A French Bakery Chain - Case Study Example

A French Bakery Chain Introduction Fields had acquired LPB, a French bakery chain of 119 stores from the PepsiCo in 1987. Fields were optimistic on the acquisition of LPB and saw it as great opportunities to diversify their business interests. It provided them with huge scope of organizational growth through diversification of products and services and at the same time, expansion across wider international border. It also helped Fields to access broader database of knowledge and facilitated manipulation of strategic business information to improve the overall business prospects and productive outcome. They strongly believed that acquisition would help them maintain steady advantage without incurring extra cost on expansion of business on stand-alone basis. Scope of acquisition The LPB stores had decentralized working and functioned as stand-alone stores which it easy for the Fields to amalgamate the administration within its core functioning process. It was for this reason that merely after a month of acquiring LPB, Fields reduced the subsidiary administrative staff from 53 to three. Many of their functions like accounting, finance, human resource, training etc. were merged with that of the Fields’ company that resulted in redundancy of jobs in LPB. The main reason for the action was that Mrs. fields Cookies followed mechanistic approach and heavily used technology within its administrative process to streamline sales and production. While Fields appreciated empowerment of its managers and workforce, they also used technology extensively in their production processes to predict and improve sales. The huge hierarchy of employees in LPB was therefore not suitable for the efficient delivery of Fields’ goals and daily targets. Hence, they could only retain two persons in operations and one from their R&D section. Individual perspective of LPB manager As LPB Manager, I believe that the strategy of Fields is not right. LPB has gained considerable credibility in the area of baked products, coffee and sandwich. The huge size of LPB was a significant factor that had prompted Fields to acquire it. The LPB products and services could offer huge scope of expansion of interests of Fields as they had already created niche market for their cookies. The acquisition had provided them with the opportunity to introduce their specialty cookies in the European market. The combination outlet could serve as major facilitating platform for their business with wide scope of opportunities for improved revenues. In such a scenario of win-win situation, the redundancy was neither necessary nor morally correct decision. Fifty employees were terminated without enough notice, jeopardizing their livelihood. Interests of LPB and Fields cookies Fields were motivated for acquisition of LPB primarily because the saw similarity in their interests. Both the companies had similar products, customers and management challenges. The baked products of LPB produced from frozen dough would complement the Fields cookies made from fresh ingredients. I think that while the products, customers and managerial challenges of managing store could be similar, the fundamental difference was in the administration of the stores. LPB was a traditionally run business which relied on people to supervise the various functional processes like accounts, human resource, sales, production etc. The individual stores of LPB also followed defined hierarchy in the organizational structure to achieve its target at different stages. Fields Cookies, on the other hand, was technology driven were day today processes, forecasting and even hiring of salesperson was dependent on the expertise of computer system. The highly sophisticated information system not only mechanized the various tedious processes but streamlining the same hugely facilitated the store managers to personally supervise sales and interact with the customer to increase its people centric image. It was a huge asset that significantly gave Fields a competitive advantage in the industry. Use of Fields Information system in LPB stores The varying work culture and leadership style are major challenges that Fields faces in acquisition of LCB. The information system developed at Fields’ is the major element of success as it efficiently and diligently streamlines the processes to simulate original cookie taste, keeping same high standard of quality. This helps to run each store as the first Palo Alto store. Indeed, technology has considerably impacted firm’s performance which is far reaching and extensive. By absorbing most of the functions of LPB within its system, Fields can exploit the size of LPB to penetrate European market. Fields has well developed MIS system that runs all the Fields’ stores like original Palo Alto store. It had also realized that access to information is most important aspect of business and uses the same to improve and improvise the performance of all its outlets across the globe. LPB stores would also significantly gain through Fields’ MIS system as it can be enhanced to incorporate the products and services of LPB stores. It is important tool for the management to exploit the available information to improve its performance and revenue. Information provides wide ranging knowledge about the existing and emerging imperatives of the business world which considerably impacts the organizational performance outcomes. Rationalization of loss after acquisition The acquisition of LPB stores was visualized as important diversification technique that would enable the company to explore new market. As both the companies catered to same market segment, the loss of $19.9 million as incurred in closing down of its non-core business stores and writing down of its other real estate business was rationalized as routine. The main reason was that the acquisition of LPB had facilitated huge scope for expanding its core business in baking goods. The research had shown that downtrend in the economy would have least impact on the baking business and that the acquisition would enhance potential for future growth and revenue. Randy also envisages that the demands for the bakery products worldwide could be effectively met through the huge network of Fields’ outlets which are spread across the globe. The acquisition has further strengthened the dominant position of Fields in the global market which would be exploited to augment future profit. The Fields can therefore meet the external challenges by judiciously manipulating the diverse information for promoting its own interests in the global business. Future of LPB staff There are 119 stores of LPB across Europe that need efficient and trained staff to sell cookies and other baked items. Though Fields had terminated the services of fifty of its administrative staff in the subsidiary, there is still hope for the sales staff that understands the local culture and tastes. They could prove to be an asset that can be exploited by the new management. The only expenditure incurred would be on the training of the staff in the use of technology. The organizational culture of fields is widely different to that of LPG. The low staffed Fields organization is more inclined to run the stores with the same zest as that of the founding member, Debbi. The constant communication with the staff and the need to mechanize the production for optimal performance is based on technology. The existing staff would therefore have to adapt to the new culture of Debbi and use technology to add value to their work performance. I therefore, think that the sales staff and the managers of the LPG stores stand a good chance of retaining their position because LPG stores have good market standing and success of stand-alone stores gives credibility to the managers’ ability to run the stores successfully. In the foreign land, it would also hugely benefit the Fields cookies if the LPB manager and sales staff can be trained as per the criteria of Fields. Conclusion Indeed, the use of information technology and its application has greatly helped to evolve new strategies and analytical packages that can improve firm’s core competencies and production processes. Fields’s MIS is a case in point. Its application has not only facilitated better communication among various inter-related units and employees across the globe but also created a wider database of new opportunities. It has also made it easy to integrate information of newly acquired retail chain of LPB within its own database, enhancing and promoting operation in the diversified area. Thus, retaining of LPB store managers and sales staff would be cost effective strategy for Fields and also establish better image amongst its various stakeholders who could have been affronted by its earlier crude decisions of summarily dismissing 50 of its administrative staff. References Case study provided. Read More