AEREN FOUNDATION’S Maharashtra Govt. Reg. No.: F-11724

MARKS : 80 COURSE : GDM

SUB: GENERAL MANAGEMENT

N. B.: 1) Attempt any Four Cases 2) All cases carries equal marks.

Case: 1

TRI – STATE TELEPHONE

John Godwin, Chief executive of Tri – State Telephone, leaned back in his

chair and looked at the ceiling. How was he ever going to get out of this

mess? At last night’s public hearing. 150 angry customers had marched in to

protest Tri – State’s latest rate request. After the rancorous shouting was

over and the acrimonious signs put away, the protesters had presented state

regulators with some sophisticated economic analyses in support of their

case. Additionally, there were a number of emotional appeals from elderly

customers who regarded phone service as their lifeline to the outside world.

Tri – State Telephone operated in three states and had sales of over $3 billion.

During the last five years, the company had experienced a tremendous

amount of change. In 1984, the AT & T divestiture sent shock waves

throughout the industry, and Tri-State Telephone had felt the effects, as

pricing for long distance telephone service changed dramatically. The

Federal Communications Commission instituted a charge to the effect that

customers should have “access” to long – distance companies whether or not

they were in the habit of making long distance calls. Consumer groups,

including the Consumer Federation of America and the Congress of Consumer

Organizations, had joined the protest, increasing their attention on the

industry and intervening in regulatory proceedings wherever possible. The

AN ISO 9001 : 2008 CERTIFIED INTERNATIONAL B-SCHOOL

FCC was considering deregulating as much of the industry as possible, and

congress was looking over the commissioner’s shoulder. Meanwhile, the

Department of Justice and Judge Harold Greene both of whom were

responsible for monitoring the AT & T divestiture) continued to argue about

what business companies like Tri – State should be engaged in.

In addition, technology was changing rapidly. Cellular telephones,

primarily used in cars, were now hand-held and could be substituted for

standard phones. Digital technology was going forward, leading to lower

casts and requiring companies like Tri – state to invest to keep up with the

state of the art. Meanwhile, rate increases negotiated during the inflationary

1970s were keeping earnings higher than regulators would authorize. New

“Intelligent” terminals and software developments gave rise to new uses for

the phone network (such as using the phone for an a arm system), but as

long as customers paid one flat fee, the phone company could not benefit

from these new services.

Godwin’s company has recently proposed a new pricing system

whereby users of local telephone services would simply pay for what they

used rather than a monthly flat fee. All of the senior managers were

convinced that the plan was fairer, even though some groups who used the

phone with netable frequency (like real estate agents) would pay more. It

would give the company an incentive to bring new services to their

customers, and customers would be able to choose which ones to buy. None

of them had anticipated the hue and cry from the very customers who would

save money under the new plan. For instance, Godwin’s studies showed that

the elderly were very light users of local service and could save as much as

20 percent under the new plan.

After the debacle at the hearing the previous night, Godwin was unsure

how to proceed. If he backed off the new pricing plan, he would have to find

a different way to meet the challenges of the future – may be even different

businesses to augment company income. Alternatively, the company could

not stand the negative press from a protracted battle, even though Godwin

thought that the regulators were favorably disposed toward his plan. In fact,

Godwin himself believed the company should help its customers rather than

fight with them.

Questions:

1. Who are the stakeholders in this case?

2. Which stakeholders are most important?

3. What are the critical trends in Tri – State’s environment?

4. Why do you think Tri – State’s customers are so upset?

5. What should John Godwin do?

CASE NO. 2

FRESH IDEAS AT FRESH FIELDS

Fresh Fields may be a supermarket, but what it’s super at selling is its image:

“Good for you foods.”

