1

Competency Post-Test 5

Alejandro Bazarte

ORGL-4342-KV2-Organizational Change

Jennifer Guerra

August 19, 2022

           
 2

Market Basket is a New England based supermarket chain that was created by Athanasios

Demoulas in 1917. It started out as a small market called DeMoulas that was located in Lowell,

Massachusetts. In 1954, he sold the market to his two sons, Mike and George, and they each had

equal stakes in the it. They went on to create DeMoulas Super Markets, Inc. George died in 1971

and Mike took over the business. He wanted to make what is now known as Market Basket

different than most of its competitors. “Mike’s strategy was to keep prices low and stores clean

and to finance growth with profits rather than through debt. Even in his 70s, Mike was known to

put in long hours, some of them greeting customers and bagging groceries” (Ton, Kochan, &

Reavis, 2015, p. 3). The main focus was on the employees and the customers. 

           The business model that Mike created had been extremely successful. “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 lowcost structure. And No. 3 is that we’ve got no debt.”” (Ton, Kochan, & Reavis, 2015,

p. 4). As stated above, one of their main focuses was on the employees. They made sure their

employees were taken care of and made sure they had the major holidays, Easter, Thanksgiving,

and Christmas, off. Most of their competitors are open at least half of the day on each of these

holidays. 

           In 2013, the new board of Market Basket decided that Arthur T. needed to be fired as the

president of the company. Even before he was officially fired, there was evidence that it would

anger a lot of the employees. “In the weeks leading up to that meeting, nearly every store

director wrote to the board that firing Arthur T. would “cause significant damage to this

company.” Supplier Jim Fantini started an online petition supporting Arthur T., saying that his
 3

removal would sacrifice customers and employees for higher prices and profit margins.

Meanwhile, over a thousand Arthur T. supporters stood outside the building where the meeting

was being held with signs saying “Save Market Basket”” (Ton, Kochan, & Reavis, 2015, p. 13).

Both parties knew that an intergroup conflict was going to arise between the employees and the

board. As soon as Arthur T. was fired, the intentions for both the employee and the board were

known. The employees were going to fight to have Arthur T. reinstated and the board was going

to stand their ground and not reinstate him. 

           The behavior aspect of the conflict process becomes evident when employees at Market

Basket’s headquarters “demanded in writing that Arthur T. be reinstated and requested a

response by 4:30pm the next day. Rejecting the response given the next day by the board that it

would take up their demand the following Monday, the employees planned a walkout and rally

for the following day” (Ton, Kochan, & Reavis, 2015, p. 13). The employees followed through

with their walkout and their rally the next day. Not only did the employees protest the firing of

Arthur T., so did vendors, truck driver, and their customers. The main reason for the protests and

wanting Arthur T. to be reinstated was that “employees feared that without Arthur T. at the help,

the company would be sold, whereupon customers would face higher prices and employees

would face lower salaries, reduced benefits, and the loss of a very special place to work” (Ton,

Kochan, & Reavis, 2015, p. 15). They were afraid that everything that Market Basket was based

off of would be changed and not for the better. 

           The type of conflict that the firing of Arthur T. created was a process conflict. The

conflict relates to how the work will be done to achieve their goal. By firing Arthur T., the new

CEOs will be changing how everything runs and now how the work will be done will be

different. All of the protesting that was done, the board reinstated Arthur T. One reason for the
 4

reinstatement is that “Less than two weeks into the protest, Market Basket’s sales were down

more than 90%. All parttime employees had been let go. Full-time store employees spent their

working hours cleaning, organizing, and painting” (Ton, Kochan, & Reavis, 2015, p. 16). They

were losing a lot of money because customers began boycotting the stores in support of the

employees. Another reason is that the company no longer had their seasoned managers to help

run the stores. The board fired them all because they believed it was them who started and led

the protested to have Arthur T. reinstated. Also, the new CEOs tried to have job fairs, but barely

anyone attended them. Lastly, most of the employees who continued to work there would rather

be fired than stop protesting the return of Arthur T. 

           The outcome of the conflict ended with the board of directors and shareholders coming to

“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 CEOs would stary on in a monitoring capacity and report to the board during this

time” (Ton, Kochan, & Reavis, 2015, p. 17). The only way for Arthur T. to afford to pay for part

of the company was to take out a $1 billion mortgage loan and help from Bank of America,

Merrill Lynch, and KeyBank. The only problem now is that for the first time, Market Basket was

in debt. The main question now is will Market Basket’s original business plan be able to succeed

with the debt they have incurred. I believe the answer is yes. They have a lot of support from

their customers and their employees. To get the business back up and running to full capacity

only took a few weeks. It may take a few years to be able to get out of debt, but with focusing on

their employees and customers like they have in the past, they should be able to continue to be a

successful business. 
 5

Work Cited

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

Management , 1–28.