Mrs. Fields’ Original Cookies Case Analysis

0
92

Table of Contents

  • The Organization
  • Fields’ Initial Actions upon Acquiring LPB
  • Reasons to Initiate These Actions
  • Point of View as LPB Store Manager
  • LPB Business Line and Mrs. Fields’ Business Line
  • Fields’ Information Systems
  • Losses after Acquisition: Randy’s Explanation
  • Future of LPB and Its Employees
  • The justification behind the Thought
  • References
  • Bibliography

 The Organization

Mrs Fields’ Original Cookies, Inc was established in 1977 at Palo Alto in California by Mrs Debbi Fields. The company, in its introductory stage, only used to market the cookies baked with Mrs. Fields’ recipes. Gaining a rapid growth in the market, Mrs. Fields decided to expand her only business to the national and the international boundaries as well. Although in the early years, the concentration was rigid on the product lining of the company to market only the cookies, in the later years, with the improvement in the performance, the company started marketing ice-creams and other baked products along with cookies in 14 unparallel flavours and varieties. Incidentally, the company emerged as one of the major players in the sweet snack industry. The company in this virtue expanded its operations in different parts of Japan, Hong Kong and Australia. It was during 1987 when the company initiated the acquisition of a France based bakery and/or sandwich store named as La Petite Boulangerie (LPB). LPB during the period was operating through almost 119 stores scattered in every nook and corner of the country under the corporate head of PepsiCo (Harvard Business School, “Mrs. Fields’ Cookies”).

Mrs. Fields' Original Cookies Case Analysis

 Fields’ Initial Actions upon Acquiring LPB

The dimensions of LPB in terms of both product lining and organizational structure were mostly different from that of Mrs. Fields’, Inc during the period. Therefore, it was quite likely that in realistic practices, both the companies will have unparallel values and objectives as well. In this regard, to transform the goals and the vision of LPB to be similar as that of Mrs. Fields’, specific significant changes were enforced which brought about drastic changes in the managerial outlook of the company. For instance, LPB associated more than 53 administrative staffs with controlling its outlets through various departments from marketing and sales to Research & Development (R&D). But as a result of the acquisition, the number of administrative staffs was reduced to only three as Mrs. Fields’ took control of the overhead functions of LPB, such as the finance department, the human resources department and others. Only the operations and the R&D department were left unchanged (Harvard Business School, “Mrs. Fields’ Cookies”).

 Reasons to Initiate These Actions

According to Randy Fields, the acquisition was enforced as an expansion tactic because LPB dealt with both cookies and various other bakery products to the upscale customers through sit-down cafes. However, as stated by the founders, the strategy represented something extra than just expansion, which was treated to be a new concept for Mrs. Fields’. It was due to this reason that the stores of Mrs. Fields’ after the acquisition went through a change process to obtain a new outlook of a combination store. This combination store thereby would serve both cookies and other bakery products along with ice-creams and desserts. Another reason to attempt the strategic decision of acquiring LPB was the belief of Randy. According to Randy’s perception, Mrs Fields’ stores were running so vividly that anything which adapted the brand name would perform well in the targeted market.

Consequently, the then market analysis also depicted that the popularity of the quality baked products is somewhat resistant to the economic fluctuations. This, in turn, encouraged the founders to undertake the risk of acquisition and reformation. The in-depth cause of acquiring LPB was to incur a more significant profit than Mrs Fields’ could gain separately (Harvard Business School, “Mrs. Fields’ Cookies”).

There were also specific causes from the part of LPB which permitted the event of an acquisition. First, franchises were heading towards lawsuits against the bakery chain. And also, the bakery chain was operating in losses despite being under the corporate head of PepsiCo. The trial enforced by Calny Inc against LPB in the year 1987 was a similar one (Nation’s Restaurant News, “Calny sues PepsiCo, Petite Boulangerie”).   

Point of View as LPB Store Manager

Mergers and acquisitions have become one of the frequent happenings in the corporate, which has a few causes along with specific effects. In this case, the purpose of the acquisition was the then objective of Mrs. Fields’ to expand their product lining from cookies to various kinds of bakery goods in an attempt to attain an extra profit. Consequently, the event headed to several upshots, including the reformation of the HR policies practised in LPB. For instance, immediately after the acquisition, 53 headquarter staffs were reduced to several 3 with responsibilities of the R&D and the operations department. At the same time, the store managers were assigned with the freshly designed combination stores, as titled by Randy Fields. This strategy was adopted with an aim to technologically retrain the store managers in order to become familiar with the newly developed organizational environment. Perpetually, this resulted in a diminished moral from the employees’ end, as the strategy ignored the needs of the staffs and their future requirements in the organization to an extent. Conversely, the manager had to deal with an unfamiliar business line beside a highly fluctuating organizational structure. The store managers who proved to be resistant were fired by the corporate heads in the following months (Holton & Gill, “From Salvation to Damnation: A Case Study on the Role of a System Sponsor in Strategic Downfall”).

