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An Exploration of the Impact of Environmental Factors and Leadership Style: A Case

Study of “Undercover Boss” – Cinnabon S4 EP3

Group Members

MGT 601: Leadership in the Global Context

University Canada West

20th August, 2023

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Table of Contents
Executive Summary...................................................................................................................3
Introduction................................................................................................................................4
Internal and External Environmental Factors............................................................................4
Internal Environmental Factors..................................................................................................4
External Environmental Factors.............................................................................................6
Political Factors.................................................................................................................6
Economic Factors...............................................................................................................7
Social Factors.....................................................................................................................8
Technological Factors........................................................................................................8
Environmental Factors.......................................................................................................9
Legal Factors....................................................................................................................10
Leadership Style and Framework.............................................................................................10
What if Analysis.......................................................................................................................11
Conclusion................................................................................................................................11
List References.........................................................................................................................12
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Executive Summary

Cinnabon is a global cinnamon roll bakery chain established in 1985 and it renowned for its

iconic cinnamon rolls and complementary baked goods. In the season 4, episode 3 of

"Undercover Boss,” President Kat Cole exposes the challenges and strengths of Cinnabon.

The challenges that the company include high rate of turnover due to issues related to

inadequate wages, lack of training to new employees, increase in level of customer

dissatisfaction, and a negative work environment. Cinnabon’s strengths include a loyal

customer base, committed workers, and strong brand identity. From the insights of her

undercover experience, Cole initiated transformative changes aimed at promoting a

conducive work environment and improved training protocols. External environment factors

for Cinnabon were analyzed using PESTLE analysis. The external factors at Cinnabon

include the need to adhere to health, safety, and labelling regulations to uphold customer

trust, consumer spending trends, inflation rates, cultural preferences, changes in lifestyles,

drive customer engagement and streamline production through technology, sustainability

concerns and climate-related disruptions, and compliance with food regulations.

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Introduction

Cinnabon is a multinational chain of cinnamon roll bakeries that initiated in 1985

(Cinnabon, 2023). Currently, the company has more than 900 locations in forty countries

globally (Cinnabon, 2023). The company is known for its cinnamon rolls and other baked

goods, such as smoothies, and muffins. In season 4, episode 3 of Undercover Boss titled

"Cinnabon," Kat Cole, the President of Cinnabon, goes undercover to experience the

organization from the perspective of her employees (Dave, 2014). Cole learns that Cinnabon

faces various challenges that include high rate of turnover, unconducive work environment,

and inadequate training for new employees. Regardless of the challenges, Cole notes that the

company has several strengths, including a loyal customer base, a strong brand identity, and

dedicated workers (Dave, 2014). She users her findings from her undercover experience to

make changes at company, such as increasing wages and salaries for employees, providing

training opportunities for new employees, and creating a positive work environment. This

report is, therefore, based on “Undercover Boss” episode of Cinnabon, a global chain of

cinnamon roll bakery chain to analyze the company’s internal and external environmental

factors, leadership styles, and a hypothetical 'what if' scenario, to provide an understanding of

its operations and strategic actions within the context of the global bakery market.

Internal and External Environmental Factors

This section discusses the internal and external environmental factors that affect Cinnabon.

The first part outlines the internal factors within Cinnabon, while the second part highlights

the external aspects, including political, environmental, economical, social, and technological

factors that affect the organization in its industry and market.

Internal Environmental Factors

At Cinnabon, internal environmental factors include elements within the company

that influence its strategies, overall performance, and operations (Utomo, 2020). Internal
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factors originate in the company itself and have impact on its ability and success to attain its

goals. Cinnabon’s internal environmental factors high turnover among employees, lack of

training for new workers, and unconducive work environment.

Cinnabon has experienced a high turnover rate of employees that can be costly to it.

Ongori (2017) outlines that there are several factors that contribute to employee turnover,

including low wages and salaries, lack of opportunities for career advancement, and poor

working environment. The high turnover can lead to increased training costs because of new

employees who need to be trained to understand the organization’s procedures and products.

Secondly, the high turnover disrupts operations since new employees are less productive than

as experienced labourers. The high turnover can also lead to a lack of knowledge and

knowledge among the workforce that impact the quality of services and products (Colton &

Roberts, 2016). The organization has taken appropriate measures, including to increase wages

and offer training opportunities to employees to reduce its turnover rate.

