FAR EASTERN UNIVERSITY

Case: We Are Market Basket

Operations Management
MBA 703
FEU-Manila

Submitted by:
 Reporting Group  Reacting Group
CASUGA, ELY
GIANAN, ANGELICA
MADURAR, ABEGAIL

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I. Case Background
Athanasios "Arthur" Demoulas and his wife founded DeMoulas in Lowell,
Massachusetts in 1917, which was sold to their sons Telemachus (Mike) and
George in 1954, and was later transformed into a supermarket chain and turned
into DeMoulas Super Markets, Inc., operating as Market Basket, over a 15-year
period. In a few more years, Market Basket grew to become one of the largest
supermarkets in the North East of England, demonstrating that it is capable of
providing advantages to its employees such as a retirement plan, health care,
competitive wages, and annual bonuses.
They were able to outsell other supermarkets such as Shaw's and Stop &
Shop in terms of sales since their pricing were at least 20% lower and even came
close to beating Walmart, and they even pushed other competitors' branches to
close. The Board, however, ousted Arthur T. Demoulas as Chief Executive
Officer on June 25, 2013. What went wrong?
The family business's heirs compete for control of the corporation in a tug-of-
war. Arthur T. Demoulas and Arthur S. Demoulas have been warring for two
decades when Arthur S. Demoulas is killed. discovered that their Uncle
Telemachus Mike had been surreptitiously buying their family's shares from the
corporation, reducing their ownership from 50% to 8%, and sued them for judicial
misconduct. After a number of years, on June 23, 2013, Arthur S. Arthur T. was
sacked by the board. as the President and CEO of Market Basket As a result, the
community, including employees, managers, and customers, mobilizes in support
of one of the family factions over the other. This management decision sparked a
battle over workers' rights.
It sparked massive worker protests and a customer boycott; the store was left
vacant, and employees and customers banded together. The participants believed
they were protesting not only for Arthur T., but also to preserve the corporation.
When Arthur T. Demoulas offered to buy the other half of the corporation,
the situation was solved. This contract took weeks to negotiate, but once it was
announced, workers were back in the warehouse and stores within minutes.
Customers rejoiced and returned as soon as the new produce arrived.

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II. Statement of the Problem

How can the corporation regain its sales and image following Arthur T.'s
reinstatement? with his supervisors? And how are they going to pay off the
company's debt?

III. Assumptions
• Arthur T.'s leadership was felt by the staff. because he was concerned not only
with profit but also with the well-being of his people Arthur T contemplated
giving incentives and awards to his employees who worked hard and performed
well.
• The company maintained its price-cutting strategy in comparison to rival
supermarkets. That is why they have kept their long-term clientele.
• He worked closely with the Marketing Research & Development Department
to improve the company's marketing strategy in order to reclaim sales and restore
the company's image.
• The exact story behind Arthur T.'s firing was exposed by the labor union. The
other side of the family, who were jealous of his influence, even forced the
company to sell itself at a loss to another set of enterprises.

IV. Areas of Consideration

a. Human Resource and Development

• They had underestimated the stockholders' business activities. One

thing they didn't mention was Arthur T.'s swift dismissal.

• There was no effort made to mold upper management's attitudes,

prolonging and intensifying the family rivalry.

• Work-life balance is important to the Human Resource

Department.

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• They think about recruiting someone with a lot of experience.

b. Operations

• All stores were open from 7:00 a.m. to 9:00 p.m. (7:00 p.m. on
Sundays), with the exception of Easter, Thanksgiving, and Christmas.

• They were overseen by a Director, who was supported by assistant

directors, front-end managers, a merchandising manager, and
department managers—one for grocery, meat, bakery, fresh produce,
dairy, deli, frozen, kitchen, and, in some stores, beer and wine. The
store director and a regional department both reported to the department
supervisors. Supervisor is in charge of around 24 stores.

• The majority of store products came from company-owned and

operated warehouses. Warehouse products were stocked exactly as they
were in stores, resulting in more efficient retail stocking, and
transported to stores by 68 drivers driving company-owned trucks.

• Vendors provided items including bread, chips, soda, and beer

directly to businesses.

• Market Basket's management structure was lean. Arthur T.'s

leadership VP of Operations William Marsden, VP of Grocery Sales
and Merchandising Joseph Rockwell, VP of Grocery Sales and
Merchandising, and VP of Perishables Jim Miamis The shop network
was backed by 200 people at headquarters. There were about 22
category buyers, with six of them specialized to grocery, which
accounted for roughly half of the revenue.