A New Age grocery store, Fresh Fields falls somewhere between a

health food store and a traditional supermarket. It is not merely a health food

store, because it carries a wider variety of foods including fresh pasta, baked

goods, and seafood and deli selections. What distinguishes Fresh Fields from

supermarkets lies in what is absent from the shelves, rather than what is

present, for Fresh Fields shoppers will not find foods containing lots of

preservatives and artificial flavorings, such as Jell – O and Oreos, that they

can purchase at other supermarkets. What Fresh Fields offers is “ organic

and conventional produce, meats, seafood, dairy products, baked goods from

an in – store bakery, deli items gourmet and vegetarian prepared foods, a

wide array of cheese, a full grocery department, an extensive selection of

supplements, skin enriching cosmetics and natural health care products and

environmentally friendly household goods.”

The arrival of Fresh Fields coincides with that of the New Age, health –

conscious trend of the 1990s, and the company has not hesitated in taking

advantage of consumers’ new whopping preferences resulting from the trend.

According to a 1992 survey by Health Focus, a Pennsylvania – based research

firm, 90 percent of shoppers say that health has become a factor in

determining the food they buy. This perhaps accounts for why many

Americans are willing to pay up to 20 percent more for natural foods.

Actually, the Fresh Fields premium tends to hover closer to 5 percent, and

when in season, Fresh Field’s locally grown organic produce can even cost

less than produce sold at other supermarkets.

A team of entrepreneurs began Fresh Fields in 1991. The team

included 33 year old Mark Ordan, former Goldman Sachs investment banker

as CEO and President, 75 years Old Leo Kahn, founder of Staples, the

prosperous office – supply sores, as chairman and 44 year old Jack Murphy,

former manager of the Heartland supermarket chain in New England, as Chief

operating officer.

Within the first 19 months, five Fresh Fields locations opened in

Maryland and Virginia. Expanding into Pennsylvania and Illinois, by mid –

1994 Fresh Fields had opened a total of 14 stores in the four states, with

more in the planning stages.

Much of Fresh Field’s success can be attributed to the fact that the

company offers only the freshest produce, often from local growers. The

company screens growers to find those who use natural methods of pest

management and apply the least amount of agricultural chemicals. In

addition, Fresh Fields seeks meat and poultry from farms, not factories, to

avoid the growth – promoting drugs often used. Fresh Fields also makes an

effort to get to know the people who catch the seafood, and seeks out fish

caught in deep, clean waters, not from coastal waters threatened by

pollution.

According to Kahn, though, the key to Fresh Field’s success lies in

pleasing the customer. “Everybody says the same things please the

customer – but while everybody says it, not too many practice it. The

customer is smarter than all of us. Here we’re building an organization that

zeroes in and keeps customer satisfaction in mind.”

Instilled in Fresh Fields is a warm, friendly caring culture that begins

with Kahn and travels through to all stakeholders: employees, suppliers,

customers, community members. Whereas at other stores, such as Wal –

Mart, there is a single, symbolic greeter by the door, every employee at Fresh

Field is a sort of “greeter”, and he or she looks up, smiles and says “hello” to

shoppers as they pass by. Within the company, there are no employees,

there are only “associates” many of whom Kahn knows by name.

Much of what Fresh Fields is about is relationship building. The warm

relationship between the company and associates lies at the heart. From

there, associates build relationship with suppliers to add the personal touch

that is integral to the Fresh Fields quality image.

As shoppers walk through the stores, numerous samples are offered.

“Originally, I bought organic produce and spent $25 to $30 every week or

two.” Says Merri Mukai, a homemaker in Annandale, Virginia. “Then I tried

the baked goods and upped my spending by $60. Now I’m buying meats and

eyeing the fish. They’ve definitely got me hooked.”

Says Fresh Fields, “We guarantee your satisfaction unconditionally. You

can consider our guarantee as an opportunity to be adventurous and to try

new products, without risk. If for any reason you are less than completely

satisfied with something you purchase at Fresh Fields, we will cheerfully offer

you a full refund.”

Questions:

1. What economic and social factors should Fresh Fields managers

watch?

2. Suppose you manage a local supermarket and Fresh Fields

comes to town. How would you reinvent your organization to

meet the challenges posed by Fresh Fields?