Cinnabon is also faced with a lack of new and trained employees in its workforce.

Many employees have reported that they have received no training when they were employed

at company. The lack of training has led to mistakes within the organization, such as poor

customer service and incorrect orders (Beaver & Hutchings, 2015). The inadequate training

has also led to increase customer dissatisfaction because customers could not receive the

products and services, they expect from Cinnabon. For example, some employees have

reported of only being given a brief overview of the job on the first day of work and then left

to figure out the rest for themselves.

The company has experienced negative work environment. Employees feel underpaid,

overworked, and underappreciated. They have reported of being bullied and harassed by

company’s management. The unconducive environment led to low moral and productivity.

Cinnabon's unconducive work environment manifests in different ways. For example,

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employees are feeling stressed and overwhelmed because of long hours and heavy workloads,

as well as feeling intimidated and afraid due to harassment and bullying from management

(Benson & Dundis, 2023). Overall, the negative work environment has negative

consequences for Cinnabon that can lead to high employee turnover, legal issues, customer

dissatisfaction, and low productivity and morale.

External Environmental Factors

An external environmental factor is a factor, affecting a business from outside of the

business. These businesses do not have direct control of these factors, although they have

significant impact on their performance and operations. A PESTLE analysis is used to

analyse the external environmental factors that influence Cinnabon. A PESTLE analysis is a

framework that help analyse and identify external macro-environmental factors that impact

an organization. The PESTLE stands for political, social, technological, environmental, and

legal factors. The PESTLE analysis of Cinnabon include:

Political Factors

The main political factors that affect Cinnabon include regulations and compliance

and taxation policies. Health and safety regulations and labelling are indirectly affecting the

operations of Cinnabon. Cinnabon operates in a highly regulated business in which health and

safety are important factors (Thottoli, 2022). As a result, the company needs to comply with

the laws for food preparation, handling, and sanitation are not only legal requirements, but

also key part of retaining customer trust. Adherence to these rules guarantees that Cinnabon

maintains a high level of sanitation and safety throughout its manufacturing procedures

(Goslinga et al., 2019). In addition, Cinnabon is required to provide all labelling requirements

that include accurate ingredient lists, allergen information, and nutritional content. The

compliance with these requirements helps consumers to make informed decisions and choices

about their food consumption and to allow the business to align with evolving consumers’
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needs, such as preferences for healthier options. However, failure to meet labeling

requirements can result in legal consequences and potential damage to the reputation of

Cinnabon.

Moreover, taxation policies can impact profitability and pricing strategies of

Cinnabon. According to Thottoli (2022), taxation policies differ from country to country and

can significantly affect financial performance of companies in different sectors, including

Cinnabon. For example, higher tax rates lead to increased operational costs that negatively

affect profitability. Tax structures can also impact the organization’s pricing strategies

because higher taxes necessitate adjusting product prices to maintain profit margins.

Economic Factors

The two economic factors that impact the company’s operations are change in consumer

spending and increase inflation rates.

Consumer spending patterns are intertwined with the broader economic environment

that shape demand for permissive treat for products of Cinnabon. Economic health also

directly influences disposable income that drive purchasing behaviours. In economic stability,

increased disposable income leads to a greater willingness to indulge in comfort products that

benefit Cinnabon (Cozmei9& Şerban, 2014). However, economic instability leads to cautious

spending habits that affect sales of this organization. Understanding these trends informs

strategic decisions, leading marketing, products, and prices to match economic fluctuations.

In growth period, the focus on premium options can cater to higher spending capacities,

whereas during economic challenges, the emphasizes on value-oriented choices and

promotions can sustain customer engagement.

Inflation rates leads to price hikes that influence Cinnabon’s profitability and pricing

strategies. Inflation increases operational expenses, such as prices of ingredients, including

flour, spices, and sugar that directly impacts production. Ehiogu et al. (2018) postulate that
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inflation also increases wages of employees, rent expenses, and utilities that further influence

the company’s operations. To respond to the high inflation rates, Cinnabon has balanced

consumer affordability with fiscal health through different strategies namely: supply chain

optimisation and operational efficiencies to lessen cost escalation (Belanová, 2023). The

company also adopted strategic pricing that reflect increased costs while communicating

transparently with consumers to ensure financial sustainability and brand loyalty. Thus,

informed financial and pricing strategies are key to sustain organizational operations during

inflation to prevent fluctuations.