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c. Finance

• The company's finance department has struggled to control their

financial security.

• With the reinstated CEO, Arthur T., no research, forecasts, or

reports were asked, which later turned out to be problematic and caused
other stakeholders to distrust the investment made for. It should include
a barometer for a specific stock to provide an assessment of how
operations are doing and how dividends are flowing.

• They ensure that employees who have worked for them for a long
time and have remained loyal will be provided with the greatest
retirement plan.

d. Marketing

• The brand has a great brand identity and is an industry specialist,

based on the years they've been in business and the employees who have
remained loyal throughout the years.

• Stores carried a wide range of private-label products to boost gross

margins.

• Buyers collaborated closely with store managers to understand and

track client satisfaction.

• As they grew older and bigger, they paid little to no attention to the
various marketing options available.

• They 'personalized' their supermarkets' SKUs and experiences based

on the demographics of the area.

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e. IT / R & D Business Development etc.

• The corporation did not place a strong emphasis on innovation. They

underestimated the significance and did not improve people's shopping
convenience. This could result in a loss of competitive advantage and
inefficient procedures owing to a lack of innovation.

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

Strengths Weaknesses

• Employee expertise, particularly in • Having more employees means

senior management greater pay and bonuses.

• A distinctive shopping experience • Ineffective upper management

communication
• A wide range of products
• A family squabble
• Management of Lean Structures
• Long lines and wait times
• Reputation, image, and brand name
• A smaller number of shops
• The operations are well-planned.

• Low prices and sufficient in-store

inventory.

• Products of excellent quality

• Excellent in-store services

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• Employees' and customers' loyalty

Opportunities Threats

• Innovation in their technologies • The number of rivals is increasing.

• The industry's expansion • Higher raw material costs

• Globalization • Consumer purchasing power is

dwindling.

• Affordability issue

• A significant environmental issue

• Customers' diverse tastes and needs

VI. Alternative Courses of Action (at least 4)

1. Rebranding of the company and modifying the framework of the organization

including the financial and investment transparency.

Advantage:
Attraction for new customers
Gain the trust of the top management
Avoid mishandling of funds
Disadvantage:
High cost
Loss of loyal customers
Long-term
May cause confusion to the customers and employees.

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2. Leadership Development
Advantage:
May improve the leadership skills of the employees.
This can improve and help the productivity and decision making.
More employee engagement.
Disadvantage:
More time to demonstrate that the leadership program's benefits would pay off

3. Make a shareholder declaration of interest

Advantage:
Avoid miscommunication
Monitors all the plan
Disadvantage:
Top management morale may suffer

4. Employ independent directors to supervise major management decisions,

including the company's finances, operations, and investments.
Advantage:
Better transparency
Disadvantage:
May cost additional expenses.

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VII. Action Plans

Activity Responsible Person/s, or Timeline

Department/s, Team/s, etc
Arrangement of the family Top Management 1 Month
feud and solve the internal Human Resource Department
problems of the company. Shareholders
Modify declaration of Shareholders 1 Month
Interest agreed by all
shareholders.
Leadership Development Human Resource Departmenr 1 Month
Rebranding of the Finance Department, 6 Months
company Marketing Department, R&D
and IT Department.

VIII. Recommendation
Market Basket should rebrand because their reputation has
been tarnished and because of the events of the past. This would assist
businesses in attracting and retaining clients who had lost interest and faith
in them. The connection that rebranding creates can reach out to previous
customers and help the company stand out from the competition. A new
design and image may be enough to save the company by reviving client

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loyalty. Gaining their trust can lead to increased sales. They will become
ardent supporters and champions of the business.

Staying current or on trend, such as upgrading new

technologies, can assist the entire firm reduce manpower costs. Technology
advancements for the finance department, the CEO, and the shareholders
can also protect all critical information held by the organization. And
attract new investors.

IX. Conclusion
The first step in regaining revenue and image lost due to the
firing of their CEO, Arthur T., is to resolve the family conflict. To
avoid confusion and misunderstanding, both parties should sign
agreements. Second, senior management leadership programs should
be organized. This would allow leaders to see and grasp each other's
potential. Third, due to the incidents that occurred, the greatest
method to cover it up is to improve one's image. To save money, the
company can consider limited rebranding, such as tweaks to their
logos and taglines.

Finally, the corporation should consider updating the system utilized

by the Finance Department, such as cloud computing technologies,
for safer and more accessible monitoring of their funds.

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