BUMGT1501 – Management Principles

Case study 1: McDonald's

Ray Kroc, the founder of McDonald's, once said, I don't know what we'll be serving in the year 2000, but we'll be serving more of it than anybody'. From its founding through to the early 1980s, McDonald's changed with consumers' tastes, seeming to give us what we wanted before we even knew we wanted it. Today, however, Kroc's bold claim does not seem so assured. Although McDonald's still has a majority share of the US fast-food market and continues to expand internationally, the company is slipping fast in its ability to recognize and shape popular trends.

Some analysts and investors believe the widespread problems with McDonald's are due to the company's insular, arrogant culture. The average top executive at McDonald's started working at the company when Richard Nixon was President of the United States, and the company has been reluctant to bring in outside leaders to guide management as the external environment changes. And the board is made up of close-knit insiders who have done little to agitate for change. As performance declined, top leaders tended to blame others, such as dissident franchises, news reporters, and Wall Street analysts. If there were one thing I would change about McDonald's,' said senior vice-president Brad A. Ball, it would be to correct the misconceptions and misperceptions that have become so pervasive in the last few years.

In the late 1990s, McDonald's embarked on an effort to reform. Management was reorganized, and the then-head of the US domestic division, Jack M. Greenberg, brought in at least a handful of new managers, including executives from Burger King, Boston Market, and General Electric. He also divided the United States into territories, creating smaller companies to recapture some of Mcdonald's entrepreneurial zeal. We are not afraid to do things differently,' Greenberg said. Management began to recognize that, even though McDonald's was still the world's most successful restaurant company, it was far from achieving its potential. They were trying to return McDonald's to the healthy, adaptive culture of the early years when it was constantly in touch with the tastes of consumers.

By the late 2000s, McDonald's had made many changes, was operating more efficiently and sustainably and offered new products such as salads and cafe products. It increased sales across its 35,000 stores, obviously giving its 60 million customers per day an experience that they value, while also increasing the company's stock price by a factor of three over the five years to 2007. Growth in emerging economies has been very solid. McDonald's has more recently refurbished its stores and redesigned its products in leading markets such as Australia, now making many products to the specific orders of its customers. By 2014, McDonald's had substantially accomplished this product and process upgrade by rolling it out on an international basis. As of 2016, McDonald's has engaged in significant innovations, from Create Your Taste' to table service options and a range of new services and initiatives. McCafe's, which is an Australian innovation for McDonald's, has been rolled out internationally. These new services have led to significant sales growth and have even brought new customers to consume McDonald's.

Question.In week 3, we discussed General, Task, and Internal Environments - briefly define the three task environments and referring to the McDonald's case above, identify the relevant General, Task, and Internal Environment factors that are presented together with any references to Corporate Culture and Managing Change concepts (from weeks 3 and 10 respectively).

Case study 2: MARS

When people get a job at Mars, Incorporated, one of the largest and most successful private companies in the world, they rarely leave. Mars has been on Fortune's The Best Companies to Work For' list since 2013. It was ranked 95th in 2013, 76th in 2014, 85th in 2015, and 99th in 2016. Further, the company also features in Best Workplaces to Retire From' (ranked 24), Best Workplaces in Manufacturing & production' (ranked 14), Best Workplaces for Millennials (ranked 63), and World's Best Multinational Workplaces' (ranked 12) lists in 2016.

Mars, the maker of confectionery such as M&Ms and Snickers and pet food such as Pedigree and Whiskas, is a private, family-owned business with more than US$35billion in sales. At Mars, 89 percent of employees say their workplace is great ranking very high on challenges, atmosphere, rewards, pride, communication, and bosses. Perks and programs include:

• The Mars Volunteer Program (MVP), is a worldwide initiative that allows Mars's employees (who the company refers to as associates) to make a difference in the communities where the company operates and sources its products
• The Mars Ambassador Program (MAP), helps qualified employees develop their skills while building partnerships around the world
• The Make The Difference program and Awards, which celebrates the impact the work of an individual or team can make on an entire organization, and Mars communities by bringing The Five Principles of Mars to life
• Open offices create an environment that encourages networking, openness, and communication that spans physical and organizational barriers
• The Pets @ Work initiative, which allows employees to bring their pets to work
• Health and wellness programs, aim to find the right work-life balance as well as foster a healthy and safe environment, including stress management, weight management, and other wellness programs.

