NORTH SOUTH UNIVERSITY

Production Management
Subject Code – 314
(Case study on “Market Basket”)

Prepared For: Muhammad Maruf Ibne Wali (MfW)

Lecturer, Department of Management
North South University

Date of Submission: 28/08/2018

Prepared By
Name Id

Israt Jahan 1430921030

Umme Sumaiya 1431111030

Md. Mafijul Islam 1511261030

Md. Asifuzzaman 1510391030

Introduction
The case is all about a loyal CEO and a very much effective chain market which is known as the
“Market Basket”. This supermarket chain was started in 1917, Greek immigrant Athanasios
“Arthur” Demoulas (Demoulas Sr.) and his wife Efrosine with a small market, called DeMoulas,
in Lowell, Massachusetts. In 1954, Demoulas Sr. sold the business to his sons, Telemachus
(Mike) and George, for $15,000. They acquired equal stakes and established DeMoulas Super
Markets, Inc. At some point it known as the Market Basket.
Market Basket is a haven for bargain shoppers who have tremendous loyalty, not only because
Market Basket has the lowest prices around, but also because it has friendlier service than most
other chains. The family-owned corporation is one of the country’s fastest growing supermarket
chains. But in 2013, things turned ugly. The board of directors, which was controlled by Arthur
S. Demoulas, decided to fire his cousin, CEO Arthur T. Demoulas. The board planned not only
to fire him, but also to sell the company to a supermarket conglomerate that had previously
bought a competitor chain, then changed the business model, moved headquarters and laid off
employees. When he was finally fired in June of 2014, people banded together in protest.
Warehouse workers walked off the job, cutting off supplies to stores. Associates at stores
demonstrated on street corners and in local parades; they rented buses with their own money so
they could attend rallies of more than 10,000 people in Tewksbury, Mass. Customers boycotted;
in fact, some would return to Market Basket stores after a large purchase at a competitor so they
could tape their receipt to the front door, just to send a message to the board of directors.
Suppliers stopped shipments, picketed alongside associates, and wrote letters to lawmakers and
newspapers.
For six weeks during the summer of 2014, the chain was essentially shut down. Store shelves
were empty; sales were down more than 90 percent. Stakeholders of all stripes were determined
to protect the culture they loved from what they saw as marauding corporate profit-takers. What
united them mostly was the unique brand of social responsibility at Market Basket. Sure, Market
Basket gives money to charity. But it serves the community in other, subtler ways. A large
portion of its clientele are low- or moderate-income families. These families say they save up to
$4,000 a year by shopping there. Associates tell me that Market Basket is more than a store, it
provides a service to the community by helping people put food on their tables and lead better
lives. Protecting Market Basket for some was a way to look after the region.
Could Market Basket keep offering low prices to customers and high wages and generous
retirement benefits to employees? Could it keep growing?
From the point of view of profitability, it is inefficient keep low prices and high wages where
every store is selling with higher price and earn more. However, they saved loyalty from
customers and employees as well. Market Basket one of the few which could satisfy both sides.
The competent leadership of Arthur T. made the company very successful. His attitude toward
employees and customers made the company’s strategy work well. His openness to people
encouraged employees to be open with customers and they were satisfied. Even vendors know
about his generous personality and they supported him on the strike too. (Ton, Kochan and
Reavis, 2015) The company cannot continue to grow, because they have debts. To the company
continued to work in its mode, it must pay all debts. It can take a very long time, a few
years, and maybe it will not work at all to pay off debts. In order to close all their debts,
they need to use the single use plan it is a plan of unique cases that fulfills the needs.
They need to carefully think over every detail so that the company subsequently makes a
profit, but that their principles remain the same. The company can be contacted in the formal
planning department. The formal planning of the department is a group of specialties in which
their duty is to help write a plan.
Had the protest, which ultimately saddled the company with a $1.6 billion debt, been
worth it?
If we look at the beginning position of the troupe of Market Basket, we can see
that the company was one of the lead supermarkets. What brand this party so great is the
hamper between the managing consistence and the worker bodies and their extensive
welfare endeavor which shaped the organizational finish in a different way. There was
such a coherence among the employees that they were ready to spring up everything for
each other. This is what caused the objection in the fellowship. Though the company had
a clean and jerk track record of doing business and had zero record of any debts but due to
this protest they had to doomed their certain glorification. The competent leadership of Arthur
T. proves that this protest was the only one way out. This protest told that without their ex-
director they will not work. We can assume that, this debt was not so big as if the company
lose their loyal customers and other parties who trusted Arthur.T
Conclusion
The Market Basket case also urges us to reconsider a common belief that people are anti-
business. For example, the CEO of Whole Foods, has claimed that “business is under attack.” In
fact, Market Basket is an example of a truly pro-business movement. Its base of customers and
employees are so loyal to the company that they do not want to see it change hands. What they
oppose is the greed often seen at other companies, which put profits ahead of people. Most
people assume that the board is solely responsible for representing shareholders. In fact, some
scholars argue that although directors are elected by shareholders, their fiduciary responsibility is
to the company. The Market Basket protest was in part a reaction to the board acting in the
interests of shareholders at the expense of customers, associates, suppliers and the community.
Loyalists believed that directors had a duty to protect the Market Basket culture, and that some
had flouted that duty. It is reason to pause and reconsider to whom a board is responsible.
Reference
1.Behling, O., Labovitz, G. and Kosmo, R. (1968). The Herzberg Controversy: A
CriticalReappraisal. Academy of Management Journal, 11(1), pp.99-108.
2.Sørensen, J. and Sorensen, J. (2002). The Strength of Corporate Culture and the
Reliabilityof Firm Performance. Administrative Science Quarterly, 47(1), p.70.
3.Robbins, S. and Coulter, M. (2012). Management. 11th ed. England: Pearson Education.
4.Ton, Z., Kochan, T. and Reavis, C. (2015). We Are Market Basket.