MGM 3101-9: PRINCIPLES OF MANAGEMENT

GROUP: GROUP 1
LECTURER’S NAME: DR. KAMARULZAMAN BIN ISMAIL

NO. GROUP MEMBERS MATRIC NO.

1. Ismam Fatin Zishan 195747

2. Gulam Mohiuddin Abdul Qader 195461

3. Arif Hafi Bin Mohamad Khairudin 213416

4. Muhammad Hariz Ikmal Bin Zakaria 213480

5. Nur Azrina Binti Mohd Razali 211207

Case Study - 1
Executive Summary

In this case study, In Style: Beauty Brands with Social Media Trust, focuses on small cosmetic
brands that have received a lot of social media attention and have been acquired by major
cosmetic companies as a result. Some of the hottest targets in the beauty and personal care
industry last year were private brands with large social media followers, according to
investment bank Financo LLC. Shiseido Co., Asia's largest cosmetics company, acquired
MatchCo, a 10-man company that developed a smartphone app that scans an individual's skin
color to make custom makeup. Consumers are increasingly turning to smaller, more innovative
brands. The business unit structure integrates various functions based on product lines and
regional business units.
Introduction

We discussed in the case study that a large beauty company acquiring small brands of cosmetics based on social
media, with real-life examples. A detailed explanation of the first four questions in the case gave us insight into
how a small cosmetic brand or a social media-focused cosmetic company is being acquired by a large company. We
discuss the challenges that may arise when designing an effective organizational structure, the strategies
managers should use to ensure a positive employee experience, redesign the organizational structure for one of
the newly acquired companies mentioned in the examples, and explain the strategic reasons. Among other things,
the acquired cosmetics company's strong social media presence encourages alliances between managers. Small
brands with innovation and "authenticity" are more attractive to consumers than large brands. Because of this,
many private equity firms have expressed interest in Ryan Craig's takeover, but have refused to respond to
anyone. According to the case summary, the beauty and personal care industry made 52 acquisitions last year, the
most in a decade.
Issues

1. The sales strategy of cosmetic product has changed over the century.
2. Consumers tend to follow the influencers instead of their own choice.
3. Small cosmetic companies are getting merge with the Large companies .
4. Old cosmetic companies can't find their place in market due to their old sales/marketing strategy.
5. Consumer buying behaviour is changing rapidly .
Problems

1. Brands need to change their marketing strategy frequently.

2. Consumers are loosing their own personal taste.
3. Brands need to pay attentions towards influencers rater then the consumers.
4. Brands are losing their unique identity.
5. Social media marketing can take up a lot of time, which could alternatively be used for other
business functions.
Question for Discussion
Q1: What obstacles could occur regarding designing an effective organizational structure with the acquisition of these smaller businesses by large, global
conglomerates?

Answer:
Below are some of the obstacles that can occur in designing an effective organizational structure if these small companies are acquired by a large global conglomerate.

● Obstacles to the size of corporate funds.

Corporate funding is an internal source of funding for a company to merge or acquire. SMEs are small and unprofitable. The level of self-financing makes it difficult to secure the
proportion of capital required for a merger or acquisition.
● Policy restrictions.
Few companies are taking advantage of M & A opportunities to secretly avoid bank debt and weaken the bank's enthusiasm to participate in M & A financing. This extraordinary
relationship between banks and businesses has created great difficulty in financing mergers and acquisitions of businesses. This does not encourage corporate mergers and
post-acquisition financial restructurings, and it also reduces the chances of corporate mergers and acquisitions to obtain bank funding.

● Bond lending obstacles.

Issuance of corporate bonds is subject to complex approvals and a limited range. The state has very strict entry requirements for issuers, it is difficult to meet the needs of more
investors entering the market, limiting the investment of investors' funds and hindering the expansion of M & A loan issuance.

● Equity finance obstacles.

For listed companies, refinancing by additional issuance or allotment is required, the conditions are strict, the required time is long, and the completion of M & A by issuing shares is
restricted.
Q2: If you were a manager in a small cosmetics company, what would be your strategy to ensure your
employees continue to experience job enlargement and job enrichment once your firm was acquired?

