Free Case Study About Problem Statement
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Business Case Analysis
This is a case of Barrie Super Subs, a chain of over 300 restaurants situated across different locations in Canada. Discussions in this case will focus on one particular branch of Barrie Super Subs only. The team of workers that operate this particular branch of Barrie Super Subs is rather small. With only one chief restaurant manager, one assistant manager, and several part-time leaders, and a small team of part-time crews, the team has survived day to day restaurant operations without any hassle. In terms of profitability and sales, this Barrie Super Subs branch has been on an above average streak for at least a couple of months, leading to big bonuses for the restaurant manager and assistant manager. The main problem, or rather, symptom of the underlying problem, which will be discussed in this case, was the below average profitability that the branch witnessed over the past 18 months or one and a half year.
After reading the case report, we have identified at least seven key findings that may have contributed to the significant and continuous decrease in profitability of this Barrie Super Subs branch. It is important to note that these key findings may either be a problem in itself, or just a negative variable that can be solved once deeper underlying problems have been solved. These are: the employment status of the workers, high rates of deliberate and accidental wastage, the managers’ high consideration and prioritization for monthly bonuses, inability to create and implement systematic rules on food allowances, the employees’ giving out of free foods and drinks to some favored restaurant patrons, strained relationships between the managers and employees, inability to find trained replacement workers for those who left, and a vicious cycle of high wastage.
The proposed solution that would solve most, if not all, problems that may be related to the otherwise above average levels of profitability was the incorporation of revamped workforce.
In order to systematize our problem analysis, we have created a list of problems identified in the Barrie Super Subs branch. Each item in the problem list may be a problem in itself, a result of an underlying problem, or a mere contributory factor to the main problem which is the vicious cycle of high wastage in the company.
Most employees work part-time
High Consideration for Manager Bonuses
Inability to implement rules on food allowances
Giving out free foods and drinks
Strained Relationships between managers and employees
Inability to find trained replacement workers for those who left
Analysis of the Problem with Corresponding Alternative Solutions
As opposed to what was presented or implied in the case, we do not believe that the main problem is the decrease in profitability of the Barrie Super Subs branch. Sales are an important factor that must be considered in measuring profitability. These two variables have a directly proportional relationship. That is a higher level of sales leads to a higher level of profitability. However, it is important to note that sales is not the sole factor that can and must be considered in dealing with issues related to reduced levels of profitability.
One of the other important variables that we can use to analyze the root cause of all the identified problems would be the expenses. Profit has been defined as “a financial benefit that is realized when the amount of revenue gained from a business activity that exceeds the expenses, costs, and taxes needed to sustain the activity noting that any profit that is gained goes to the business owners who may or may not decide to spend it on the business” . In the field of economics, there are many ways how to compute for a company’s profits. The standard equation states that to get the profit, one has to subtract the total expenses from the total revenue.
What makes this discussion about profitability relevant to the case is the fact that one of the biggest problems that the current Barrie Super Subs branch faces has something to do with its inability to control the surge in its overhead costs, particularly the wastage as a result of day to day operations. Wastage can be operationally defined as the unnecessary loss of resources that would have been otherwise sold for a profit or used as a raw material in the production of the output that the business is trying to sell.
We have been under the assumption that wastages that have been unaccounted for or unrecorded would be shouldered by the company and that would automatically be included in the total costs of business operations. Note that total costs and profit have an inversely related relationship wherein a higher level of total costs would result to lower profits. This, we reckon, is what is exactly happening to this Barrie Super Subs branch. Wastage, in this case, can be classified into two: deliberate and accidental wastage. It is important to note that both are expected to have a negative impact on the company’s financial books because they both lead to higher costs of operation.
But between the two, deliberate wastage is the one that can be easily solved because as its name implies, it is done deliberately and it can be solved easily when employees start to commit to deliberately reducing wastages. Examples of deliberate wastages that have been mentioned in the case were the employees’ giving out of free food, drinks, and even discounts to the restaurant patrons who we assume to be their friends, citing that giving free food, drinks, and even discounts to their friend/customers makes them popular in school (this is a highly relevant information because
Most of the employees work as a part-time student, part-time Barrie Super Subs employee
Employees are the functional unit of any organization, and without these functional units, practically every operation that the business has would be crippled. Employees are the backbone of any organization. Some leadership theories would even go as far as saying that what makes up an organization is neither the infrastructure that symbolizes its existence nor the leaders who direct its operations but rather the employees who fulfill all the processes related to its core business.
So, if the employees’ values are junk, then there really is no reason not to see the value of the organization that such employees make up as junk. In this case, for example, it appears that the employees’ goals and motivations are not set directly in line with that of the managers, assistant managers, and the business owner. In general, the goal of any manager, assistant manager, and business owner would be to make the business and its operations as profitable as possible; the supposed goal of any full-time employee, on the other hand, is to contribute to the survival and preferably, growth of the organization both in terms of size and profitability because that is actually one way of ensuring employment stability.