Social Factors

Cultural preferences and changing lifestyles are social factors that impact Cinnabon’s

operations. Housden (2020) postulates that cultural factors influence taste preferences and the

acceptance of Cinnabon’s offering in various regions. As a result, cultural preferences play an

important role to shape individuals’ tastes to embrace the company’s products in different

geographical areas. A combination of cultural factors, from culinary traditions to flavour

profiles have influenced the reception of Cinnabon’s offerings.

Furthermore, changing lifestyles characterized with time constraints and pursuit of

convenience affect the demand of the organization’s products and services. The increase in

hectic and busy routines causes a raise in the desire for on-the-go snacks and meals that

perfectly correspond with these changing patterns (Decock & Cappelle, 2015). For this

reason, Cinnabon’s ability to harmonize and adapt with these cultural differences and

changing lifestyles is important in creating a compelling presence and establishing long-term

consumer ties across global marketplaces (Decock & Cappelle, 2015).

Technological Factors

The first technological factor that affects Cinnabon is digital channels that

revolutionize customer interaction. Technological advancement is reshaping the way people

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engage with businesses, and the company is leveraging digital channels. Technology has also

led to change in bakery business. Through innovative online platforms, customers can order

the products of Cinnabon on their devices, such as smartphones and tablets (Degbey & Pelto,

(2023). Decock and Cappelle (2015) postulate that real-time tracking and personalized

delivery options ensure that the company’s services are convenience its customers. In

addition, technology has improved Cinnabon’s digital marketing strategies as a result of data

analytics and targeted advertising to ensure that every message reach specific audience.

Technology advancement has led to streamlined production through automation at

Cinnabon. The attractive aroma of freshly made Cinnabon’s rolls now coexists with the

technology (Pop et al., 2019). The company has achieved unprecedented levels of efficiency

through the adoption of automation and using advanced technology into its production

processes. For example, the mixing ingredients and baking ensure that each roll goes to the

oven in its finished state (Pop et al., 2019). This technology leads to automated systems at

Cinnabon that increase the quality of its products.

Environmental Factors

Sustainability concerns that reshape practices and climate change are two

environmental factors that influence operations of Cinnabon. The increase in environmental

awareness led to change in consumers’ behaviours. This awareness spreads throughout

Cinnabon's targeted market, encouraging the company to source its ingredients from

suppliers who value environmental practices. As a result, Cinnabon needs to make effective

packaging choices that match the increasingly changing acts of sustainability to reduce its

ecological footprint (Chen et al., 2019). Hence, Cinnabon has made effective decisions to

comply with all different environmental regulations and laws globally.

Climate change impacts business operations of Cinnabon due to its potential

disruption in the supply of its key ingredients, including cinnamon (Griffin, 2021). As climate
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patterns change and extreme events become more frequent, regions that produce cinnamon

experience altered growing conditions. For example, unexpected heavy rainfall, prolonged

droughts, and temperature fluctuation have compromised cinnamon harvests that leads to

decreased yield and even crop failures. This disruption in the cinnamon supply chain could,

therefore, negatively affect Cinnabon’s operations. The disruption affects the firm’s

operations because it reduced availability of quality cinnamon can lead to higher ingredient

costs that force forcing it to either absorb the increased expenses and pass them on to

customers (Paul et al., 2018). Lastly, the scarcity of the raw materials, such as cinnamon also

necessitate the exploration of alternative sources that influence the flavor profile and

consistency of the company’s products.

Legal Factors

Cinnabon has to comply with food regulations, such as food safety, labelling, and

hygiene laws that are important for the company’s reputation and legal status. The company

complied with food safety regulation to increase level of product integrity (Dave, 2014).

Effective quality control mechanisms, production processes, and ingredient sourcing are

components of the company that enabled it to adhere to food safety regulations. In addition,

labelling laws compelled Cinnabon to differentiate products from those of competitors

(Dauvergne, 2018). Every product of the company has catering information of the ingredients

used to increase the level of transparency that customers needs (Bray et al., 2019). This

transparency encourages a sense of trust because customers are able to make informed

choices that aligned with their dietary preferences and restrictions, thereby, nurturing a loyal

customer base.

Leadership Style and Framework

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What if Analysis

Conclusion
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