Answer:
However, despite the change in affiliation, the original labour contract continues to be fulfilled, and the
length of service is being calculated on a regular basis. Second, in the event of a disagreement or the
termination of the employment relationship, I agree to calculate the length of service beginning on the date of
signing the employment contract with A.
Q3: If you were responsible for redesigning the organizational structure for one of the newly acquired companies discussed in this case,
would you use a functional structure or a divisional structure? Explain your reasoning.

Answer:

The organizational structure represents the way of work through the company. All administrative tasks are performed within the framework
of an organizational hierarchy system, as described in this document. It represents the relationship between authority and activity that exists within
the structure of an organization. There are two types of organizational structure: functional structure and departmental structure. The first is a system
for grouping employees by skill, related roles, and expertise. The second is a system that groups employees by location. Another type of
organizational structure is a departmental structure consisting of product lines that combine different functional areas and regional departments. The
cluster is organized around the project. We recommend that you use the split structure of the newly acquired company's organizational structure
rather than the organizational structure of the newly acquired company described in this example. This is an organizational structure that maximizes
efficiency by combining various functions based on product lines and regional divisions. Apart from that, each department of the organization has its
own key resources and functions such as production, marketing, purchasing and human resources. The departmental structure is suitable for large
organizations with multiple product lines that will continue to grow. The fact that departmental structures are inherently less hierarchical than
functional structures is one of the main reasons for choosing departmental structures over functional structures when acquiring a company. The
departmental structure is more suited to product operations and requires less technical skills and expertise to design the organizational structure of a
newly acquired cosmetics company.

First and foremost, all activities in individual areas are carried out independently of each other. As a result, organizational structure guarantees clear
accountability while helping to improve synergies. The results of the segmentation are easy to evaluate. This approach allows you to close
unprofitable areas. Second, it helps to improve synergies and coordination between departments. It contributes to the development of long-term,
mutually beneficial situations in the department. In addition, departmental structures help develop different skills among departmental team
members. The department structure covers all aspects of the business, facilitating an understanding of all aspects of the business and helping
department heads overall understanding and skill development. After all, each department works for itself. The department head has the authority to
make decisions about his department without consulting with other department heads. This makes decisions quick and effective.
Q4: Does the strong social media presence of the acquired cosmetics businesses discussed in this case encourage strategic
alliances among managers in various parts of the combined organization? Why or why not?

Answer:
In particular, the cases described here facilitate strategic alliances between managers in different organizational departments. First
and foremost, strategic alliances enable the sharing of resources and expertise. Strategic alliances can bring together the best of both
companies' products and services. This may include a deeper understanding of the product, sales and marketing skills, or even more
hands-on work to reduce the time it takes to bring the product to market. Second, strategic alliances promote social alliances between
leaders of all parts of the organization, as they provide synergies with social media activities and regional coordination by market. Both of
these are beneficial to the organization. In addition, strategic alliances have the potential to drive innovation. The right alliance can
differentiate itself from its competitors by providing its customers with a comprehensive package of innovative solutions. In addition,
internationally expanding companies often work with trusted local partners to gain an edge in emerging markets. This helps sell beauty
products by convincing customers of the authenticity of the product. It supports the company in establishing social relationships with the
target group. Finally, strategic alliances in product manufacturing and distribution allow collaboration to increase capacity and quickly expand
to meet market demand.
Conclusion
In conclusion,the analysation above with leadership practices in this report have many useful factors based on what we searched and
studied. According to the case summary, the beauty and personal care industry focuses on small cosmetic brands that have received a lot of
social media attention and have been acquired by major cosmetic companies as a result.Other then that consumers are increasingly turning to
smaller, more innovative brands.Furthermore,the brand that had been published by the company has over 18 million followers on Instagram,
appearing in video tutorials showing how to use their latest products.Many small and agile brands have the opportunity to appeal to younger
consumers by offering something new.This unusual relationship between banks and corporations has created significant difficulties in
financing corporate mergers and acquisitions.The business unit structure integrates various functions based on product lines and regional
business units.A strategic alliance can bring the strengths of both companies together. The right alliance can offer customers a complete
package of new solutions.Even venerable Estée Lauder Cos. has joined the buying frenzy.Last year it shelled out $1.5 billion which is the
biggest acquisition deal ever for Too Faced Cosmetics, whose products are a big hit with women under the age of 40. It also scooped up
Becca Cosmetics, active on Instagram and Facebook which is known for its shimmery highlights and appeal to young women of color, for a
figure estimated to be more than $200 million. Says Andrew Crawford, a managing director at private equity firm General Atlantic LLC, which
acquired a majority stake in Too Faced Cosmetics a year before flipping it to Estée Lauder:Like they said “Success leads to a lot of interest.”
Case Study - 2
Executive Summary

