the company down. The public started supporting the employees, because they felt they had

uniform pricing on items, and built a well-structured business communication with the

customers. This means building a service culture, that included always having someone on the

floor to assist the customers. Arthur T. Demoulas adopted the “distributed leadership”, where

everyone can have an impact on the bottom line, suggest ideas, and profit from their efforts. As a

result of giving up power, employees get motivated to excel. This improves consumers’

experience in small ways, which can boost sales (Give away power to spur your team, 2015).

Moreover, Market Basket followed the lean management structure, organizing the

company design in a new creative way. CEO Arthur T. Demoulas innovated his organization

associates, customers, and community. Analyzing the company structure and the CEO innovative

leadership style, shows a combination of avoiding waste by reducing variation in every process,

with the process of implementing new ideas. The company began approaching innovatively the

way of doing business and created new markets by organizing their work in a new, creative way.

At the same time, there is a strong sense of independence, vision and self-realization among

them. This, of course, affects the competitiveness of the entire economy, hence their activity is of

interest to the scientific community as well as the state (Świtek, et.al., 2018).

Innovation can become a major competitive differentiator delivering benefits in three

distinct dimensions, such as exciting customers through new features, offerings, experiences, and

services, leading competitors with innovative responses, including proprietary technologies and

expanding, enriching, and diversifying the product portfolio to achieve different growth

trajectories (Bowonder, et. al., 2010). Arthur T. Demoulas visited his stores following his own

theory of “staying close to the customer”, and came out with ideas like the 10 foot rule to greet
Market Basket Analysis 5

customers, and making store managers assist the front checkouts handling the customers in a

single line to direct customers to the appropriate cashier when one became free, omitting people

cutting ahead (Z. Ton’s, etal. 2015). There does appear to be a systematic, dispositional-based

component to being an effective leader, supporting the “Great Man” approach to leadership

(Hoffman, et.al., 2011).

Lastly, I compared the successful leadership of (Arthur T. Demoulas) from unsuccessful

leadership (Arthur S. Demoulas), and concluded that Arthur T. Demoulas was a leader who

influences and inspires people. Employees, suppliers, customer relations, and community in

general, all had a direct effect from Arthur T’s. effective leadership. On the other hand, Arthur S.

Demoulas had the manager perspective to organize, control people jobs, and production. To my

understanding, his main issue with his cousin was that Arthur T. was spending too much of the

shareholders’ money on capital costs and entering improper business deals, focusing in money

only.

Collectively, the immediate action by the Market Basket employees was to support

Arthur T. Demoulas. They went through walking out their jobs, being fired, boycotts, and even a

protest gaining the attention and support from the general public. In the end, Arthur S’s side of

the family sold their shares to Arthur T., who was reinstated even during the transition period.

However, implications for the Market Basket business were affected, due to the time frame of

the dilemma and a debt that Arthur T. obtained by asking for a loan to payout Arthur S’s side of

family shareholders. If we accept that the biosphere should remain viable (sustainable), then the

implication is that all the other levels of recursion should also be viable. We are not only now in

a position to see why organizations such as businesses must become viable, but also how the

viability of organizations is dependent on individuals and society (Lewis, 1997). Figure 1.

Market Basket Analysis 6

Figure 1. How the viable system model informs us about sustainability

Arthur T. Demoulas still caring for his employees gave them a bonus that same year. The

associate’s reaction was reinforcing their company vision and mission, taking the debt as it was

theirs. Appointing the implications in leading today’s organizations , a leader should begin to

appreciate shifting social dynamics in which people feel vulnerable, in need of ongoing

recognition and affirmation, and demand passion and meaning in work as symptomatic of the

disintegration of the symbolic order and the decline of the efficacy of the big other. We could

approach people in organizations, not as self-serving caricatures like “entitled Millennials” or

“crybaby snowflakes,” but as simply subjects trying to make lives for themselves (Catlaw, et.al.,

2018).

In conclusion, leaders in todays’ business organizations must respond positively,

powerfully, and ethically to the many situations arising in todays’ industry. As a future leader, I

will engage in analytical thinking and build strong reliable relationships with coworkers.
Market Basket Analysis 7

According to the article “We Are Market Basket” CEO Arthur T. Demoulas empowered his

organization employees, including his supplier relations. This approach contributed to the

employees, business, and their communities. Arthur T. Demoulas impacted me with his ideas,

and approaches, by involving his organization workers, leadership, customers, and even future

customer like me.

Market Basket Analysis 8

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