Case: 3

RESPONDING TO ALLEGATIONS OF RACISM :

FLAGSTAR AND THE PLEDG

The 1990 s have witnessed an increased emphasis on valuing diversity. With

both the marketplace and the workforce becoming more and more diverse,

many managers have redesigned their company’s cultures to reflect and

encourage multiculturalism. Changing a company’s culture, however, is often

more difficult than managers might first believe. At Denny”s for example,

promoting multiculturalism required a reworking of its corporate culture from

top to bottom.

In the early 1990s, Denny’s found itself the target of numerous

allegations of racism, by both customers and employees. Black customers

asserted that they were not receiving the same treatment at Denny’s as

white customers. Some complained that they were either forced to wait for

their food longer than white customers or denied service entirely, others said

that they were forced to pre-pay for their meals while white customers in the

restaurant were not. There were also allegations that Denny’s restaurants

would close if there were too many black customers. In addition, Denny’s

was accused of discriminatory hiring practices as well as preventing blacks

and other minorities from reaching management and franchise positions.

None of this garnered much attention, however, until a suit was filed on

March 24, 1993, by a group of minority customers in San Jose, California, who

made the all – too – familiar allegation that Denny’s had required cover

charges and pre-payment of meals from minority customers, but not from

white customers.

In response to these charges, Denny’s parent company, Flagstar,

formally apologized to the customers, and Flagstar CEO Jerry Richardson

dropped the cover charge and pre-payment policies and explained that they

had been intended to prevent late night “ dine – and – dash” theft and that

any discriminatory implementation of them was in direct violation of

corporate policies. Richardson admitted, however, that he had been unaware

that the cover charge and pre-payment policies even existed within the

company. Furthermore, Richardson began talks with civil rights groups such

as the NAACP. Flagstar also signed a consent decree issued by the Justice

Department that required spot testing of Denny’s restaurants for

discriminatory practices as well as an anti-discrimination training program for

all Denny’s staffers. “Our company does not tolerate discrimination of any

kind,” Richardson assured all, and his actions seemed to support his words.

Then, on May 24, 1993, six black Secret Service agents filed suit

against Denny’s for allegedly having denied them service at a Denny’s in

Annapolis, Maryland. The six men claimed that while they received

deliberately slow service, their white counter parts were served in a timely

fashion. “Hearing the allegations made yesterday by Six African – American

Secret Service agents on national television that they were not treated fairly

at Denny’s was a painful experience for our company,” Richardson admitted.

The highly publicized suit served as a catalyst that set off a whirlwind of

changes throughout Flagstar. In a late May Richardson issued an internal

memo that marked the beginning of Richardson’s pledge to change. “I am

distressed that some people in our company haven’t gotten the message that

we will not tolerate unfair treatment of customers,” he wrote. “ The past year

has been a trying experience, particularly for many of our African – American

employees who are embarrassed by what happened. This is my personal

pledge to them to restore their pride in Denny’s.

Richardson stopped promising change and started creating it. On July

1, 1993, Flagstar reached an historic agreement with the NAACP. The

agreement, which was the most far-reaching arrangement the civil – rights

organization had ever signed, represented a breakthrough in relations

between minorities and businesses. The plan targeted several specific

problem areas within Flagstar. For example, of Flagstar’s more than 120,000

workers, 20 percent were black, but only 4.4. Percent of its managers were

black. Under the agreement, at least 12 percent of Flagstar’s managers will

be black by the 2000. The company also wanted to increase the number of

black-owned franchises; only one of Denny’s 405 franchises was owned by a

black person as of 1993, but Flagstar planned to have at least 53 black-owned

franchises by 1997. Flagstar also agreed to direct more marketing funds

toward minority advertising and to begin purchasing more goods and services

from minority – owned businesses. In addition, Flagstar promised to appoint

at least one minority to its board of directors. In the entire plan will direct

more than one billion dollars in jobs and economic benefits to minority

workers and companies by the year 2000.

