Assignment 2: LASA 2 Assignment—Workforce 2020 Executive Report

Strategic Leadership at Chick-fil-A

Latrice Jones

Argosy University

Perspectives in Change Leadership

10/29/2014

Introduction

Chick-fil-A is a United States based company operating in the food and beverage sector. Founded in the early 1960s, this company has its headquarters in Atlanta, Georgia. It registered peak sales of more than $5 billion in the 2013 fiscal year. Currently, it is the largest quick-service chicken restaurant in the nation. The company’s main specialty is serving freshly prepared chicken products, with its major offering being chicken sandwich. The values and vision developed by the company’s founder, Truett Cathy, continue to guide employees’ conduct and values. Currently, the leadership of the company is under COO Dan Cathy. The mission of Chick-fil-A is “to be America’s best quick service restaurant”. It hopes to realize this ambition through strategies such as responsiveness to customer needs, improved employee training, responsiveness to customer needs and more emphasis on quality. According to its Website, the company’s purpose is “to glorify God by being a faithful steward of all that is entrusted to us, and to have a positive influence on all those who come to Chick-fil-A”. This report analyzes the strategic cascade of the company, highlights the specific strengths, weaknesses, opportunities and threat faced by the company and concludes by an evaluation of the internal environment of the firm. The paper also offers practical recommendations that can align employee’s behaviors to the overall strategies of the firm.

Strategic Cascade

Target Market

Chick-fil-A pursues an ingenious marketing strategy that has enabled it to continue registering growth over the recent years. The target audience for Chick-fil-A differs from the usual fast food clientele that normally includes children and teens. The company mainly targets adults between the ages of 18 and 44. According to Lee (2011) many of the target clientele are women. The company also targets customers on the high-income bracket and it strives to reach out to the more educated clientele than those targeted by restaurants in the hamburger market. Lee (2011) asserts that customers targeted by Chick-fil-A are more likely to be in white-collar jobs. Mindful of the aforementioned demographics, the company decided to operate in suburban neighborhoods and malls, as these are the areas where most of its potential consumers reside.

Value Proposition

In order to deliver services that satisfy the needs and wants of the target clientele, Chick-fil-A has emphasized on various components. First, the company’s management emphasizes on some simple rules such as listening to the customers, high quality products and emphasis on impeccable customer care. As envisaged by Rama (2011), the value proposition of the company is to deliver exceptional experience to consumers in terms of quality, customer service and speed. Chick-fil-A has been superior in speed delivery of its products through producing chicken sandwiches in less time with no condiments and a relatively simplistic menu.

The company also has a sophisticated training and recruitment program designed to ensure impeccable customer service that makes consumers have a much more personal and emotional experience (Chick-fil-A, 2014). Furthermore, the company also strives to offer healthy products in its menu offerings and maintains ambient stores, all of which have increased customer satisfaction. The employees are also friendly and courteous, which has contributed to the retention of customers in the restaurant. Moreover, Chick-fil-A organizes an ‘Appreciation Day’ annually where it gives thanks and gratitude to its clients. This helps to show the customers that the company values them, a factor that has translated to improved loyalty.

Product Positioning

One of the major factors that have contributed to Chick-fil-A’s success is its inventive brand positioning strategy. According to Palmer (2012), positioning entails making the image and offerings of the company to occupy a unique place among the minds of the target consumers. The company has been successful in positioning it brand through the “Eat Mor Chikin” cow ads that that encourage customers to consume more chicken and in the process conserve beef (Cathy, 2002). Such advertisements have helped to give Chick-fil-A a more competitive edge against the hamburger-oriented chains such as McDonalds, Wendy’s and Burger King. In addition, the company has reinforced its brand positioning through tapping the emotional response of its consumers.

As Hill & Jones (2012) vividly point out, a good positioning strategy needs to “appeal to both the heart and the head”. Chick-fil-A has indeed leveraged its strong corporate image and superior customer service to capitalize on the emotional branding concepts. Through promoting its corporate image as a healthier, more socially responsible and friendlier choice, the company has stimulated a positive emotional appeal among its customers, which has helped to strength its brand recognition and image (Hill & Jones, 2012). Chick-fil-A also charges a slight premium on its offerings as compared to similar offerings by the competitors. This has helped to reinforce the company’s image and reputation for quality offerings.

