Mrs Fields Cookies - Case Study Example

Introduction Mrs. Fields’ Cookies is a well established chain of freshly baked cookies with more than 400 outlets spread across the globe. The different contextual factors vis-à-vis size, technology, environment, diversification and globalization are vital elements that have significant impact on the managerial decision making. Fields’ had early realized the vast potential of technology within the business processes and they have developed their unique information system. Indeed, its application in the business processes has greatly facilitated communication among various inter-related units through the tacit manipulation of the informed choices by the organizational leadership. It has thus created a wider database of new opportunities in the real world. It has also become a necessary business tool with its wide range of applications in the ever expanding and competitive global environment especially where acquisitions and mergers are concerned. Acquisition and amalgamation strategy When Fields’ acquired La Petite Boulangerie or LPB in 1987 from PepsiCo, the company saw huge potential of successful diversification into new sit-in café that would also serve to complement the delights of Fields’ cookies. LPB was a French bakery cum sandwich retail chain with 119 outlets. Within a month after acquisition, Fields’ cut down LPB’s administrative staff to 3 from the strength of 53 employees as various administrative functions like accounts, human resource, finance, training and development were brought within the wider scope of Fields’ in-house information system. It was a major tactical strategy that was used to promote centralized monitoring and uniformity in the work functioning across its various outlets. Prime importance of using technologies is not only improving the various processes within the system but also the overall performance. It also greatly facilitates merger of diverse ideologies and processes for improved performance. In the case of LPB, it was an essential tool to promote better efficiency in the delivery of the common organizational goals and objectives. Justification for changes within the acquired units In a fiercely competitive business environment, the firm gains the position by leveraging its strengths by improving and improvising its business management and organizational goals. ‘A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both’ (Porter, 1996). The technology driven organization culture within the parent company needs to become intrinsic part of all its subsidiaries and acquisitions. Hence, incorporation of LPB’s major functional areas within its indigenously developed information system was correct. When such large changes occur within a system, the redundancy factor is an obvious outcome. Therefore reducing staff was also to some extent right. Expectations of LPB employees and personal viewpoint on the actions of Fields’ management As a manager of LPB Store, one would expect that there would be many changes within the administration that would significantly impact the existing workforce. Introduction of technology and amalgamation of major function is a welcome change as it would streamline the various processes and help expedite the efficient delivery of organizational goals. The reduction of administrative staff from 53 to 3 was a drastic step that would adversely impact the remaining workforce. It has also greatly spread insecurity amongst the staff, resulting in low esteem and low performance. I totally disagree with this step. I believe that it is ethically wrong, on the part of company, to drastically reduce the strength of administrative staff. They should have been given advance notice and enough time to seek alternative work. They could also have been offered alternative jobs as an option or compensation package so that they could justifiably maintain self esteem and exercise their choices. Justification for acquiring LPB Debbi and Randy see huge similarity between the Fields’ and LPB vis-à-vis products, customers, management challenges etc. primarily because LPB’s product line complements its range of products. While LPB’s bakery products are made from the frozen dough and served with hot soups and sandwiches, the highly ‘feel good’ environment of LPB is the major asset for Fields’ concept of creating personal bond with customers. I also see the acquisition of LPB as vital link to the diversification that complements the business goals and objectives of the Fields’ Cookies. The portability of IS vis-à-vis LPB chain The rapid globalization and fast technological advancements are major factors that need to be incorporated at a continuous basis, in the strategy and planning of the company while addressing the changing needs of the time. The entrepreneurial process is an evolving process that must be able to assess the challenges faced by the company in meeting all its aims and objectives within the framework of its principle and professional and organizational ideologies. The application of technology across its various functions, considerably influence various factors that necessitate optimal performance outcome. Indeed, the in-house developed information system incorporates wide ranging modules that help the organization to run its various outlets with same efficiency and quality as is done personally by the founder member, Debbi. Since the system has been successfully running across its various outlets, it can be assumed that it is highly portable in its functionality. It can therefore be clearly asserted that it would be able to successfully incorporate the various functions of its new acquisition, LPB. The financial loss and its ramifications Randy’s had asserted that Fields’ had to write off $19.9 million as loss against the closing down of poorly performing stores but which could be considered as R&D expenses. With the acquisition of LPB, the introduction of new combination store offered huge opportunity of diversification and expansion of its business across wider geographical region. The acquisition also brought in huge profit in terms of real estate which would be great asset and become major enabling factor in its diversification drive of having more combination stores. Randy also believes that the acquisition in 1987 would increase the revenue by $45 million within the same year. This whopping amount of increased revenue would actually not only nullify the so called losses but put the company back into the profitable position despite the closure of many of its stores. Conclusion Mrs. Fields’ Cookies is widely known name across the globe and its acquisitions have been successfully absorbed within its fold. Even in partnership stores like Hong Kong store, Debbie was able to maintain its store designs so that customers could continue to experience the ‘feel good’ feeling by providing the product and technical knowledge and partners provided the real estate and on-site management. Thus, the future of LPB, after acquisition, is seen to be endowed with huge prospect but not as LPB but as subsidiary of Fields. I believe so because despite the fact that LPB, with its 119 outlets was acquired as a business diversification asset. The executives of Fields’ had well defined business strategy that is intrinsically linked to expansion of its business interests and improved performance. Its strategy mainly relies on creating value through customer satisfaction. It has been able to gain effective leverage against its rivals by creating brand equity, quality products and exemplary service. The use of technology and uniformity in its products has been the hallmark of its cookies across the world. The unmatched efficiency in the delivery of its services and the uniform quality of its cookies has become the unique feature of all its outlets. Hence, LPB would need to merge its identity with that of Fields to sustain itself. Reference Case study. (1993). Mrs. Fields’ Cookies. HBS. Porter, Michael E.(1996). What is Strategy. Harvard Business Review. Nov/Dec. 74 (6). Read More