Managers in other companies are discovering that creating an environment where people feel valued and that they are making an important contribution is one key to high employee motivation, which is an essential ingredient for organizational success. Most people begin a new job with energy and enthusiasm, but employees can lose their drive if managers fail in their role as motivators. Yet motivation is a challenge for many managers because motivation arises from within employees and may differ for each person. Some people are motivated primarily by money, others are motivated to perform well because managers make them feel appreciated for doing a good job, and still others find their primary motivation in the challenge of solving complex problems or making a contribution to society.

Question: Explain the Hackman and Oldham Job characteristics model (week 9), and from the Mars case study above, identify relevant factors that may align with the Job characteristics model (specifically the Core Job Dimensions and Critical Psychological states).

Case study 3: A Leadership Dilemma at Timberland

In the early 1990s, Jeffrey Swartz, the then chief operating officer of Timberland, and son, nephew, and grandson of the founders of the company began transforming Timberland into a company known as much for philanthropy as for its boots. But Swartz found himself in a quandary when one of the company's bankers implied that the focus on philanthropy was hurting the company and its stakeholders. Swartz's transformation began when City Year, a non-profit agency involved in various community projects, asked for boots for its workers. Swartz convinced other Timberland executives to answer the call. Over time, Timberland provided free boots and uniforms for about 10,000 people. Visiting some of the community projects, Swartz was deeply moved by what volunteers were accomplishing. I saw what real power was that day,' Swartz recalls. I didn't realize how hungry I was for that kind of purpose'.

Timberland began shutting down operations one day each year so the company's thousands of employees could get paid to take part in a variety of company-sponsored philanthropic projects building homeless shelters or cleaning up playgrounds. The company also started giving employees 16 hours of paid leave annually to volunteer at charities of their choosing. But the emphasis on corporate social responsibility doesn't come cheap. The all-day event alone costs about US$2 million a year in lost sales, project expenses, and wages for employees. When Timberland's profits were soaring, that seemed fine, but then the company hit a rough patch. It reported its first operating loss since going public, laid off some employees, and shipped some work overseas to cut costs. One of Timberland's bankers bluntly told Swartz that the company needed to cut this civic stuff out and get back to business. Swartz wondered if he was right. Maybe managers were failing the organization and its stakeholders by plowing too many resources into philanthropic activities.

Timberland decided to continue its commitment to social causes. In fact, later the same year when Swartz was faced with this dilemma, the company doubled the number of hours it underwrote for employees to do community service. Timberland, through its Path of Service employee volunteering program, offers employees up to 40 paid hours per year to service in their communities. In 2014, the program had racked up more than 1 000 000 hours since its launch. In order to help employees take advantage of their volunteer service hours, every year Timberland organizes two annual global service days: Earth Day in April and Ser-a-palooza in autumn. Both events unite the company and its partners to address pressing environmental and social needs. Projects have included planting trees in Thailand, restoring a wildlife reserve near London, and helping build homes for families in need in the United States.

Timberland's commitment to discretionary responsibility has contributed to exceptional loyalty among many employees because people feel good about the work they do. This resulted in Timberland featuring in Fortune magazine's survey of the 100 Best Companies to Work For. However, some people felt that Timberland should have cut out its activities to focus on meetings its economic responsibilities when the company hit difficult times which resulted in the company being sold to the VF Corporation in 2011. In addition, some felt that the company was not meeting its ethical responsibilities by spending money on community service when it was laying people off and shipping jobs overseas. Some employees asked,' Doesn't charity begin at home? Swartz said. He believed, however, that cutting out community service would damage morale and lower commitment without solving the financial problems. Fortunately, Timberland rebounded from its difficulties and continued to grow. However, managers will continue to face challenges concerning how to best meet their responsibilities to all stakeholders.

Question: Define the term Triple Bottom Line' and using the information in the Timberland case study above, identify what ethical questions or issues, Jeffrey Swartz would have had to respond to in making the decision to not only continue community service but to increase the company and employees' commitment to community service. Briefly discuss if you agree or disagree with Swartz's decision and the reasons for your agreement or disagreement.