 LPB Business Line and Mrs. Fields’ Business Line

The overall business line of LPB was recorded to be three times larger than that of Mrs. Fields’ Cookies. It was incorporated with 119 outlets located all over France, serving its upscale market through sophisticated sit-down cafes. Moreover, the product line of the organization was centred on various kinds of bakery goods embracing sandwiches, hot soups and cakes (Harvard Business School, “Mrs. Fields’ Cookies”).   

On the contrary, Mrs. Fields’ Cookies was a relatively smaller organization compared to that of LPB. Moreover, the organizational structure of Mrs. Fields’ was mostly based on modern information technology to increase the efficacy of business communication taking place within the corporate hierarchy. Similarly, Mrs. Fields’ used to deal with different kinds of cookies, brownies, ice- creams, candies and muffins. Additionally, the customer base of the organization was also somewhat focused on the middle-income group of the targeted market. However, regarding the financial status of the company, it was incurring a constant growth in terms of profits, while LPB was recorded to operate on losses (Funding Universe, “Mrs. Fields’ Original Cookies, Inc.”).

Therefore, it is quite apparent that both the companies possessed a different organizational structure not only in terms of working conditions but also in terms of the targeted customer. Moreover, the product lining was also widely different from each other. Thus, it is quite likely that both the organizations witnessed separate kinds of managerial challenges and were widely dissimilar in terms of the business line.

Fields’ Information Systems

To save time and increase the efficacy of the store managers, a newly developed Management Information System was used in the organization. This software was significant to maintain the uniformity in the organization, which was termed to be essential according to Debbi’s perception. Moreover, the software also proved to be highly supportive of stimulating the growth of the organization through the expansion strategy. It is notable that the software not only improved the managerial decision-making process for the store managers but also assisted Debbi Fields to control each unit similarly as she used to control her first cookie store in the city of Palo Alto. The tasks performed by the software included the routine activities of each store such as maintaining financial records, complete agenda of operations, supporting marketing tactics, recording the hourly sales goals and even proved supportive in the interview selection process (Power, “Gaining Competitive Advantage with Decision Support Systems”).

Despite all these advantages, the information system used in the organizational structure of Mrs Fields’ was restricted due to certain limitations. For instance, the organizational structure of the company was highly depended on the system, which increased the level of moral disengagement among the new workers absorbed from LPB. The high degree of dependency also caused a diminished level of autonomy which a store manager used to practice in LPB (Monsalve, “It’s the System’s Decision: Uncovering Expert Systems and Ethics in the Workplace”).

This resulted in a reduced efficiency level which in turn caused the termination of several employees associated with LPB. Hence, the dependency on the system raised a significant challenge in terms of the managerial decision undertaken by Mrs. Fields’.

Losses after Acquisition: Randy’s Explanation

In this case, it is quite evident that the company, i.e. Mrs. Fields’ Inc had to witness several shortcomings in terms of administration and managerial decision makings after the acquisition of LPB. These drawbacks or failures resulted in a significant loss which amounted to $18.5 million after-tax in the year 1988. In contrast, in 1987 the company had gained a profit of more than $7.2 million after-tax. This contributed to the fact that the company had to face losses after the acquisition of LPB (Harvard Business School, “Mrs. Fields’ Cookies”).   

In this context, the explanation put forward by Randy Fields regarding the losses incurred by the company after the acquisition was caused by the lowered efficiency level of the information system used in the company. His explanation also included that the planning made by him was based on the long term perspective. Therefore, an initial loss which was incurred in the first year after the acquisition does not depict that the strategic decision was a failure in real practices (Harvard Business School, “Mrs. Fields’ Cookies”).   

Records related to the company’s later performances reveal the fact that the company was again on the track of profits with almost 8% increase in the amount of the annual revenue in 1989. However, the company had to undergo other reformations such as the creation of a new education institute and others (Funding Universe, “Mrs. Fields’ Original Cookies, Inc.”).

