Background/Situation
The case study under analysis reveals the situation of the Market Basket chain of supermarkets. Initially, Athanasios and Efrosine Demoulas opened a small store and called it DeMoulas. Within 15 years, it was bought and reorganized by their sons – George and Telemachus in a supermarket chain. However, George died in 1971 making Telemachus the only head of the business. Telemachus opened several shops giving them different names. In reply, Telemachus was accused and sued for defrauding Telemachus’s wife and children out of their shares. As a result, they won the case and were awarded 50.5 percent of the company stock.
Key Individuals
- Athanasios and Efrosine Demoulas were founders of the company.
- Telemachus, their son, expanded the company from 14 stores to 51 stores between 1971 and 1994.
- Arthur, son of Telemachus, enhanced annual sales from $ 3 to $ 4 billion and expanded the number of employees from 14,000 to 25,000 (Ton, Kochan, & Reavis, 2015). According to the shareholder’s decision, he was fired which caused employees to strike.
Described individuals belonged to one family but had a feud. In order to save the business, they should act appropriately without emotions and personal interest.
Issues/Problems
The first problem concerned customer service. In particular, there were no loyalty cards, no website, and no self-checkout lines. Second, employee management was focused on duration rather than on the quality of operation. Third, shareholders, not the company had to pay taxes, and some of them accused Arthur of excessive costs and fired him. It caused employees’ discontent. As a result, employees were striking. The race for power is a subliminal problem as some members of the family wanted to win neglecting business interests. Among other issues that might occur, there are competitors’ strengthening or obsolescence of the company’s policy. The problems above are of great importance as they might lead even to the bankruptcy of the company.
Causes
An inappropriate organization was the key determinant of problems. Family members along with development managers caused the above issues. To support that causes are real, it seems useful to consider credible sources such as documents of the company.
Decisions/Alternatives
To eliminate issues concerning employees, it is necessary for the company management to initiate paid sick leaves and retirement funds putting the staff before profits. In relation to customers, the company should reduce average prices by 20 percent. It also would place Market Basket in a pole position against competitors. All in all, the company should create a policy of customer and employees’ loyalty. I would recommend criteria of regular examination when the situation would be under permanent control. There are no alternatives to these decisions as they are the most suitable in that case. I would implement these decisions gradually without any procrastination with the help of top managers as the success of the whole business is at stake.
Conclusions/Recommendations
In conclusion, it should be stressed that the case reflects a family business case where different feuds appear that might lead to the decrease of employees’ loyalty and the company’s prosperity in general. In order to avoid such issues, I would appoint a top head of the company while others would be shareholders with limited rights.
Model
In my point of view, Bridges Transition Model is the model that best relates to the case. It explains how to improve the performance of the company in detail overcoming negative aspects such as stress, ambivalence, and neutral zone and achieving acceptance and enthusiasm.
Reference
Ton, Z., Kochan, T. A., & Reavis, C. (2015). We Are Market Basket. Cambridge, MA: MIT Sloan School of Management.