Business Finance - Management Assignment 1

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MBA 6615 Assignment 1- Leadership Styles

Narration 1

Two brothers, Albert and Harry Stiles founded A&HB Company, a decade ago with a mission to source, manufacture, and sell fair trade premium chocolate confectionary products. Albert and Harry are environmentalists who personally witnessed the damage to the environment, communities, and society from sourcing cocoa from modern large-scale cocoa plantations. The brothers believed that there was a market niche for premium chocolate products sourced from mid to small-sized farms that valued the well-being of the environment, the economic development of workers, and their communities.

Both Albert and Harry are passionate about their mission and the quality of their products. Harry is the anthropologist who oversees the supply chain for cocoa, living and traveling amongst the various communities that farm the cocoa. Albert is the CEO of A&HB Company overseeing the manufacturing, marketing, and sales of their premium brands.

Albert is exacting in his approach to work, with himself and his employees. He insists that the company operate based on the principles of integrity, honesty, and hard work. Albert set personal and operational quality standards and is diligent about assessing how the company measured up to those standards. He often stated that the principles he stood for applied to himself as much as to any other.

Here are some observations from one of his employees:

“My boss is a model of the Puritan work ethic. He is a true professional with boundless energy. He seeks excellence and is eager to listen to ideas and initiatives that further the growth of the business and its mission. He seems to be in all places and knows everyone and almost all the workings of the business.

He can be annoyed when people don’t deliver to his level of expectations. He has little patience for middling to low performance. Sometimes when he is unhappy about the work he tries to do the job himself. Often his work is not satisfactory but that is a way of expressing his frustration. I appreciate who he is, but I don’t want to be like him.

I see that he is more at ease and open with those who share his approach to work. Sometimes he can be stubborn about his opinions, even when presented with evidence to the contrary. For example, in the early years, the company produced chocolate bars and candy without any extraneous flavors or nuts. Even though the company was growing the marketing team explained that we needed flavored products like chocolate with orange or mint and nuts. Mr. Albert was stubborn and would not agree. Maybe he was just being emotional and opinionated. Only much later did he relent products and we experienced a much-needed bounce in our business.

Now. Mr. Albert seems to be more open to various ideas about products and marketing. He listens more to his team but still requires detailed answers to questions before he can be convinced.

Narration 2

RJK is a retail company that owns department stores in shopping malls across the country. RJK is doing poorly facing declining sales, profitability, and cash. The board of directors of the company decided to replace the current CEO, bringing in an experienced leader in the retailing industry. Ms. Bailey, the new CEO, has broader knowledge and experience in retailing and was eager to take on the challenges at RJK.

Ms. Bailey met with her team and visited the larger stores. She expressed shock at the conditions at stores. She declared the store design as “old fashioned” and the merchandise as “out of touch”. Her senior team disagreed with some of Ms. Bailey’s assessments. They pointed out that their stable customers were demographically older and preferred lower-priced brand merchandise. They agreed that updates were necessary, both to the store layout and merchandising, but advised Ms. Bailey against a “total revamp of the store”. Ms. Bailey expressed no confidence in her senior team. She devalued their concerns. She mocked them for holding on to past ideas and challenged them to “embrace the modern age of retailing”.

She brought in an outside team of retailing experts, who ignored RJK senior management ideas and concerns. The new team worked closely with Ms. Bailey to redesign the store and improve merchandising. A new marketing campaign was launched and promoted the stores’ upgrades. Ms. Bailey burned through RJK’s cash and took on new debt to pay for the upgrades.

After a few months, RJK observed positive signs of a turnaround in the business. Sales at redesigned stores were up, and their inventory was at more manageable levels, but profitability was down due to the ongoing costs of executing the turnaround. Debt levels continued to climb, business liquidity was low, and the company faced potential insolvency unless expenses and debt levels were decreased.

The governing board conferred with Ms. Bailey about the financial risks at the company. Ms. Bailey insisted that financial improvement would be forthcoming with the continued uptick in sales. She laid out aggressive and expensive plans for redesigning the majority of the stores and closing the remaining unprofitable stores. The Board was unconvinced of her plan and asked to slow down the pace of redesign.

