Starting a Successful Business - Essay Example

Debbie was just an expert in making cookies when she had met Randy. She had loved baking and perfected her recipe for cookies which were hugely like by friends and relative. She had also served in a departmental store and gained experience of sales and importance of customer relationship management. Randy was a Stanford University graduate and a successful economist. He was well qualified and experienced to understand the complexities of running a business. He also had the expertise and necessary skills for starting a business and develop appropriate corporate structure to make it a viable venture. Debbi’s passionate zeal for baking and Randy’s business sense was complementary for starting a successful business. Hence, Debbi and Randy would seem to have reasonable future for each other. Debbi’s cookies were very much in demand amongst Randy’s clients which inspired Debbi to start an independent business of selling cookies. Debbi had confidence on her expertise in making mouth watering cookies which had always been very popular amongst her relatives. She was therefore able to convince her husband, Randy for starting a cookie business. Her main goal was to bake great cookies and make customers feel good. Thus, it was important for her to create an ambience of caring that would attract customers and provide them with quality cookies to make them feel good. On the other hand, Randy’s goal was to develop an enviable corporate structure with state of the art information technology that would help run the various operations smoothly. His goal was to exploit technology to optimize information flow within and across stores so that effective decision making could be based on informed choice. He strongly believed that machines must relieve people of mundane task and make them free to exploit their creativity in ways that would benefit the business like selling cookies directly to customers and giving personal touch. Debbi was in dilemma while opening her second store of Mrs. Fields’ Cookies. She loved baking cookies and strongly believed that personal involvement was an important part of running successful cookie business. She was afraid of delegating and thought that it might lower the quality of her cookies and most importantly, she would not be able to interact with her customers. Thus, the dilemma was genuine as she could not be in both the places at the same time. Her management style was fundamentally based on the simple principle that if one believes in something, one would be more convincing. Hence, she promoted an environment of trust where the workforce believed in what they were doing. Hierarchy had little meaning in the actually running and therefore whenever possible store managers would also serve customers from the counters. This helped generate a feel good environment which was integral part of Mrs Fields Cookies. Randy’s role in the organization was basically that of head of controller which involved developing unrivalled management information system that had streamlined all operations and managerial functions. The head of MIS directly reported to Randy. MIS helped in flow of information across stores and corporate office thus facilitating centralized decision making. He also encouraged regular input from employees to improve and improvise the system. MIS was also used to project daily sales based on weather, holidays, school days etc. making it easier for stores to meet their target. Randy’s role also required making future growth plans for Mrs. Fields Cookies and identifying and arranging financial resources for expansion and investments. The in-store systems are essentially unique for a business of this type at this time. It was especially true for Fields as all its daily operations of the stores were driven by technology. Specific mathematical model for computing daily schedule was the highlight that helped the stores to project their daily sales based on day characteristics like school day or holiday, weather, events etc. The computer would calculate and inform the number of batches of cookies to be made at different time and amount of dough to be mixed for them. It would also make suggestions like free sampling, in case of low sale figure which store manager could accept or reject. The stores use the information to make fresh cookies and after two hours, the remaining unsold cookies are given to charities. The information technology also helps to transmit daily sales data to corporate office so that store level problems are immediately identified and quick actions can be taken to rectify them. The in-store and corporate system has both mechanistic and organic culture. They both are heavily reliant on information control through automation. The information technology and MIS are used to streamline smooth flow of information across stores and corporate office that helps to make projections and establish effective communication amongst employees and senior management, including Debbi via voice mail. The pyramid hierarchy is well defined with senior management, middle level managers and store employees but is flattened mainly due to the fact that IT connects the higher hierarchy with store employees thus alleviating middle managers and promotes direct communication between employees and senior management, irrespective of job designation. An ideal store manager mainly is between 20-25 years of age with one or two years of college. The store manager needs to be well versed in computers and it is important that he has friendly disposition. While previous experience is not required but their belief in the vision and mission of the organization is critical ingredient. They should exhibit feel good factor and must be able to satisfy their customers and help make them feel good. As Fields has relative hierarchy, multi skill is important so that each can serve customers directly if and when required. The store managers of other organizations like Subway or Burger King etc. work based on defined hierarchy of roles. They serve as supervisors and help to run the stores efficiently. It is intrinsic part of organizational policy. Turnover of employees is an important aspect of organization which provides firms with strong market credibility. The turnover of Fields’ store manager is 100%. Sometimes store managers also remain for 12 to 14 months but it is not a regular feature. The high turnover does not impact the overall productivity mainly because the Fields eligibility for store manager is not stringent and they are able to get good students who are ready to work hard and adapt to the culture. In fact the work culture of Fields inspires young store managers to attain higher educational qualification and many of them also return to join Fields. Fields is good paymaster and therefore young students are eager to join Fields for funding their higher studies. Hence, it is not seen as bad thing for Fields but rather as a service to community. Debbie and Randy, were both against franchising because it would lead to loss of control over operations and management of stores. Debbi’s primary apprehension was that financial gain is main objectives of which would seriously impact the quality of the Fields’ cookies and other products. They would also be not able to enforce the need to inculcate feeling good concept which is very dear to Debbi. To generate higher financial gains, franchisees often promote quantity over quality that could endanger the credibility of Fields in the long run. Most importantly, Debbi likes to be personally involved in the activities of the stores either directly or indirectly, which franchising would not allow. This is very critical factor because it helps to inculcate trust amongst the various stakeholders of Fields and promotes a sense of feeling good. For such type of business, franchising is preferred because firms can expand across wider geographical areas without incurring heavy investment. It also helps them to focus on their core competencies and create effective network of activities ti facilitate growth. Bank loans and raising capital from the market are two viable and most common ways to raise finances for organizational growth and expansion. Bank finances are complex with high interest rates and require mortgages which frequently lead to bad experience. Public offering, on the other hand raises capital from the market and share value is dependent on the market credibility of the firm. The firms need to develop credible public image through high corporate ethics, fair business practice and high returns. Fields had bad experience with the bank loans and therefore they decided to raise capital through market offering in London Stock Exchange. The major goal of public offering was to pay off existing bank loan LSE was not the success as anticipated because British institutional buyers did not have much knowledge and awareness about the firm as Fields had only one store in London. They had little knowledge or awareness about Fields which were roaring success back at home in America. With only one store in London, they were doubtful of its success without franchisee network. Lukewarm response at LSE was expected. It is also important to note that personal control over operations was key to Fields’ management style. Hence, their decision to raise finances through cash flow and debt was in line with their managerial policies and style. They were better placed with cash flow as stores functioned as independent financial units that met their own expenses and corporate expenses were not passed on to stores. Fields has an organic organizational structure which is based on participatory approach, mutual trust and independent decision making based on informed choice. It promotes flexibility and people centric ideals and ensure customer satisfaction through quality and exemplary customer service. Interesting hierarchy is flattened through vertical communication. The reduced hierarchical control hugely empowers employees and makes them feel important. This also helps to inculcate mutual trust and confidence that promotes better and more personalized service to customers. It creates an environment of feeling good which percolates down to customers with whom Fields develops special relationship of caring and trust. It is for these reasons that the organization is thought to be warm and fuzzy! Read More