Kudler_Problem_Statement

Kudler Problem Statement October 25, 2010 MGT 521 University of Phoenix Kudler Fine Foods Problem Statement Problem Description Kudler Fine Foods is a premier gourmet cooking and grocery store with three locations in Southern California. Kathy Kudler established Kudler Fine Foods in 1998. She was a gourmet-cooking enthusiast and was disappointed that her neighborhood did not have an adequate gourmet food store. She made her dream become a reality and quickly went from one store to three. She is heavily involved with the day-to-day operations of her stores and often visits all stores every day. Their mission is, “Kudler Fine Foods is committed to providing customers with the finest selection of the very best foods and wines so that their culinary visions can come true.” Kathy whole-heartedly believes this mission and strives to pass is on to her employees. To gain a better understanding of Kudlers, the following SWOT analysis has been prepared. Strengths Because Kudler’s is small Kathy is able to monitor and control activities in all stores on a regular basis. Kudler’s has found a niche in the market and does not have any direct competition. Product variety is also strength; it gives customers a plethora of options. Another strength is that Kathy interacts with customers so she knows what to order and how much. Kudler’s also enjoys the benefit of many return customers. Weaknesses Kudler’s deals with perishable goods and needs to turn product around quickly or it spoils. They are a specialty shop and pay high wages to experts in various specialties in the stores. Another weakness is that Kathy makes up most of the management. She has hired a store manager for each store but limits their duties. She takes care of all the ordering and managing of inventory. When Kathy is sick or out of town no one else is trained to take care of this aspect of the business. The last weakness is that one of the stores, located in Del Mar is not performing as well as anticipated. Opportunities Kudler’s has the opportunity to expand throughout California and beyond. They can also bring in outside management to help run the company. Threats Another Gourmet shop opening up and taking some of the market share is always a threat. An ailing economy is also a concern because if customers think that they need to save their money they may not see the need for gourmet food. The last threat is that of Kathy’s health. Although she is in good health, if something happened to her the company would be threatened with closure because she is doing much of the operating by herself. Problem Statement Kudler’s wants to expand their business into other cities and possibly neighboring states. The problem is that Kathy currently does all of the ordering and inventory management in all stores by herself. As it stands Kudler’s is not managed properly to facilitate expansion. End State and Goals Kudler Fine Foods strives to provide a quality product. They want to make this service available to more people by opening more stores further from their flagship store. Kudler’s wants to open a new store in Carlsbad, California, and merge it with the Del Mar store by October 2012. They would also like to open a store in San Francisco. This will be a big endeavor; it will be the first store opened outside the general area of southern California. This should be done in the next five years. Furthermore, Kudler wants to open five additional stores outside of California in major cities such as Phoenix, Arizina, Seattle Washington, Portland, Oegon, Salt Lake City, Utah, and Sun Valley, Idaho in the next 10 years. Once stores are open in these major cities expansion can continue throughout these states. A final goal is for Kathy to be able to go on a vacation without the stores being significantly impacted. Possible Alternatives It is clear that to reach the end vision for the company changes need to be made to the way Kudlers is managed. While Kathy has done a tremendous job growing the company to where it currently is, the following have been identified as possible alternatives. Hire an MBA One possible alternative solution to the problem is to hire an MBA to come into the company and make necessary changes to prepare the company for expansion into neighboring states and markets. An MBA has the proper skills and experience to help propel the company into new areas successfully. Franchising Kudler could sell franchises to those who are interested. Training Manual Another alternative is to have Kathy write a detailed training manual listing the duties and responsibilities of each job in the organization. This manual would include all of her responsibilities including inventory management and purchasing. Empower Store Managers Each store has a general manager who handles the affairs of his or her store. Kathy could train each general manager to do the ordering for each individual store. These managers will take over much of what Kathy has been doing and at the same time empower them to have more responsibility. Mentor a Store Manager Kathy could mentor one of her current store managers, showing him or her the inns and outs of purchasing and inventory management. Once this person is self-sufficient he or she could be placed as the manager of new stores opening up outside