In this case report shows about Starbucks’ corporation wanting to reigniting their sales. This
was due to their shares having declined 3.8 percent after quarterly sales exceeded analyst
estimates, renewing concerns that competition and mobile ordering problems weighed on
growth. The company also lowered its earnings forecast for the year. The results leave it up to
Chief Executive Officer Kevin Johnson to reassure investors he has a plan for reigniting sales
especially as cheaper rivals target his company's market share. In a conference call with
analysts, Starbucks said it can still meet its annual goal of comparative sales in the mid-single
digits. the company is retraining employees and adding touch screen tablets. It's also testing
the idea of putting additional workers at some of its busiest locations to improve order speeds.
Introduction

We have identified the practiced organizational controls found in this report and provided
honest observations and opinions based on what we have read and learned. According to the
case summary, the Starbucks' wants to reignite their sales after their shares have declined after
quarterly sales exceeded analyst estimates, renewing concerns that competition and mobile
ordering problems weighed on growth. As you can see the challenges Starbucks’ face in
increasing their sales and having to compete with their competitors. We also discussed how
Starbucks’ tackled the problem so that the problem could be resolved. This is as asked in the
question and we have answered it as a result of our own research.
Issues and problem

- The shares declined as much as 3.8 percent after quarterly sales missed analysts’
estimates, renewing concerns that competition and mobile-ordering problems are
weighing on growth.
- Starbucks also has suffered problems with its much-vaunted mobile-ordering technology.
- Starbucks missed analysts’ projections in all its major geographic areas, including the
China Asia-Pacific region which is seen as key to its future.
Questions for Discussion

Q1: Did Starbucks’ control system fail when it came to introducing a mobile-ordering app?
Why or why not?

Yes. Starbucks’ control system has failed when it came to introducing a mobile-ordering
app as this is their first time bringing in the system into the store and they were still not
familiar and did not have many experiences with the mobile-ordering technology.
Q2: Describe the organizational control process as it relates to Starbucks’ Mercato
business.

● Managers need to decide the organization’s standard of performance or goals against

which performance is to be evaluated.
● Measuring actual performance.
● Actual performance needs to be compared against chosen standards of performance.
● Evaluating the outcome and take corrective action if the standard is not being met.
Q3: Explain why the mobile-ordering app has been such a headache for store managers
and employees in terms of day-to-day business and overall store performance.

● This system is having less control over customers’ experience with the delivery.
● Cause a traffic jam or delays to get the order done.
● The manager also does not have a lot of opportunities to fix the bad experience of
customers as it did not happen in the store.
Q4: What are some of the challenges the new Starbucks CEO faces in terms of
organizational culture after taking over CEO duties from Howard Schultz?

● The company introduces a new line of sandwiches and salads that are made fresh
daily in outside kitchens.
● Johnson has taken good moves to improve the system by adding touch screen
tablets and testing the idea of hiring additional staff at the busiest locations to
improve the order speeds.
Conclusion

Mobile-ordering technology can help a store to increase sales growth and move ahead from competitors, but without a proper
control system and management, it will cause more problems than fortunes to the company. Starbucks has taken a good move by
bringing in the mobile-ordering app system to the cafes. This system gains a lot of attention from customers from home as it is
convenient to have orders delivered in front of their house and this can improve their sales growth. But, as the company
familiarizing with the system, the company faces a lot of problems and issues such as cost increment, order delays, and complaints
from customers that have a bad experience with the order delivery. However, it is indeed normal to encounter problems when
introducing new systems to the store. Even though the system did not operate well, Starbucks remains calm and handles the
problems with appropriate ways and experimenting with alternatives that will help to succeed the system.
Thank You