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1. What were Debbi and Randy's "resumes" when they met? Based on this – what would seem to have been a reasonable future for each?
When Debbi and Randy met the two had extremely different resumes and educational backgrounds. Debbie had not gone through any formal business training at higher learning institutions. However, Debbie had a long time experience in baking cookies. As a teenager, she had found baking chocolate chip cookies as one of the hobbies she valued most. It was during this time that she had perfected her recipes while she worked for a baseball club at Oakland. Later she also worked for a local department store further enhancing her perfection of the baking experience. Debbi was also enthusiastic and had a fundamental philosophy that all her cookies would be the most delicious her customer had ever had. With all these experiences Debbi was not meant to be a great business success. Without any formal education beyond high school, she would otherwise make a great homemaker. The best Debbi would pursue was to bake for department stores within her neighborhood.
On the other hand, Randy Fields was an economist from Stanford University, one of the most prominent American universities. At the age of 29 Randy had several clients and his future as an economist was quite bright. He was open to business providing an incentive to his wife as she went into business of baking cookies. Randy had the expertise required to establish a corporate structure for the implementation of the prospective business, implying that a reasonable future for Randy would be a business executive.
2. What do you think led to the opening of the first store? What do you suppose Debbi's goals were? Randy's?
The idea of opening a store first came to Debbi after serving her husband’s clients. The clients commonly demanded her cookies during their visits. This gave Debbi a motivation to share her great cookies with the people of California. Her reasons for opening the store were least driven by profit. In fact, when Debbi was asked by Pier 39 shopping Mall to open a store there, she turned it down since such a move would be perceived as a business that would grow to make lots of money. This was not the reason for opening a store; the main reason was to bake great cookies, which came first. This one of the primary goals of Debbi she later adapted as a management philosophy that she applied at Mrs. Fields’ Cookies.
On the other hand, Randy was not too sure about the business. He was not sure about Debbi’s selling much of the cookies and thus betting with her on her sales. However, Randy supported her as they borrowed the capital as a couple of about $50,000 from the bank.
3. The opening of the second store presented Debbi with a real dilemma. What was it? Discuss Debbi's management style in this context and in the context of the rapid growth that follows.
Debbi opened her second store in San Francisco at the location with high tourist traffic. This new store presented a management challenge to Debbi because she was originally opposed to delegating management duties to staff, so managing the second store was a challenge. In her argument Debbi asserted she had learned all that she knew through doing the work herself. She preferred to work at the store she owned selling cookies behind the counter. The second problem that faced Mrs. Fields’ Cookies was design of each store. Debbi was so particular about the outlay of the stores. The store was to have an inviting and accessible look; in that, customers would see what they wanted as soon as they stepped into the store. Different stores followed in the rapid expansion were supposed to have the same exact precise outlay.
4. What was Randy’s role in the org.?
Randy’s main role was to design the Management Information System that would assist in the management of the store. It was the desire of the couple to have each store running like the first store at Palo Alto. Randy was to develop a system that would aid the process of decision-making and other simple works in order to free the manager to do other jobs in the store that was unique to humans. His idea of integrating human expertise with information systems would help the management hierarchy of the company quite simple. In essence, there was to be one manager at each store who had less managerial staff and managerial duties, and more of customer satisfaction responsibility.
Randy considered information system as a means of growing the company without having to increase the staff. He encouraged the invention of new applications in order to improve service delivery as well as eliminating redundancy. He was also the financial advisor/manager of the firm. He is the one who set the financial strategy of the firm.
5. Examine the exhibit on the Field information system. The in-store systems are essentially unique for a business of this type at this time. Discuss them. What do you think of them? How does Fields use them?
The information system used by Fields was rather simple. It was good in the sense that it provided justification for any decision made by the company. The working of the system was such that anyone would come to the company with proposal. At this point, an ad-hoc assessment would be performed to evaluate the cost/benefit analysis and the result would be justified using one of three accepted criteria.
The first criteria is based on the idea that a new measure should cut on cost, that is, it should save money for the company. This criterion was known as potential payback criteria. The second criterion was called drive sales criterion. In this case, a new idea would be considered viable if such a move would generate new sales. The last criterion was the strategic importance criterion. This criterion suggested any new move should put the company in a position where the company would take advantage.
Information systems were perceived as a strategy that can be used to accommodate growth without the need to increase the number of employees. In light of this view Randy emphasized on constant interaction with technology to facilitate the development of new and creative applications. This facilitated the implementation of an expert system that automated the routine elements associated with an activity. In addition, the expert system would also respond to exceptional situations by prompting the managers for input. Continuous learning by the system implies that the exceptional cases became routine.
In addition, a small number of staff places emphasis on the development of business solutions rather than focusing on the management of people. This is because smaller teams speed up the process of decision-making. A small staff could only be achieved using an effective implementation of information systems.
6. Classify the in-store and corporate system with respect to the classification of business systems that we discussed in class.