Sources of Uniqueness and Sustainability

Chick-fil-A is sustainably different from other competitors in the food and beverage sector in various ways. First, the company’s commitment in corporate social initiatives is unparalleled in the industry. Currently, the firm is involved in sponsorship deals with various college athletics, specifically with college football. For instance, over the past few years, it has been sponsoring The Peach Bowl, which has recently changed its identity to ‘Chick-fil-A Bowl’ (Chick-fil-A, 2014). The company also sponsors the Chick-fil-A Kickoff Game. These sponsorships offer the company immense advertisement and promotional opportunities during college football seasons. They also enable the company staff to interact with potential customers and understand their distinct needs and preferences, which can help the firm to make product or service modifications and attract more customers (Palmer, 2012).

In addition, over the last three years, the company has given over $70 million in contributions to more than 700 charitable and educational institutions (Chick-fil-A, 2014). Such initiatives aimed at empowering the communities where the firm operates can help to sustain a positive brand image, which subsequently improves sales. Chick-fil-A’s strategy is also unique from other quick-service restaurants in that rather than trying to attract consumers via cheap pricing and cheap value menus, they employ a higher pricing strategy that offers no value menu (Lee, 2011). This has enabled the company to focus more on the freshness and quality of their food while keeping their profit margins high. This is indeed the reason why Chick-fil-A has continued to realize success of its prestige pricing strategy.

SWOT Analysis

Strengths

Chick-fil-A enjoys various strengths that have allowed it to sustain a competitive edge in the food and beverage sector. One of the strengths enjoyed by the company is a huge market share. According to Rama (2011), the company currently commands a market share of 22% in the restaurant chain industry. It is also the leading quick-service chicken restaurant in the United States in terms of domestic annual sales. The huge market share has also enabled Chick-fil-A to register record revenues, which amounted to over $5 billion in the 2013 fiscal year (Chick-fil-A, 2014).

Chick-fil-A also has a motivated and competent work force dedicated to excellent customer service. The employees in the organization rely on the Christian values held by the company’s founder, Truett Cathy, which has aided to improve their personal and corporate values. Some of the desirable values exhibited by Chick-fil-A’s employees include integrity, teamwork, open communication, hard work, commitment to ethical standards and courtesy (Lee, 2011). This is a major strength since it has enabled the organization to win the loyalty and trust of its customers. The company’s management also gives staff work off on Sundays. This helps them to revitalize and hence they are able to offer better services during the weekdays.

In addition, the firm hires, recruits, manages and trains its employees. This has helped to build cohesiveness among employees. It has also enabled them to develop a heightened sense of shared purpose and commitment to company vision. Management in the organization has established various initiatives, for example the Leadership Scholarship Program, which grants $1000 to qualified Chick-fil-A employees to advance their studies in institutions of their choice (Chick-fil-A, 2014). Since the program begun in 1973, the company has awarded over $25 million in financial assistance to its employees. This initiative improves employees’ retention rates and encourages skill development, which gives the fast food restaurant a competitive advantage.

Weaknesses

Although Chick-fil-A enjoys various strengths, it also has some weaknesses that may undermine its performance. One of the major weaknesses stems from the company’s closure on Sundays. Even though it gives the staff time to rejuvenate and revitalize, the closure may have a negative impact on company sales. Furthermore, it may also reduce brand acceptance and recognition. According to Rama (2011), many firms in the food and beverage industry maintain 24-hour operations throughout the year, which helps them to garner more profits.

Another weakness comes from Chick-fil-A’s overconcentration of its stores in the South. Hill & Jones (2012) reckon that the company’s presence in the Western, Mid-Western and North Eastern regions of the nation is very minimal, a factor that may limit its sales and make it problematic to sustain the employee development programs. In addition, Chick-fil-A does not maintain international operations like other companies in the industry. Personnel in the organization also have to abide by Christian principles and values (Cathy, 2002). Hence, the company seems insensitive to diversity in the workplace. The requirement to abide by the Christian values may eventually prevent Chick-fil-A from tapping fitting talent because qualified individuals from other faiths may be hesitant to apply for positions in the company.

Opportunities

Being a franchise presents Chick-fil-A with various opportunities for growth. Individuals from diverse parts of the country can liaise with the firm and open up new restaurants under its name, which provides opportunities for Chick-fil-A’s expansion to the regions where it currently has few stores. The low fees of erecting franchises can entice many individual operators to set up new stores, which will ultimately be of benefit to the company (Rama, 2011). The company also has opportunities for expansion in other parts of the globe, especially in the emerging markets such as the BRICS countries where the spending and purchasing power of consumers is increasing. Expansion into new areas brings innovative and new ideas into the firm, which can ultimately aid to foster a learning culture (Palmer, 2012).