Richardson also undertook efforts to restore Denny”s reputation as well

as his own. At the forefront of his efforts was “The Pledge”. “The Pledge”

was the name given to a 60 – second TV spot, which aired in 41 television

markets and on the Black Entertainment Television network during a two-

week period in June 1993. In it, Jerry Richardson and a representative sample

of Flagstar’s 46,000 employees endorsed a solemn pledge to treat customers

with “respect, diginity, and fairness.” “The whole idea for the ‘pledge’ started

with our desire to express support for our own employees.” Explained David

Hurwitt, Flagstar’s senior vice president of marketing. “These people have

been very much under the gun. We chose television for this special campaign

because we felt it was important to show people exactly who the Denny’s

employees are”. Overall, response to “The Pledge” was favourable. “Our

phone has been ringing off the hook since Denny’s aired this ad,” said W.

Gregory Wims, president of the NAACP in Rockville, Maryland, the largest

branch in the Washington, D.C.area. “About 90 percent of our members

approve of the commercials and the steps Denny’s has been taking to

improve relations with people of color.

Experience, however, had taught Flagstar that mere policy statements

do little good in the absence of training and monitoring. With this in mind,

Flagstar reaffirmed its commitment to its agreement with the Department of

Justice by steping up its multicultural training programs and agreeing to allow

the NAACP to conduct its own inspection of Denny’s restaurants. Denny’s

also set up a hot line for employees to use to report possible instances of

discrimination. In addition, Flagstar made significant management changes

during the summer of 1993 by installing three executives considered

particularly sensitive to diversity in the workplace: Norman Hill, Joe Russell,

and Ron Petty. Russell was appointed head of the diversity training program,

and Hill came on board to oversee field hiring. “ There are companies that

bury their heads in the sand and say, I’m going to conduct my business the

same way I’ve always conducted my business,” said Petty. “ And then there

are enlightened companies that say, “There are opportunities outside of the

way we’ve normally done business.”

The steps taken by Flagstar have been significant, not only because of

the model the company has set for other companies, but also because of

Flagstar’s own holdings, including 530 Hardee’s fast food units, 1,400

Denny’s family restaurants, 200 Quincy’s steak houses, 120 El Pollo Loco

outlets and more than 2,000 Canteen Corp. Food and Recreation Service

accounts. The community’s response to the allegations against Denny’s

confirm that multiculturalism can no longer be ignored.

Questions :

1. How would you describe the organizational culture at Flagstar ?

2. How does Flagstar deal with diversity ?

3. What challenges could Flagstar face in its near future ?

Case: 4

DISNEY’S DESIGN

The Walt Disney Company is heralded as the world’s largest entertainment

company. It has earned this astounding reputation through tight control over

the entire operation : control over the open – ended brainstorming that takes

place 24 hours a day ; control over the engineers who construct the fabulous

theme – park rides; control over the animators who create and design

beloved characters and adventurous scenarios ; and control over the talent

that brings the many concepts and characters to life. Although control

pervades the company, it is not too strong a grip. Employees in each

department are well aware of their objectives and the parameters established

to meet those objectives. But in conjunction with the pre-determined

responsibilities, managers at Disney encourage independent and innovative

thinking.

People at the company have adopted the phrase “Dream as a Team” as

a reminder that whimsical thoughts, adventurous ideas, and all – out

dreaming are at the core of the company philosophy. The over all control

over each department is tempered by this concept. Disney managers strive

to empower their employees by leaving room for their creative juices to flow.

In fact, managers at Disney do more than encourage innovation. They

demand it. Projects assigned to the staff “ imaginers” seem impossible at

first glance. At Disney, doing the seemingly impossible is part of what

innovation means. Teams of imaginers gather together in a brainstorming

session known as the “Blue Sky” phase. Under the “Blue Sky”, an uninhibited

exchange of wild, ludicrous, outrageous ideas, both “ good” and “ bad”,

continues until solutions are found and the impossible is done. By demanding

so much of their employees, Disney managers effectively drive their

employees to be creative.