Ms. Bailey failed to follow the Board’s directions. Her senior management team was in disarray because many left the company. The much-anticipated uptick in sales did occur but was insufficient to ease financial stress.

This is how one of the senior managers described Ms. Bailey and her leadership.

“Ms. Bailey is hard to like. She is determined, driven, egotistical, and condescending to her team. She arrives at decisions through an opaque process, relying on her ideas and those of her outside team. She makes little effort to be inclusive or to develop the management team. Consequently, the corporate culture became fearful, silent, and incapable of generating new ideas. Ms. Bailey did achieve a resurgence in sales and brand image. Regardless of these successes, the company is going further down the rabbit hole”.

Narration 3

The Board of Directors of RJK met urgently over the deteriorating financial condition of the company. They debated whether Ms. Bailey had sufficiently followed their guidance. Several directors observed that under her leadership the company had failed to achieve sustainable recovery and an urgent change in leadership was needed to avert a deepening crisis. At the end of their debate, they decided to fire Ms. Bailey.

Mr. Jenkins, an experienced retailer in the beverage industry was appointed as the new CEO of RJK. Mr. Jenkins faced the challenge of stabilizing RJK's finances while charting a modest path for continued recovery.

These are some comments from employees about Mr. Jenkins six months into his tenure.

Employee 1: “The first thing that comes to my mind is that Mr. Jenkins is spending a huge amount of time discussing with us where the company stands, what it must achieve, and why that makes sense. After a meeting with him, we feel less isolated and believe that our ideas would be welcomed. He encourages people to ask questions. This transparency is refreshing and motivating.”

Employee 2: “Our company is in trouble. Difficult decisions on costs and employment must be made. We hear that workforce reductions of about 20% are likely. However, we have no idea how these decisions will be made and whether our managers will be part of the decision process. Mr. Jenkins seems like an open person. But I am not sure whether he can make the tough decisions that he must and still be viewed as a likable, motivating person.”

Employee 3: I think Mr. Jenkins is a nice person, but I am not sure that he is up to the job of stabilizing RFK. He is hesitant to deliver bad news to people, He is always upbeat, even when he answers questions on financial troubles at the company. I know that some of my colleagues think that he is too nice to make the tough decisions. And that he will surely delegate those tough decisions to a core team and he will merely rubber stamp them.”

Narration 4

These are some employee comments about Mr. Jenkins one and a year six months into his tenure.

Employee 1: “After nine months, Mr. Jenkins addressed all employees in a series of company-wide meetings. Mr. Jenkins told us that he learned a lot about the business from us and now he wants to make much-needed changes to the business. He showed us in charts and tables the state of the business and he asked us to support him in the changes that must be made. He created a table of the various sentiments the employees had expressed to him and many of the ideas they recommended for changing the business. I really liked that he took the time to learn about the business, especially by listening to us, and hearing how he felt and then taking the trouble to bring it all together so that we could all be on the same page.”

Employee 2: “ I was worried that he was taking a long time to learn about the business. I felt that the business problems were urgent and hoped that he would learn faster. Why wait to tell us after nine months? Perhaps, it is good to take the time to get to know us and the business before making difficult decisions.”

Employee 3: “At the company-wide meeting he told us his vision for the company and the plan for going forward. Then he dropped the big hatchet. He told us the number of employees the company must let go and that the reductions would be across all levels of the company. He also said that as the company’s financials were not in good shape the severance package would not be good as he would have liked. I was scared. I was not sure how management would decide who would stay and who would go. Even if I was not fired, I would not be happy if the cutbacks and the severance packages are not fair.”

Employee 4: “I want the cost reduction to happen quickly. I would be really uncomfortable if this process took too long. Hopefully, Mr. Jenkins understands that employee morale is not good now and that he should focus on ways to improve our morale and confidence. Many of those who remain with the business are going to be unhappy that their friends and colleagues are not here. There is going to be a lot of conflict. I really hope that senior management has a plan for dealing with this.”