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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Midterm Exam #2

Question 1

The principle of liking was among the foundational principles that Igor and Ludmilla used to establish their business and shape their organizational culture. This is because they reinforced a culture of getting to know all their employees personally, and being keen to show interest in the things that they liked. For instance, Mark Menezes organized games for the Iggy's workers because he learned that “…despite the many cultural and linguistic differences among the workers,” they all had a common passion for soccer (McGinn 6). Since people like people who are similar to them, by identifying a similarity that all employees of the company shared, the founders made it easier to foster the clan organizational culture which prompts employees to focus on working with each other collaboratively.

The principle of reciprocity (which is founded on the belief that people are inclined to behave in the same way a person behaves towards then or return the form of  gift, or service that they have got first) was demonstrated through the many benefits that Igor and Ludmilla gave their employees including offering free English lessons for the foreign workers, free weekly massages, invitations to huge, elaborate birthday parties, birthday cakes for each employee's birthday and acupuncture for employees who wanted to quit smoking (6). It goes without saying that the employees felt obliged to reciprocate the kind treatment and rather personalized gifts with working hard in their workstations and remaining committed to the mission of the company. The enactment of this principle served to inculcate the adhocracy organizational culture which focusses on building a dynamic and creative workforce. One can tell this from the fact that some of the gifts offered to the employees were transformative because they either made the employees more knowledgeable, better communicators or stop bad habits.

When it came to the principle of Social proof, the Ivanovics benefitted from this principle when the immense success of their start-up company caught the attention a renowned media personality such as Martha Stewart and writers for popular news websites such as Sheryl Julian of The Boston Globe (5). Being mentioned on television and online platforms by people with celebrity status in their respective fields not only gave Iggy's Bread free advertising but also gave the company the credibility of being among the best bakeries in Boston. Subsequently, this created an explosion of demand for their product and thus it is safe to say that the principle of authority worked towards reinforcing the market-oriented culture in the organization because this way Iggy's bread was able to crush its competition and achieve tremendous growth within a short time.

The principle of Consistency alludes to the notion that people like to remain consistent with something already said or done. As Ludmilla mentioned in one of her interviews, “…if I saw that people were unsure about carrying the bread, I would just give them a bite of the raisin pecan and reel them in!”(4). One instance where the Ivanovics used this technique was two months after they had opened Iggy's bread and during Ludmilla to Bread and Circus, to try to persuade the whole foods market to carry their bread (4). She looked for a way to make a small initial commitment and asked them to taste their bread and this (coupled up with the fact that the bread had a spectacular taste), persuaded Bread and Circus to open an account with Iggy's bread. The application of this principle also served to strengthen the market culture within the organization because the techniques used were centered on expanding the client base and creating more partnerships.  

Lastly, when it came to the principle of Authority (which is based on the idea that people heed the advice or guidance of people perceived to be in a position of authority or knowledgeable experts in certain fields), a clear illustration of this would be when Igor and Ludmilla trained unskilled labor on how to go about the process of baking bread. Iggy was keen to note that they preferred working with people who had no prior knowledge of baking so that they could learn to bake bread ‘the Iggy's way' only, perhaps to avoid compromising the quality of the bread (6). Moreover, even Igor himself went to consult chefs who were more experienced in baking other types of bread so that he could learn. All this goes to prove that expert advice is highly sought after and as a result, such a company (which structures its operations such that the unskilled or semi-skilled employees learn from the skilled employees) is said to have a hierarchical organization culture.

Question 2. a). To what extent is McRae responsible for creating this situation?

The hiring of Matthew McRae worked out so poorly because of several reasons. First, McRae did not take time to get accustomed to the culture of the company. Therefore, the quick changes that he introduced to the company structure did not settle in well with the rest of the employees who were used to do things differently (11). Secondly, due to his failure to understand that Iggy's Bread was organized around a clan culture, McRae's strategy of non-inclusivity sidelined everyone including the founders of the company whose decision-making was instrumental to the rapid growth and the smooth running of the company.

Third, some of McRae's decisions appeared not to be made from a professional point of view and they later came to affect his overall performance as the Chief Operating Officer. For instance, when he began assembling his team, his choices were based on other factors other than competence and qualification. For example, hired his brother as the Distribution Manager, a high school friend as CFO and a friend as Vice President of Sales and Marketing (10). While he had demonstrated his competency from his previous achievements in his former job, McRae might have gotten overconfident and began taking his new job less seriously. This arrogance can further be seen from the fact that he even went on to hire another top manager without consulting the founders of the company (12).  

The last reason why McRae was responsible for the situation was because of his greed and inflated ego. This is because when he admitted to feeling under-compensated and Iggy asked him to put together some figures of what he thought he should be making, his proposal included a significant raise, as well as bonuses based on profit, beginning at profit levels below those which we had been reaching before he was hired (13). This did not settle in well with the founders of the company whose patience was already very thin.

b). To what extent are the Ivanovics responsible for creating this situation?

  The Ivanovics were responsible for creating this situation because they were quick to give autonomy to their new COO without first ensuring that he was conversant with the company's tradition, organization structures, and values. Secondly, the Ivanovics' lack of involvement in the business after they hired a team of managers caused them to lose touch with the business. Igor was always more interested/focused on upholding the quality of the product other than the ‘quality' of the business while Ludmilla was away for three years to take care of their daughters. Lastly, the Ivanovics were overly patient with McRae, and this can be seen from the many chances that they gave him to redeem himself only for things to continue getting worse. Had the Ivanovics continued to be more involved in the business and sterner on McRae and the new management, the situation would not have escalated to the point it was.  

Question 3. a. Memo

TO: Staff at Iggy's Bread of the World

CC: Board of Directors

FROM: Hamad-Chief Operating Officer

DATE: 9th April 2018

SUBJECT: Change of Management

Following my recent appointment into the position of Chief Operating Officer, it has come to my attention that there is a need for a complete overhaul of the management of the company. I wish to communicate that you should anticipate huge changes in company operations, starting with your active involvement in determining the future of the company based on an all-inclusive organization structure.

To this effect, I would like members of all departments to have a sit-down today after work and choose a department representative who will attend a meeting with the board of directors tomorrow morning to deliberate on the way forward. In your meeting today, be sure to discuss all the issues that you need addressed in tomorrow's meeting at length and possibly come up with suggestions or solutions to those problems.

In case of any questions or clarifications, feel free to come see me in my office.  Thank you for your cooperation.

b) Thought process involved in writing the memo.

Some of the course concepts I utilized in the writing of this memo include first, deciding that the memo be both persuasive and informative since its purpose is to issue a directive and request the audience to act in a particular way for a given purpose. Secondly, having a clearly stated subject line that describes the exact purpose of communication. Third, following through the intent of writing the memo with a clear and purposeful first paragraph. Fourth, keeping the memo simple, with concise details, clear directives ad contacts.  

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