FAR EASTERN UNIVERSITY

Case: WE ARE MARKET BASKET

Operations Management
MBA 703
FEU-Manila

Submitted by:
Reporting Group
RALPH ADRIAN H. MIEL
MA. THERESA M. MAMAUAG
EMMANUEL OJUOLA
AMRO AHMED ABDELRAZIG

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I. Case Background
In 1916 Greek immigrant Arthur Demoulas and his wife open Demoulas
store in Lowell Massachusetts. In 1954 Demoulas Sr. sold business to his sons
Mike and George for $15,000. When George died in 1971, mike took over the
business and his strategy is to keep prices low and stores clean and to finance
growth with profits rather than through debt.

Meanwhile, mike grew the business from 14 stores in 1971 and to 51

stores in 1994. While the business is in its growing stage, in 1971, the family
feud of Demoulas started. Children of George Demoulas children claimed that
Mike is starting to buy his father’s shares to the company. A year later, the court
ordered Mike to pay George’s family $206 million. 11 Believing the judge in the
case had been biased against their side, Mike’s lawyers tried to pressure the
judge’s clerk to provide evidence to support their claim of judicial misconduct.

The plan failed, and two of Mike’s lawyers were disbarred and a third
received a three-year suspension. The chain did survive and, in fact, thrived even
after Mike died in 2003. Mike’s son, Arthur T., became president and CEO in
2008 and carried on the company’s successful business model, telling the board
it comprised three “vital pieces”: “No. 1 is its people. Without them this place
goes down the tubes quicker than you can say hi-ho. No. 2 is our low-price
offering that we have and our low cost structure. And No. 3 is that we’ve got no
debt.

The company is focusing to its people and customer by providing good

benefits to it employees and maintain the low and uniform pricing for it’s
customer, when, in June 23, 2014 Monday, because of family feud, the board
fired Arthur T. and it resulted negative effects to the company’s sales because
most of the employee and suppliers decided to have a protest to reinstate Arthur
T. to his position, the protest lasted for 6 weeks and most of the suppliers
suffered.

On August 27, the Market Basket board of directors and shareholders

reached an agreement for Arthur T. and his family to purchase 50.5% of the
company for $1.6 billion from Arthur S.’s side of the family. As part of the
agreement, Arthur T. was reinstated with his management team to run the
company with full operational authority during the transition period, and the two

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CEOs would stay on in a monitoring capacity and report to the board during this
time.

II. Statement of the Problem

Because of family feud that resulted to the company to loaned an amount of $1.6
Billon to save its people, supplier and the company itself. Therefore, what
strategies will the Market Basket use to faster increase its sales?

III. Assumptions
1. We assumed that the Market Basket will come up with a better
strategy to faster increase its sales.
2. We assumed that the Market Basket will reduce the existing
benefits of its employees.
3. We assumed that Market Basket will have a slight change to its
pricing strategy.

IV. Areas of Consideration

a. Human Resource and Development

Human Resources did not come up with a strategy on how they

reduce the existing benefits of its employee for specific time frame that
will not cause to its employee to resigned to their job.

b. Operations

It is more profitable if Market Basket operations maintains the

normal operations such as engaging its employee to customer, maintains
good customer experience, adjusting to its pricing little by little without
hurting customers budget.

c. Finance

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The finance department failed to fund the research and

development to create new products and/or services for the customer.

d. Marketing

Marketing department needs to have better strategies to push sales

faster such as investing a little more on advertising, come up with a
better marketing promo that will help to increase the sales of company
such us implementing of loyalty cards, distributing coupons, advertising
through social media etc.

e. IT / R & D Business Development etc.

The company lacks technology to improve operations and process

while R & D department must do more research for new product and
services that will help company increase its sales.

V. Framework (e.g. SWOT, Porter”s etc)

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STRENGTH
 Fastest growing retailer in
Eastern Massachusetts.
 Low cost product.
 Customer and People Oriented
Company.
 Some stores operate 24 Hours.
 Have own warehouse.
 Have own trucks for
deliveries.
 Uniform pricing.
 Store adjustment to the
Demographic Profile of the
area.
 Good customer service.
 Mystery shopper.
 Annual discussion for Good
and Bad Customer Service.
 Excellent People Management
System.
WEAKNESS
 No loyalty cards.
 No self-check-out lines to its
stores with high volume of
customers.
 Not engaging so much to
technology innovations.
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OPPORTUNITY
 Need to identify stores with
high sales to operate during
holidays.
 Need to implement loyalty
cards for its customers to
strengthen its relationship with
them.
 Implementing self-check-out
lines to the stores with high
volume of customer
 Creating official website or
any social media for better
marketing communication.
 Technology Innovations.
THREATS
 Existing Super Markets with
advance technologies.
 Family feud resulting negative
effects to the company.
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VI. Alternative Courses of Action

1. Reduce Employee Benefits

Advantages:

1. It will help the company reduce its expenses.

2. It will add up to company’s profit.
3. The money could use to other department to help the company
increase its profit.

Disadvantages:
1. The employee might resign to their jobs
2. The employee might lose their enthusiasm while working.

2. Implementing New Marketing Strategy

Advantages:
1. Better Marketing Communication for the Customer.
2. Promotes your business to a target audience.
3. Will help the company understand its customer.
4. Increase in productivity
5. Increase customer loyalty

Disadvantages:
1. Costly
2. Time and effort may not yield in return

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3. Invest New Technology

Advantages:
1. Improve in Human Resource Management
2. Improves communication
3. Save time

Disadvantages:
1. Increasing expense for R&D
2. High maintenance costs

4. Research for more products and/or services that fits to the

customer’s demographic profile

Advantages:
1. More choices for the customers
2. Can increase sales profit

Disadvantages:
1. Expensive
2. Consumes longer time
3. Consumes additional space in the market

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VII. Action Plans

Activity Responsible Person/s, or Timeline

Department/s, Team/s, etc
Planning of the New Human Resource, Marketing Day 1-5
Marketing Strategy to use Department and Finance
Department
Selecting Marketing Marketing Department Day 6 -13
Strategies that will be used
Implementing Loyalty Marketing Department Day 14 - 44
Cards and Coupons for the
customers and creating
social media accounts for
advertising
Controlling the marketing Marketing Department and Day 45 - 104
tools and Evaluating the Finance Department
profitability

VIII. Recommendation

We recommend that Market Basket Supermarket specifically Arthur T.

should talk to its employee about the situation of the company after what
happened. Market Basket should come up to strategies and plans on how the
company will pay the loan amount of $1.6 Billon. We recommend that the
company must focus to planning new Marketing strategies to use to have better
planning to increase company’s profit. Such strategies are implementing Loyalty
Cards and Coupons for the customers and creating social media accounts for
advertising. These might increase the awareness of the customers on the promos
and products the firm offers. Cards and coupons may also encourage the

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customers to buy bulk products and to gain strong customer loyalty. In the long
run, effective marketing strategies may contribute in getting high profits and
stronger financial performance for the company.

IX. Conclusion

Market Basket is a company that underwent a labor dispute that was

unprecedented. Most companies do not see employees and customers unite to
stand up for one individual. Most communities would not put in the effort to
boycott a grocery store chain with over seventy stores. The fact that these events
did occur allows this company to stand out in terms of customer and employee
loyalty.

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