At the corporate headquarters the responsibility of managing the stores was left to the controllers who reported to Debbi through the vice president of operations. These controllers were responsible for between 35 to 75 stores and their work was to review the daily reports and summaries regarding sales and other operational information. These controllers were required to monitor other unusual occurrences that emerged from the stores. Other matters that could not be understood were to be elaborated by the filed managers. Such a business with a corporate headquarters and reporting hierarchy is common in several international companies.
Additionally, the financial side of the business was handled at the corporate headquarters. Local marketing and other decisions affecting the stores were handled at the regional and the district levels to customize decisions to suit the affected region. In addition, a limited number of stores could operate under a single region or district.
7. Outline the resume of an ideal Fields’ store manager. How does this compare with the resume of a typical manager at, say, McDonald's?
The ideal resume of a manager who would work in the Fields’ business was to be based more on the character rather than the professional qualification of the applicant. The kind of managers that Mrs. Fields valued was based on honesty, values, education, punctuality, attitude, salesmanship and experience. These are the company values and thus applicants were asked questions based on these things. Promising interviewees had their answers kept in a personnel database.
This resume compares quite well with a McDonald’s manager in that the two managers would need to have undergone some higher learning of some sort. However, the two stores are more concerned with managers that are sales directed and keep the quality of the products from the store. The managers also need some management training on the discourse of electronic use.
8. We are supposed to note the statistic on store manager turnover- we are also supposed to see this as a bad thing. Why? Can you make an argument that this is not a bad thing for Fields or the store managers?
The most important reason for noting the turnover of the store managers is for remuneration purposes. Mrs. Fields’ Cookies is a company that pays it managers using two methods. The first method is through a salary that is competitive with other retail stores in the locality. The second kind of remuneration is by bonus. This bonus is based on the amount of turnover the store has made. In that the manager receives a bonus of 1.25% of all the sales made if they meet the sales forecast. In a situation where the sales exceed the forecast, the manager receives 10% of all revenue above the set goals. The company’s policy does not limit the amount of bonus a manager makes in a single financial year.
This kind of incentive bonus based on sales is a very good strategy. Companies all over the world have used the sales based bonus system to improve company’s sales. This kind of bonus is good in two ways. First, the manager gets to enjoy the fruits of hard work since the more the result, the more the pay and this motivates the manager. Secondly, improved sales mean the profitability of the company will definitely improve.
9. How do Debbi & Randy view franchising? Is this consistent with their "style"? Why do most organizations of this type embrace franchising?
Debbi and Randy have consistently opposed the proposal of franchising. According to Debbi, any business buys into a franchise only to make money and this is not the reason why Mrs. Fields’ Cookies was formed. In her argument, every store under the Mrs. Fields’ name needs to reflect the initial store that was opened at Palo Alto. She viewed that franchises would lead to the company losing control of the end touch and thus losing touch with the customer. The idea of opposing franchising is their style of business. Debbi was always concerned with every additional store that she opened. Therefore accepting franchising would go against all the ideal and principles that she set out while starting the business.
This business model is quite common with franchising. The reason for this is that franchise store chains are known for their brands; thus, all the stores are very much similar. In fact, franchise firms only provide a limited range of product that can easily be controlled. They have also registered much success worldwide.
10. What are the two most common ways that organizations finance themselves? What are the tradeoffs of each?
The two most common ways of financing is through bank credit facilities or raising money through initial public offer at a securities exchange platform. While the bank might be the easiest form of raisin funds, the interest rates were extremely high for the survival of the business. Banks are in the business of making profits from interest on loans. Thus, businesses have to be keen not to be in too much debt and thereby bring the business down.
On the other hand, the initial public offering may be a suitable method of raising funds. This is due to the fact the cost of financing is not high had therefore firms need the public on their side in order to raise the funds they need. However, if the firm floating its shares is not as popular, then this creates a problem. Nobody wishes to invest in a company that is not known.
11. Explain the Fields approach to financing in the context of their management style. Explain the London thing!
During the formation of the company, the Fields relied mainly on credit facilities from bank to run and start new shops. However, as the firm grew in size it opted for a public offering of its shares on the London Exchange. This initial public offering did not go well as the company had anticipated. This due to the fact several buyers in England did not know about the firm. Furthermore, the firm had only a single store in London and the company did not believe in franchising. All these conditions really undermined the performance of the company at the initial public offering. This result forced Randy to resort to cash flows and debt to finance future projects.
Accounting at Mrs. Fields’ Cookies was straightforward in the sense that expenses at the store level were chargeable at the store. In addition, corporate expenses were not distributed to the stores. Randy was of the view that distributing corporate expenses to the stores results in a loss of track of what the corporate is doing. Therefore, each of the stores functioned as a profit center, which helped in steering profitability.
12. The Fields say that their org. is too "warm & fuzzy" to require a formal org. chart. Based on info from the case, what type of structure do you think they actually have?
According to the Fields, an organization should not be filled with unnecessary bureaucracies. In their philosophy, it was desirable for any to contact whatsoever without regard to the rank of such a person in the organization. Under this organizational structure, less hierarchy provides the management with the time to manage business processes as opposed to managing people. The Fields were concerned with a company in which the staff had titles and jobs but without any formal organization chart. This provided a more cohesive workforce.