Iggy’s Bread of the World

Posted: September 9th, 2013

Iggy’s Bread of the World

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Iggy’s Bread of the World

Introduction

This is the case regarding the bakery business, Iggy’s Bread of the World. The organization specializes in the manufacturing of quality bread in the city of Boston in the state of Massachusetts. Iggy’s Bread of the World started its operations as a small sized enterprise in Hyannis, Massachusetts where it was under the name, Pain d’ Avignon. Because of the hard work presented by its founders, Igor Ivanovic and Ludmilla Luft, the enterprise grew into a large enterprise employing a staff of 116 employees and assuming annual gross sales of US$ 6 million with over 300 active accounts. However, Igor and Ludmilla found it difficult to expand the business without incurring debt. Thus, they decided to employ a Chief Operating Officer (COO), Colin McRae, who hired a new management from outside the organization leading to complications in the business forcing the COO to quit and then take back his letter of resignation, in order for his requirements to be met.

Background Information

Igor and Ludmilla met together in a Manhattan Restaurant in New York. Ludmilla decided to abandon her aspirations and took on other prospects of opening up a restaurant business together with Igor who had passion for bakery. 1992 was the year that saw Igor and Ludmilla collectively open up their first bakery, Pain d’ Avignon in Hyannis, Massachusetts. The first staff was comprised of two bakers who had joined them after departing from E.A.T. However, both bakers quit but another baker was found who would help both Igor and Ludmilla learn how to bake. As the business became successful, wrangles arose from the differences between the Ivanovics and the partners in using organic foods. Such differences caused the Ivanovics to sell their share of the business and scout for a new venue to open a bakery.

The Entry Strategies

Market research had to be properly carried out to determine a ready market with few barriers to entry and exit (Carlton, 2005). Boston, Massachusetts was the ideal market for Igor and Ludmilla’s products. Despite creating a new market for their product, the Ivanovics had to create a new brand name and improved bread standards that would not affect Pain d’ Avignon, hence the name, Iggy’s Bread of the World. The bakery opened in January 1994 and was located in Watertown, Boston. The success of the business was mainly attributed to an informal advertising strategy of word of mouth. Furthermore, the business was effective in cost leadership. Cost leadership is an effective strategy adopted by most businesses to have a wider customer base over their rivals by issuing low product prices (Hillstrom, 2002). Customers were also assured of the bread’s quality value due to the Ivanovics’ confidence in their product and fervor for the business. The bread’s quality and taste was also emphasized by the investments the married couple made for production. Investments such as foreign labor who were baking experts, state of the art ovens and dough machinery.

The Workforce

The main resource for the business was the employees. It is usually evident that a positive workforce enables a firm to generate maximum profits and due diligence (Sirota, 2005). The Ivanovics understood that for their business to succeed, they had to incorporate positive working conditions for their work due to the work’s intricate nature. According to Topchik, 2000, positive environments in the workplace increase workers’ compliance in completing tasks. Various strategies were implemented such as the clean and happy hands rule, which ensured that the workers sanitized their hands before working on the bread as well as encouraged the communication of individual employee problems to the acting management. Another strategy was the offering of English classes once a week, in order to enable foreign workers understand the language and thus ease communication. Other strategies included employee parties and sporting events that alleviated the workers from the stress of working two shifts due to the high demand of the products. Additionally, the Ivanovics put trust in their employees in making the best decisions positively affecting the work conditions. However, not all decisions could be tackled by the employees solely hence the consultancy of a personal and informal board of directors proved necessary.

Current Problem

The problem arose when the company could no longer function beyond its production capacity. The business had always operated in cash alone which was always reverted into the business for new equipment without considering the rapid growth of the business due to increasing customer demand. Hence, the business considered the thought of acquiring loans to finance their expansion. By taking up loans, the couple physically expanded the business. New vans were purchased for deliveries and the kitchen staff was increased. The expanded business and new financial structure saw Igor employ Matthew McRae as the Chief Operating Officer. McRae employed an external new management team comprising his friend and brother. Furthermore, McRae hired another friend, Diane Coleman as Vice President for Sales and Marketing. The rapid changes started negatively affecting the Ivanovics as they were losing touch with the management and employees. Moreover, the changes disrupted the working conditions of the employees because of discontentment. The problem then led to the resignation of McRae due to increased wrangles between Igor and McRae regarding Coleman’s poor work efficiency. However, McRae was willing to come back if his proposals, which included bonuses and significant salary increments, were adhered to by the board members.

Conclusion

Eventually, discontentment amongst employees will lead to the business gaining losses. Agreeing up to McRae’s demands is also another decision that would terminate the business. This is because he does not work collectively with the workers and does not inform the management of new appointments. Furthermore, McRae employs his management based on nepotism thus appointing people with few skills and knowledge in the business. Thus, in order for the business to grow, McRae should resign and the firm should employ effective management that will work closely with the firm to ensure that implementation plans for changes are adapted positively.

References

Carlton, D. W. (2005). Barriers to entry. Cambridge, Mass: National Bureau of Economic Research.

Hillstrom, K. (2002). Encyclopedia of small business. Detroit, Michigan: Gale Group.

Sirota, D. (2005). The enthusiastic employee: How companies profit by giving workers what they want. Indianapolis, Indiana: Wharton School Pub.

Topchik, G. S. (2000). Managing workplace negativity. New York: AMACOM.