iggy's bread dt

5/21/2018 Iggy's Bread DT

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(i)

Executive Summary

Igor and Ludmilla started Iggys bread of the world. The companys goal was to provide high quality

bread and not to consider customers as mere numbers. They treated employees as an intrinsic partof the company. The passion and hard work of the founders resulted in companys success to

establish itself as a high quality supplier of the bread. In order to meet demands of new big

customers, the founders thought of expanding the business and hired McRae as COO. McRae started

to build new management team by recruiting the members who were either his family members or

friends. The working style of the new management team was not in line with the companys culture

and employees were not happy with the new team. McRae hired an executive without consulting

the founders which has resulted in conflict between them. When Igor asked for possible explanation

McRae submitted his resignation citing that the founders were not ready to accept him. Though he

took back the resignation, Igor realised and found that McRae was not happy with his compensation

and want better pay and bonuses based on profit. The founders and Board of the directors had to

decide whether to accept his demands for pay increase. After analysing the situation, it is

recommended that the company should scale back and develop a new management team under

the guidance of Ludmilla for expansion.


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(ii)


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TABLE OF CONTENTS

Letter of Transmittal i

Executive Summary ii

THE REPORT

1.Situation Analysis.................................................................................................................. 1

2.The Problem.......................................................................................................................... 2

3.Options/Alternatives............................................................................................................. 2

4.Criteria for Evaluation......................................................................................................... 2

5.Evaluation of Alternatives.................................................................................................... 2

6.Recommendation................................................................................................................... 2

7.Action Plan............................................................................................................................ 3


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Situation Analysis

Igor and Ludmilla who were passionate about bread making and its business respectively have

started Iggys Bread of the world.They were using all natural organic ingredients that has

differentiated them from other bread makers .The mission of the company was to provide high

quality bread, nurture respectful work environment and not to treat customers as merely numbers.

Igor installed state of art ovens and insisted that that much of the work to be done by hand. Along

with one of his bakers, Igor travelled around the world to find new recipes and recruited experts to

help them out in new areas.

Igor and Ludmilla have generated leads by taking samples of their bread to speciality food stores and

kitchens. Customers were excited and agreed to have contract with them as vendors. Soon, the sales

of the company had grown to a million dollar and Iggys was featuredin a monthly Magazine. The

success was attributed to the founders passionand hard work, word of the mouth and the high

quality of the product.

Ludmilla treated employees as an intrinsic part of the business and wanted them to get pleasure out

of what they do. The hierarchy of the organisation was flat and Ludmilla encouraged employees to

approach her or manager, even if the problem was personal. She did not want person problems to

spill over into the bread, into the product. Her ultimate goal was to fully include all of Iggys

employees in every aspect of the business and make them understand all of the parts of the

business. It was difficult to integrate the immigrant workers in to the business. Menezes, the

production manager, tried to bring the workers together through soccer games.

Igor preferred to hire kitchen workers with no previous baking experience, so that they could be

trained to bake bread the Iggys way.

Nikola, Igors younger brother used to help them and as the organisation grew over time, Nikola

took more responsibilities and became general manager of Iggys. Ludmilla was no longer working at

the bakery in any formal capacity as she was busy in taking care of her children. Day to day

operational decisions was left to Nikola and employees and the founders were involved in bigger

decisions.

The business had grown rapidly and Igor and Ludmilla faced a critical business decision. They

required capital to expand and to serve new big customers. Ludmilla was not comfortable in selling

part of the business to Venture Capitalist and for the first time in companyshistory they took debt.

Igor advised Ludmilla that they have to hire real business people to expand the business. They hired

Matthew McRae whom Ludmilla know as a passionate individual. He acted as a consultant and soon

assumed the position of COO. McRae started to assemble his management team and hired his

relative and friends as executives. Igor and Ludmilla were worried that the changes were happening

too quickly and employees felt that they were isolated from the operations.

McRae hired two executives without consulting the founders and one of them were not performing

as expected and McRae was unwilling to change the executive. The relationship between founders

and McRae became strained to the point that they were not communicating effectively. Igorapproached McRae for the possible explanation and McRae submitted resignation citing that the

founders are not ready to accept him. Though, McRae wanted to take back resignation, Igor realised

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that the McRae was unhappy that he was undercompensated and he wanted significant raise as well

as bonuses based on profit. Igor and Ludmilla and their board of directors were to decide on how to

respond to COO McRaes demands.

The Problem

Iggys bread of the world,an in-between bakery has to decide whether it should agree to the

demand of its COO McRae, may be as any other start up or hire new management team or scale

back

The options

Accept McRaes demandsand expand the business Fire McRae and search for management team and expand the business Scale back and under Ludmilasguidance build a leadership program. Recruit graduates from

b schools and mould them to fit Iggys culture and expand slowly.

Criteria for evaluation

Maintain the core values and mission on which Iggys bread of the world was built. Meet the demand of the new customers by expanding the business.

Evaluation of Options

Accept McRaes demands: By accepting McRaes demands, founders can expand the business but

the intention of the McRae seems to generate more profit and also his style of working is not in line

with the organisationscore values and mission. Thus, Criteria 1 is not satisfied.

Fire McRae and search for new Management team: It is highly not possible to predict whether the

new teamswork style will be aligned with the companys core values and mission.Thus, Criteria 1 is

not satisfied.

Scale back and develop a leadership program:Iggys bread of the world can scale back and remove

the entire management team built by McRae. Ludmilla can start concentrating on the business at

least in the first few days of the development of leadership program. Recruits from b schools can be

trained under the guidance of the Ludmilla and impart the Iggys cultureinto them. New hires can be

given the expansion responsibilities under Ludmillas leadership. Thus, Criteria 1 is satisfied.

Recommendation

It is recommended that Iggys bread of the world should fire McRae and scrap his management

team. It should scale back and develop a new management team under the guidance of Ludmilla for

expansion.

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Action Plan

Scale back the business operations Ludmilla can start involving in the business She can develop a leadership program that is suitable for Iggys culture with the help of

external HR consultants.

Recruit fresh graduates from b schools with the help of search firms. Train the graduates to mould them to suit the Iggys culture. Expand the business slowly by monitoring the operations and new management team

working style.

iggy's bread dt

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