Therefore, it can be stated that although the company’s performance was recorded to fall back in the first year of the acquisition, the decision taken by the management of the company proved to be favourable in the long term perspective. However, with an in-depth point of view, the company had to face particular significant challenges which could have raised the risk of strategic failure for Mrs. Fields’.

Future of LPB and Its Employees  

About the above-discussed case study based on the acquisition of LPB by Fields’ Inc, it can be stated that the staffs of the acquired company, i.e. LPB, had to face the challenge of an uncertain future. Furthermore, almost 50 headquarter staffs were terminated, while several store managers and other teams were fired by the management after examining their resistance to change. It is worth mentioning that as the organizational structure of the two companies were widely different from each other, the employees of LPB had to witness specific significant difficulties in order to become familiar to the newly developed business environment. Hence, the employees had to experience the consequences of the acquisition at a massive risk of their uncertain future.

 The justification behind the Thought

It is worth mentioning that every M&A taking place in the corporate have inevitable consequences in terms of the well-being of the employees from a social aspect. In most of the cases, the effects related to the unique organizational structure and the unparallel employee needs of the two organizations (Frensch, “Social Side of Mergers and Acquisitions”).

Similarly, in the case of Mrs. Fields’ Inc. and LPB, the employees of LPB had to witness the same causes of uncertainty in terms of their future. For instance, Mrs. Fields’ Inc used to operate through an organizational mechanism which was highly depended on the management information software. Thus, it provided a minimal opportunity to the employees to contribute their personal thought which, to an extent restricted the complete participation from the end of the employees experienced in the environment of LPB. Apart from this, Mrs. Fields’ Inc. also had a centralized working environment which also increased the risk of low morale within the employees and decreased their efficiency level. Undoubtedly, this resulted in the termination of the employees who proved to be resistant to the organizational structure of Mrs. Fields’. Hence, the future of the employees became highly uncertain.

In this context, it can be stated that not only in the case of Mrs. Fields’ Inc. and LPB but also in several other examples of M&A, the employees of the acquired company witness similar obstacles which result in termination of their employment. Therefore, it would be prudent to enforce a certain amount of training to their acquired company’s employees keeping in mind the social responsibilities of a corporate the employers of the acquiring company should. This shall not only support the employees to become familiar to the new environment of the organization but also enhance the level of their moral and efficacy, which shall, in turn, be highly beneficial for the company.

 References
  • Frensch, Florian. Social Side of Mergers and Acquisitions DUV, 2007.
  • Funding Universe, “Mrs. Fields’ Original Cookies, Inc.”. February 04, 2011. Company Histories, No Date. <http://www.fundinguniverse.com/company-histories/Mrs-Fields-Original-Cookies-Inc-Company-History.html>
  • Harvard Business School. Mrs. Fields’ Cookies Diversification, 1993.
  • Holton, Carolyn F. & Gill, Grandon T. “From Salvation to Damnation: A Case Study on the Role of a System Sponsor in Strategic Downfall”. February 04, 2011. Americas Conference on Information Systems, 2005. <http://aisel.aisnet.org/cgi/viewcontent.cgi?article=1861&context=amcis2005>
  • Monsalve, Patricia. “It’s the System’s Decision: Uncovering Expert Systems and Ethics in the Workplace”. February 04, 2011. Ethica Publishing, No Date. <http://ethicapublishing.com/ATEOI_ch8.pdf>
  •  Nation’s Restaurant News. “Caley sues PepsiCo, Petite Boulangerie”. February 04, 2011. Business Publications, 1987. <http://findarticles.com/p/articles/mi_m3190/is_v21/ai_4743919/?tag=content;col1>
  • Power, D. J., “Gaining Competitive Advantage with Decision Support Systems”. February 04, 2011. Examples of Strategic DSS and SIS, 2000. <http://dssresources.com/dssbook/ch2cmadv.pdf>
Bibliography
  • Fischer, Arthur K. & Rush, Tom. “Staffing After Mergers And Acquisitions: A Human Resource Management Case Study”. February 04, 2011. Journal of Business Case Studies, 2008. 
  •  <http://www.cluteinstitute-onlinejournals.com/PDFs/1590.pdf>
  • Siegel, Donald S. “Evaluating the Effects of Mergers and Acquisitions on Employees: Evidence from Matched Employer-Employee Data”. February 04, 2011. The conference, 2008. <http://www.accf.nl/Conference%20papers%20RoF/Siegel-Simons.pdf>

LEAVE A REPLY

Please enter your comment!
Please enter your name here