Current Disney leader Michael Eisner has established the “Dream as a

Team” concept. Eisner realized that managers at Disney needed to let their

employees brainstorm and create with support. As Disney president Frank

Weds says, “If a good idea is there, you know it, you feel it, you do it, no

matter where it comes from.”

Questions :

1. What environmental factors influenced management style at

Disney ?

2. What kind(s) of organizational structure seem to be consistent

with “Dream as a Team” ?

3. How and where might the informal organization be a real asset

at

Disney ?

Case: 5

“THAT’S NOT MY JOB” – LEARNING DELEGATION AT

CIN-MADE

When Robert Frey purchased Cin – Made in 1984, the company was near ruin.

The Cincinnati, Ohi-based manufacturer of paper packaging had not altered

its product line in 20 years. Labor costs had hit the ceiling, while profits were

falling through the floor. A solid quarter of the company’s shipments were

late and absenteeism was high. Management and workers were at each

other’s throats.

Ten years later, Cin – Made is producing a new assortment of highly

differentiated composite cans, and pre-tax profits have increased more than

five times. The Cin – Made workforce is both flexible and deeply committed

to the success of the company. On-time delivery of products has reached 98

percent, and absenteeism has virtually disappeared. There are even plans to

form two spin – off companies to be owned and operated by Cin-Made

employees. In fact, at the one day “Future of the American Workforce”

conference held in July 1993, Cin-Made was recognized by President Clinton

as one of the best – run companies in the United States.

“ How did we achieve this startling turnaround ?” mused Frey.

“Employee empowerment is one part of the answer. Profit sharing is

another.”

In the late spring of 1986, relations between management and labor

had reached rock bottom. Having recently suffered a pay cut, employees at

Cin- Made came to work each day, performed the duties required of their

particular positions, and returned home-nothing more. Frey could see that his

company was suffering. “To survive we needed to stop being worthy

adversaries and start being worthy partners,” he realized. Toward this end,

Frey decided to call a meeting with the union. He offered to restore worker

pay to its previous level by the end of the year. On top of that, he offered

something no one expected : a 15 percent share of Cin-Made’s pre-tax profits.

“ I do not choose to own a company that has an adversarial relationship with

its employees.” Frey proclaimed at the meeting. He therefore proposed a

new arrangement that would encourage a collaborative employee-

management relationship “Employee participation will play an essential role

in management.”

Managers within the company were among the first people to oppose

Frey’s new idea of employee involvement. “My three managers felt they

were paid to be worthy adversaries of the unions.” Frey recalled. It’s what

they’d been trained for. It’s what made them good managers. Moreover,

they were not used to participation in any form, certainly not in decision

making.” The workers also resisted the idea of extending themselves beyond

the written requirements of their jobs. “ (Employees) wanted generous

wages and benefits, of course, but they did not want to take responsibility for

anything more than doing their own jobs the way they had always done

them,” Frey noted. Employees were therefore skeptical of Frey’s overtures

toward “employee participation.” “We thought he was trying to rip us off and

shaft us,” explained Ocelia Williams, one of many Cin-Made employees who

distrusted Frey’s plans.

Frey, however, did not give up, and he eventually convinced the union

to agree to his terms. “ I wouldn’t take no for an answer,” he asserted.

“Once I had made my two grand pronouncements, I was determined to press

ahead and make them come true.” But still ahead lay the considerable

challenge of convincing employees to take charge :

I made people meet with me, then instead

Of telling them what to do, I asked them.

They resisted.

“ How can we cut the waste on his run ?” I’d

say, or “How are we going to allocate the

overtime on this order ?”

“That’s not my job,” they’d say.

“But I need your input,” I’d say. “How in the

World can we have participative management

If you won’t participate?

“I don’t know,” they’d say. “Because that’s

not my job either. That’s your job. ?”