of the southern California area. Helping the stores become successful and maintaining the company vision. Evaluation of Alternatives Hire an MBA The alternative to hire an MBA is a viable solution to the company’s problem. An MBA has much knowledge and experience, but hiring an MBA comes with a price. If he or she was to stay with the company long-term instead of just coming in on a consultant basis the cost could be very high. The company could learn much from an MBA, he or she will have the skills to take the company to the next level of achieving its goals of expansion. Franchising Franchising could be a good solution to the problem. Kathy could set rules that need to be followed by franchisers. She could maintain some control and allow her company to expand rapidly without financial risk associated with expanding on her own. Extra revenue could be used to continue opening stores where she wants. The extra revenue could help her enjoy retirement more. Training Manual Having Kathy write a training manual is crucial to the survival of the company. Kudler’s is lucky to have survived thus far without a written training manual. Employees need to understand their job descriptions and subsequently what is expected of them. Kudler’s has survived because Kathy has been able to visit each store almost daily to pass on her vision and train employees little by little. With the opening of the store in San Francisco and subsequent stores outside of California she will not be able to do this. With this training Kathy can have someone else trained to do her responsibilities in her absence. If something happens to Kathy now, the company will struggle to keep up the same pace. This would help operations continue in her absence and enable stores outside her geographical area to operate properly and efficiently. Empower Store Managers Kudler already has general managers in place in their stores. Training them to do the purchasing for their individual stores is a good alternative. This is a cost-effective alternative and general managers in many grocery stores do their own purchasing with guidelines from a regional manager or headquarters. By having GM’s purchasing, it introduces diversity and variety into the process and could be an advantage. Providing compensation to managers if they will move to new areas where stores are being opened will help with the expansion process. Mentor a Store Manager Having Kathy select one of her GM’s and mentoring him or her is a good alternative. This allows Kathy to personally train a manager to take over her duties of purchasing and inventory management. She could introduce him or her to important contacts necessary to complete her job. She could effectively pass her vision and knowledge to her mentee. She could appoint this person to oversee the opening of new stores outside the area. Identify and Asses Risks Risks will be rated on a scale ranging from one to five with five being a high risk and one being a small risk. Hire an MBA Hiring an MBA is not without its risks. The number one risk with hiring an MBA is the cost. This risk is low on the scale at two. Hiring an MBA would be a good investment and Kudler should see a good return on this invesment. Franchising Risks include not having as much power and authority as Kathy is accustomed. The quality of the stores could be vulnerable and the vision she has strived to create could be gone. They rate this as a three on the risk scale. Training Manual The manual could be obtained by potential competition and used to copy kudler’s philosophy and methods. There will not be any company secrets in the manual so this is rated low on the scale at two. Empower Store Managers This alternative is low on the risk scale. Adding more responsibility to the already busy schedule of a GM could be a difficult adjustment for the company. Important tasks could be overlooked or procrastinating causing customer service issues. This is listed as a three on the risk scale. Mentor a Store Manager Risks in this step include other managers being jaded for not being selected to be the mentor. De-motivation and poor job performance could result. This is rated a three on the risk scale. Decision Kathy has decided to combine three of the alternatives to fix the problem. First she will write a training manual with specific emphasis on training general managers to do the ordering for their own stores. She will also be selecting a GM to mentor. His or her Job will be to eventually help open new stores outside of California. Implementation Kathy will need to do some serious reflecting about what to put in a training manual. Hiring a technical writer would be a tremendous help in wording it correctly. She will then need to take on the daunting task of training her current general managers on how she manages inventory and purchases product. Last she will need to set criteria and interview current managers to decide who will be the mentee. Evaluation of Results To evaluate the results of the problem solution kudler will evaluate the rate at which kudler expands its stores. They will see if the Carlsbad store opens in October 2010, and a San Francisco store within five years. They will also be evaluating progress on the goal to open five stores in major cities outside of California in the next 10 years.