However, this may not be the same case if the status of the employment of the employees is set on a part-time basis. In this Barrie Super Subs branch’s case, their employees double as a student: they are a part-time student and a part-time employee. It may be safe to assume that their priority is not really to contribute to the growth of the company but to use whatever they can earn from the company to sustain their expenses while studying, as evidenced by the fact that they resort to forcing their food allowances and giving unofficial free food, drinks, and discounts to their university friends who are at the same time customers of Barrie Super Subs branch.
This can possibly be a case of conflict of interest between the managers and the employees. One solution to this issue about employment status is to replace all part-time employees with full-time employees because the latter group is more likely to focus all of their attention and interests to the growth of the organization. Also, the likelihood of the development of conflicts of interests would be significantly reduced as well.
High Wastage, Employees giving out free foods and drinks, Inability to Create and Implement Rules on Food Allowances
Superficially, high wastage would indeed appear to be the main culprit behind this Barrie Super Subs branch’s below average profitability for the past 18 months. However, based on the dynamics of the actions that the employees and the managers commit, it certainly appears that there is more to this situation than just a recurring cycle of wastage. However, we cannot downplay the significant impact that wastages play on the company’s finances. For example, the part-time employees’ forced enforcement of a free food allowance can automatically be considered as wastage because those foods could have been sold by the company to its rightful customers as a profit. In fact, what the employees are basically committing is stealing from the company’s merchandises, something which can not only lead to termination of their employment but also to prosecution.
The employees’ giving out of free foods and drinks to their friends, the spillage of food during cooking and preparations, can all be considered as wastage. Unfortunately, there is no other way to prevent this but to directly address the issue. The branch can, for example, create an anti-wastage drive from within and incentivize employees who have proven to be cooperative to the drive.
Managers’ High Level of Consideration and Prioritization for Monthly Bonuses
It is not right to put all the blame to the employees in this case because there is certainly a possibility that the managers are also a fault. It has been mentioned in the case that the managers have continuously received hefty monthly bonus checks during the time when the company was making well above average profits. We assume that the employees know everything about the bonus and with this assumption comes a certain level of probability that what motivates the employees to not cooperate in reducing the wastage levels within the branch is their desire to also receive bonuses whenever the branch’s profits get elevated as a result of low wastage levels.
In the current scenario, the managers are the only ones in the organization that benefits from the rules that they are trying to enforce such as the ones about food allowances and bonuses. If the management could, for example, do something to incentivize the employees for cooperation in the anti-wastage program, then perhaps they would be well motivated to do so; they will cut off all the unofficial discounts and freebies to their friends, and they will also stop taking unofficial food allowances from the company’s supply of food that are supposed to be sold to customers and not be given as food allowances.
If this proposed alternative solution is to be followed, the managers should be able to show to the employees that it is not the monthly bonus that they are after because that would surely create resistance among the employees.
Poor relationship between the employees and the management
Because the employees appear to be uncooperative to the rules and policies that the managers have enforced, they started to be more rebellious. Some of them even resigned. This is a direct sign of poor morale and a low level of relationship between the managers and employees. One possible way to look at this is to check what motivates the employees to do the rather unethical things they have committed against the company and check if there are any valid grounds or basis for doing so.
If there are none, then that would only support the stricter policies that the management has implemented because it is never really advised to negotiate with uncooperative and untrustworthy employees. One theory that can be applied in this case would be the McGregor Theory of Motivation. It basically classifies human motivation into two. We have a Theory X and a Theory Y. Theory X suggests that employees are naturally unmotivated to and dislike work; that they have to be forced, controlled, and threatened to deliver the results or outcomes that are needed .
Because of this, Theory X prompts a more authoritarian style of leadership. Theory Y, on the other hand, suggests that employees are happy and motivated to work, prompting a more dynamic and de-centralized leadership from the management. Between the two, it would appear that the one applicable to this company’s case is the Theory X. Based on the principles of Theory X, the requests and expectations of the employees should only be granted based on a carrot and stick basis—a jargon that is used to describe a situation where a condition has to be satisfied before negotiations can even start. In that case, the managers can negotiate a deal where employees would stop whatever they are doing so that they can keep their jobs and not be prosecuted for stealing. The management may also tell to the employees that the company would start deducting wastages from their respective salaries, in order to solve the problem once and for all.
In summary, we have identified the real problem in the company’s case is not the below average profitability for the past 18 months or the high level of wastage incurred during day to day business operations. The real problem is the lack of cooperation received from the employees and the conflict of interests that exists between the management and the employees. These are the two things that create the downward spiral and vicious cycle that has led to the poor earning outcomes for the company.
In this paper, we proposed different possible solutions for every item in the problem list we created. The most recommended solution, however, is to remodel the entire human resources or workforce which can be progressed into a process of including full time workers in the kitchen and in the dining areas, and select candidates who appear to have goals and interests that are in line with that of the organization. This does not mean that part-time workers should be denied employment, however. The company may still allow workers to be employed on a part-time bases provided that they can prove to be adherent to the rules and policies set by the company.
Investopedia. "Profit." Investopedia (2014).
Kopelman, R., D. Prottas and D. Falk. "Further Development of a Measure of Theory X and Y Managerial Assumptions." Journal of Managerial Issues (2012): 450-470.
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