Gradually, Frey made progress. Managers began sharing more

information with employees. Frey was able slowly to expand the

responsibilities workers would carry. Managers who were unable to work with

employees left, and union relations began to improve. Empowerment began

to happen. By 1993, Cin Made employees were taking responsibility for

numerous tasks. Williams, for example, used to operate a tin-slitting machine

on the company’s factory floor. She still runs that same machine, but now is

also responsible for ordering almost $ 100,000 in supplies.

Williams is just one example of how job roles and duties have been

redefined throughout Cin-Made. Joyce Bell, president of the local union, still

runs the punch press she always has, but now also serves as Cin- Made’s

corporate safety director. The company’s scheduling team, composed of one

manager and five lead workers from various plant areas, is charged with

setting hours, designating layoffs, and deciding when temporary help is

needed. The hiring review team, staffed by three hourly employees and two

managers, is responsible for interviewing applicants and deciding whom to

hire. An employee committee performs both short – and long – term planning

of labor, materials, equipment, production runs, packing, and delivery.

Employees even meet daily in order to set their own production schedules.

“We empower employees to make decisions, not just have input,” Frey

remarked. “I just coach.”

Under Frey’s new management regime, company secrets have virtually

disappeared. All Cin-Made employees, from entry-level employees all the

way to the top, take part in running the company. In fact, Frey has delegated

so much of the company’s operations to its workers that he now feels little in

the dark. “I now know very little about what’s going on, on a day-to-day

basis,” he confessed.

At Cin-Made, empowerment and delegation are more than mere

buzzwords; they are the way of doing business – good business. “We, as

workers, have a lot of opportunities,” said Williams. “If we want to take

leadership, it’s offered to us.”

Questions:

1. How were principles of delegation and decentralization

incorporated into Cine – Made operations?

2. What are the sources and uses of power at Cin – Made?

3. What were some of the barriers to delegation and

empowerment at Cin –Made?

4. What lessons about management in a rapidly changing

marketplace can be learned from the experience of

Cin – Made?

CASE NO. 6

HIGH-TECH ANSWERS TO DISTRIBUTION

PROBLEMS AT ROLLERBLADE

When a manger finds that demand exceeds inventory, the answer lies in

making more goods. When a manager finds that inventory exceeds demand,

the answer lies in making fewer goods. But what if a company management

finds that they just do not know which situation applies?

This is the situation that recently confronted management at

Rollerblade, the popular skate manufacturer based in Minnetonka, Minnesota.

Rollerblade has been one of the leading firms in the fast growing high

performance roller skate marketplace, it matters a great deal for Rollerblade

managers whether demand and inventory are in balance, or not.

Rollerblade was in a bind. The product literally could not be shipped

out the door. The managers found that workers were not able to ship

products because, as a result of poor storage structures, they could not find

the products. Once they were found, overcrowded aisles, in addition to other

space constraints, still prevented efficient shipping because the workers could

barely manage to get the products out the door. “We were out of control

because we didn’t know how to use space and didn’t have enough of it,” said

Ian Ellis, director for facilities and safety. “Basically, there was no more

useable space left in the warehouse, a severe backlog of customer orders,

and picking errors were clearly in the unacceptable range,” added Ram

Krishnan, Principal of NRM Systems, based in St. Paul, Minnesota.

The answer for Rollerblade was found in technology. High-tech

companies have introduced a collection of computer simulations, ranging in

cost roughly from $10,000 to $30,000, that assist managers in generating

effective facility designs. With the help of layout Master IV simulation

software, developed by NRM, Rollerblade Management was able to implement

a new distribution design. As a result of the distribution improvement,

Rollerblade was able to increase the number of customer orders processed

daily from140 to 410 and eliminate order backlog. “Now we have a different

business,” says Ellis. “The new layout has taken us from being in a crunch, to

being able to plan.

Questions: 1. With retailers as their primary customers, what customer

competitive imperatives could be affected by Rollerblade’s inventory problems?

2. How appropriate might a just – in – time inventory system be for a product such as roller skates?”

3. What opportunities are there fore Rollerblade managers to see themselves? as selling services, instead of simply roller skates ?