Running head: MARKET BASKET

Melissa Anne Fernandez

South Texas College

ORGL-3332 Behavior, Ethics, and Leadership II CBE

Dr. Micah Bailey

South Texas College

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Imagine employees, customers, and store suppliers loyal to a CEO and uniting when they

learn he was terminated. Many gathered, June 23, 2014, to protest on the matter. What some

thought was a self-interest fight turned out be a demonstration of how a group of people came

together to fight for something that was much larger than themselves. The story of how one

supermarket proved that executives, managers, and employees can all profit, together has

become both informative and inspiring. They fought for a man who always fought for them and

whose management style fostered a unique company culture.

Case Study

DeMoulas Super Markets, Inc., under the trade name Market Basket, are a supermarket

chain that was established by Greek immigrants, Athanasios “Arthur” Demoulas and his wife,

Efrosine Demoulas in 1916. It consists of 71 supermarkets that are in Maine, New Hampshire,

and Massachusetts, with headquarters in Tewksbury, Massachusetts.

Market Basket supermarkets are known for their clean, well-stocked, easy to navigate stores, as

well as for their commitment to customers, customer service, and their employees.

For its customers, Market Basket provides an “uncomplicated shopping environment.”

Customers don’t have to deal with the hassle of store loyalty cards or self-checkout lines, like

Wal-Mart. Market Basket is also known for providing customers with lower prices, unlike its

competitors; Wal-Mart, Stop and Shop, and Shaw’s. Competitor prices can range anywhere from

10% to 22% above Market Basket prices. Market Basket also provides “uniform pricing” – when

a firm sells their products at the same pricing across markets - at all their locations; regardless of

season or geographical area. Arthur T. always took care of his customers and with services such
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as saving potential, simplicity, and a fantastic shopping environment it’s no wonder Market

Basket customers can’t stay away.

Customer service wise, Market Basket makes it a point to provide fantastic customer

service. They do this by stocking their shelves during the day rather than at night. This ensures

that there is always someone available to assist customers’ needs. They also make sure to

acknowledge, greet, and smile at their customers. All while providing a friendly environment.

For its employees, Market Basket focuses on providing a great working environment, by

working hard, working together and making sure that chemistry is right amongst each other.

Market Basket also compensates their employees rather well. Their full-time and part-time

employees start at $12/hr. and $8/hr. They also have profit sharing plans and give employees

bonuses throughout the year, based on longevity.

On June 23, 2014, Board of Directors gathered and decided to fire President and CEO,

Arthur T. Demoulas and bring in new leadership with new leaderships styles. Board of Directors

explained that “the new management team will enable Market Basket to maximize its potential

and pave the way for continued success in the future.” (Ton, 2015, p. 13)

It was rumored that the purpose of bringing in an outside management team was because

both the board of directors and Arthur T.’s cousin, Arthur S. were not happy with the company’s

profitability, its “low-price” strategy, and generous employee benefits. They also were not

pleased with Arthur T. communication skills when it came to the board of directors and Arthur S.

Arthur T. didn’t always include shareholders about any decision-making ideas. Hence why board

of directors decided on bringing in a new leadership management.

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However, little did they know that their actions would cause an uproar, bringing people together

to fight for something that was much larger than themselves.

Analysis

The differences in perception, solutions and opinions between Board of Directors and

CEO, Arthur T. Demoulas caused conflict, task conflict, within the organization. Task conflict

occurs when there is a disagreement over the understanding of goals and tasks. In the case of

Arthur T. Demoulas, conflict was between him, the board of directors and his cousin, Arthur S.,

who were no longer in agreement as to how Market Basket should be handled. Despite the

company providing exceptional customer service, prices, and employee benefits, Board of

Directors and stakeholders felt there was no trust within the firm due to Arthur T.’s lack of

communication when making decisions without them. This situation caused conflict amongst the

firm due to disagreements as to how things were being done. Board of Directors and Arthur S.

felt they was no other choice but to fire Arthur T. and bring in someone new to manage the

organization the way they felt should be ran.

Action Taken

I think that the board of directors should take note of the spectacle they are causing

within the organization. Their thought process of how the business should be handled is that of

philosopher, Thomas Hobbes. Thomas Hobbes believed that humans are both selfish and cruel.

Hobbes implied that felicity and power are strongly linked. They didn’t agree with how President

and CEO, Arthur T. Demoulas was handling the business, so they felt that in order to have order

within the firm, they had to bring in new leadership to solve the problem. Rather than coming
Running head: MARKET BASKET

together to discuss a solution, they, right away, use their position within the firm and made the

final decision, not once considering the affects it may cause.

However, the behavior and characteristics of Arthur T. Demoulas is based on the

theoretical framework of Aristotle. Aristotle’s theoretical framework was based on the

importance of virtue. For Aristotle, virtue is a state of a character; intellectual and morals. It is

what strives and brings out the best in people and its enterprise. Aristotle believed in doing what

is rational, having good behavior and habits; such as moral virtues and self-control. Aristotle’s

discussions focused on the persons character and how both the people and organizations work for

the betterment of each other. In the case of Arthur T., his values helped not only shape the

corporate culture, but he had a positive impact on the performance and success of the

organization. For example, the employee’s behavior and the effort they put in their job says a lot

about what President and CEO, Arthur T. Demoulas instilled in his employees.

Arthur T. Demoulas is a servant leader who always put his customers and employees

first. The family-oriented culture he provided, along with his understanding, passion, and loyalty

is what has made Market Basket chain a success.

Criticism

While the board of directors were more concerned with Arthur T. Demoulas leadership

style, Arthur T, Demoulas is handling business just as it should be. He is created a unique bond

with Market Basket employees that fostered intense loyalty. He valued his employees and made

sure they felt they were valued. Arthur T.’s mentality about the firm was not just about profits.

He saw the Market Basket much more than just a job. Everyone had a purpose and to him, no on

held a position of privilege. Everyone has meaning and no one is better or more important than
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another. To him, leadership was about providing a good work environment, taking pride in your

work, caring for people as individuals and not just as workers, and of course, serve customers

well. He demonstrated that a person’s moral obligation and social responsibility is to protect the

culture he provided for the workplace.

Conclusion

Conflicts occur in every type of organization, whether good or bad. Small conflicts can

sometimes be helpful and can be resolved rather quickly. However, this occurs only when both

parties can work together to overcome the obstacle. Larger conflicts can lead to parties not

working together and jeopardizing work tasks. I believe that Arthur T. Demoulas leadership style

worked well for the organization. While there are many attributes of good leaders, the one

attribute that Arthur T. Demoulas showed was empathy. He listened, thought, converse, and

acted empathetically. He formulated a plan that factored not only potential outcomes but also the

feelings and aspirations of others. As for the board of directors and cousin, Arthur S. they lacked

empathy and moral virtues. They did not see the entire picture of what Arthur T. Demoulas had

created.
Running head: MARKET BASKET

Refrences

Aristotle's Nicomachean Ethics (selections) [Book I, Ch. 7, Book X, Ch.

7]: http://classics.mit.edu/Aristotle/nicomachaen.html

Ton, Z., Kochan, T. A., & Reavis, C. (2015). "We Are Market Basket".MIT Sloan Management,

1-28.

Thomas Hobbes' Leviathan (selections) [Ch. 11]:  

https://www.gutenberg.org/files/3207/3207-h/3207-h.htm