There are also many opportunities for the company to improve on its product offerings. Currently, the major specialty on Chick-fil-A’s menu is chicken sandwich (Chick-fil-A, 2014). By venturing in new offerings, the quick-service restaurant can be able to expand its customer base as well as increase brand awareness and net sales. The advancements in IT can also present viable opportunities for the organization. For example, rather than concentrating on traditional forms of advertisements such as event sponsorships, billboards and TV adverts, Chick-fil-A can institute vibrant advertisement campaigns through the social media platforms, which will enable it to reach a wide clientele base at relatively lower costs. Through these platforms, the company can also get valuable feedback from customers, which can aid in product and service improvements (Palmer, 2012). Moreover, harnessing emergent technologies can help to improve employee relations and production processes.

Threats

A major threat that confronts Chick-fil-A is the growing number of health conscious consumers in the nation. Although the company reiterates that it is offering healthier alternatives, many consumers are still skeptical and are shifting their preferences towards more natural foods because of the health concerns related to fast food restaurants such as the risk of acquiring obesity, diabetes and other lifestyle diseases (Rama, 2011). The increasing health consciousness can potentially reduce company sales. Furthermore, since Chick-fil-A is principally a chicken specialty restaurant, some diseases including bird flu can scare aware potential customers and thereby lead to dwindling sales.

The other threat confronting Chick-fil-A is stiff competition from other renowned fast food chains in the nation. The main competitors of the company include KFC, McDonald’s, Burger King, Taco Bells, Sonic and Wendy’s (Rama, 2011). Apart from chicken offerings, these competitors also have other products in their menus. This expansion of menus by major competitors can make Chick-fil-A’s menu to appear limited to consumers. The competitors have also devoted numerous resources in advertisement and promotional campaigns, which poses a threat to Chick-fil-A’s market share. Furthermore, like many other companies in various industries, the global economic crisis presents a major threat to Chick-fil-A. The financial uncertainties witnessed during the recent years can interfere with consumer’s spending powers and ultimately lead to a decline in sales (Hill & Jones, 2012). The uncertainties can also lead to fluctuations of prices and increases in the cost of raw materials such as chicken meals. This will inevitably affect the firm’s production processes and sales.

Summary of the Internal Environment

Company Structure

Chich-fil-A follows a centralized organizational structure. Senior executives including COO Dan Cathy make decisions at the top and which are then translated to the lower levels (Lee, 2011). There is also a high degree of formalization, where the company expects employees to follow the outlined rules and regulations, most of which are based on Christian principles. In addition, there is a high degree of departmentalization in the organization. This entails grouping employees based on their roles in the organization and every group has a specific function to accomplish in the firm. Nonetheless, when need arises, employees can fill multiple roles (Cathy, 2002). The employees include operators, managers and frontline employees. The organizational structure is also mechanistic. The company maintains clear job descriptions for every employee. Nonetheless, it is worth noting that the company has been resistant to change over the past decades because the senior executives including the COO want to keep the company as true as possible to the founder’s heart. Chick-fil-A mainly pursues a servant leadership approach, informed mainly by the religious principles and values of Truett Cathy.

Systems

The company uses a point of sales (POS) system as part of its information system technology. This system oversees the operations of all the company’s stores and tracks the entire inventory, store sales as well as every customer transaction. Management in the organization communicates to all employees via video conferencing, whereby they clarify the expectations, values and goals of the firm. This helps to bring convergence of the overall strategic approach pursued by the company.

Company Culture

The culture at Chick-fil-A relies heavily on the principles of its founding father. In terms of corporate values and culture, Chick-fil-A may fit the description of a communal organization that tries to uphold and preserve its shared values, most of which are guided by Christian principles. The organizational culture at Chick-fil-A is an enabler of the overall corporate strategy of the organization. The company’s values emphasize on the importance of religion, helping those in need, making a positive impact in the community as well as promoting generosity for all people who come in contact with the firm, including employees and customers (Rama, 2011). The company recruits employees who share these values. The company also places strong emphasis on the development of leadership skills among all employees and operators. Teamwork is also a cornerstone of the restaurant’s culture.

