BUSINESS CASE

Course: Principles of Management

Program: Bachelor of Software Engineering

Note: Carefully read the business case provided below, and answer the questions given at the
end with logical arguments.

Abraham’s Grocery Store

The first Abraham’s Grocery Store was started in 1967 by Bill Abraham and his sister Doris. They used
a small inheritance to start a small grocery store in a suburb of Atlanta, Georgia, and it was immediately
successful. The location was good, and both Bill and Doris had winning personalities and a “serve the
customer” attitude. Abraham’s rapidly growing number of customers enjoyed an abundance of good
meats and produce, for which Abraham’s became well known. By 2007, Abraham’s had over 200 stores.
Company headquarters moved to downtown Atlanta to supervise stores throughout the southeastern
United States. There were four regional managers responsible for about 50 stores each. Within each
region, there were four districts of 12 to 13 stores each. Because the stores specialized in excellent meats
and produce, there was a separate meat department manager, grocery department manager, and produce
department manager within each store. The grocery department manager also served as the store
manager, but this person did not have direct authority over the meat department or the produce
department. The store meat department manager reported directly to a district meat manager specialist,
and the store produce department manager reported directly to a district produce manager specialist. The
store manager (who is also the grocery department manager) reported directly to a district store
supervisor. This direct line of authority for each store department provided excellent quality control over
the meat, produce, and grocery departments within individual stores. However, there was growing
dissatisfaction within the stores. The turnover of store managers was high, mostly because they had no
control over the meat and produce departments within their stores. Coordination within stores was
terrible, such as when a store manager decided to promote a sale on Coke products as a loss leader.
Hundreds of cartons of Coke were brought into the store for the big sale, but the meat and produce
department managers would not give up floor space to display Coke cartons. The frustrated store
manager insisted that this was no way to run a business and quit on the spot. Many stores experienced
conflict rather than cooperation among the meat, produce, and store managers because each was very
protective of his or her separate responsibilities. Doris Abraham asked a consultant for advice. The
consultant recommended a reorganization within each store so that the meat, grocery, and produce
departments would all report to the store manager. The store manager thus would have complete control
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over store activities and would be responsible for coordinating across the meat, produce, and grocery
departments. The meat department manager in each store would report to the store manager and would
also have a dashed-line relationship (communication, coordination) with the district meat specialist.
Likewise, each store produce department manager would have a dashed-line relationship with the district
produce specialist. The store manager would report directly to the district store supervisor. The district
meat and produce specialists would visit individual stores periodically to provide advice and help the
store department heads to ensure top quality in the meat, produce, and grocery areas. The consultant was
enthusiastic about the proposed structure. Store managers would have more freedom and responsibility.
By assigning responsibility for all store departments to the store manager, the new structure would
encourage coordination within stores and give managers the ability to adapt to local tastes and customer
needs. The dashed-line relationships would ensure excellent meat, grocery, and produce departments
across all stores.

QUESTIONS
1. Based on the information available in the case, sketch a picture of the original structure within an
Abraham’s store and the store managers’ relationships with district specialist managers. What type of
structure is this? Explain.

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2. Based on the information available in the case, sketch a picture of the consultant’s recommended
structure within the store and the relationship of store department managers with district specialist
managers. What type of structure is this? Explain.
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3. What are some of the advantages and disadvantages you see for the two types of structures? Which
structure do you think will work best for Abraham’s? Why?
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