Chick-fil-A mainly communicates its corporate culture and values through public relations and community service. The staffs at the organization are attentive and swift. They also exhibit the desired moral behaviors advocated by the Christian principles that govern conduct at the organization. For example, all employees in the organization strive to exhibit high levels of integrity, teamwork, open communication, hard work, commitment to ethical standards and courtesy. According to Hill & Jones (2012), customer-centered leadership is indeed the cornerstone of Chick-fil-A’s service. Through instilling these values and training employees on the desired customer interactions, the company has been able to create a heightened sense of personal and spiritual commitment, which has indeed contributed to the brand awareness and customer satisfaction among the majority of its customers.

Employee Behaviors

The Chick-fil-A employees exhibit various desirable behaviors that are indeed consistent with the overall strategy of the organization. They display high commitment towards fulfilling their duties and are happy to serve the customers. This is consistent with the mission of the organization, which is “to be America’s best quick service restaurant” (Chick-fil-A, 2014). Indeed, the company employees go beyond their call of duty to understand the needs of their clients and ensure that the services they provide meet those distinct needs of the consumers. The main reason that has helped to align employee’s behavior to the overall business strategy of Chick-fil-A is emphasis on periodic training by the company’s management including the founder and the COO.

Apart from instilling the required skills and competencies among employees, the training also focuses on best etiquette practices, customer service and diversity training (Cathy, 2002). The company also provides various incentives to the employees, which has helped to improve their motivation and job satisfaction. Some of the benefits provided to the employees include health coverage for staff members and their dependents, company-paid disability insurance, tuition reimbursement program; defined benefits pension plan as well as sick leave and paid vacation (Chick-fil-A, 2014). All these have helped to enhancing the employees’ career development prospects as well as increasing their commitment towards the company’s vision, mission and values.

Leadership

Due to the strong Christian principles advocated by the founder and other executives in the organization, it is not surprising that Chick-fil-A mainly pursues a servant leadership approach. President and Chief Operating Officer (COO) of the company, Dan Cathy, is an eager and visible ambassador of the company’s brand. Due to his outspoken nature and emphasis on exceptional customer service, he is able to set high standards that guide the other employees in their task accomplishments (Rama, 2011). Despite the mounting criticism about his personal and political beliefs, Dan Cathy has managed to steer the business in the right direction and inculcated the desired values among all employees in the organization.

Nevertheless, in spite of the success of the leadership at Chick-fil-A, there is also the need for initiating some actions that might help to create new behavior that support the overall business strategy. First, there is need for comprehensive evaluation of all employees in the organization. This will entail conducting periodic appraisals and designing employee self-assessments so that all employees can gauge their progress and take remedial measures in order to ensure that their behavior and attitudes are consistent with the overall mission of the organization (Palmer, 2012). Through the periodic evaluations, employees will be able to receive invaluable feedback from the senior management team, which will foster the development of appropriate or desired behaviors.

There will also be the need for decentralizing decision-making in the organization. This is important because it gives employees the autonomy and independence required for making informed decisions that can have a positive impact on the firm. Delegating the decision-making responsibilities to lower level employees will also enable them to have a heightened sense of ownership, which will improve their satisfaction with the job and give management more time to focus on other important issues such as product development and expansion into other global markets.

Conclusion

Chick-fil-A, the largest quick-service restaurant in terms of annual domestic revenues in the nation, has been able to realize growth due to its inventive strategies that mainly emphasize on high quality products, exceptional customer care and employee development. The philosophy of company founder Truett Cathy has helped the company employees to demonstrate desired behaviors and attitudes, all of which have translated to better performance and customer retention. Nonetheless, the company needs to institute some changes in order to overcome the weaknesses and threats that still face it. Mechanisms for improving performance and modeling desired behavior should include more decentralization and periodic evaluation of employees. All these will help the restaurant to achieve its long-term goals and aspirations.

References

Cathy, S. T. (2002). Eat mor chikin : inspire more people. Decatur, GA : Looking Glass Books.

Chick-fil-A. (2014). Chick-fil-A: Company Fact Sheet. Retrieved October 29, 2014, from http://www.chick-fil-a.com/Company/Highlights-Fact-Sheets

Hill, C., & Jones, G. (2012). Strategic Management Cases: An Integrated Approach. Boston, MA: Cengage Learning.

Lee, S.-S. (2011). Customer value proposition and service profit chain of the Chick-fil-A restaurant for enhancing customer experience. European Journal of Management , 11 (4), 43-52.

Palmer, A. (2012). Introduction to marketing : Theory and practice (3 ed.). Oxford: Oxford University Press.

Rama, R. (2011). Handbook of Innovation in the Food and Drink Industry. New York: CRC Press.