Case study of Strategic Management in Bees Bakery

Bees Bakery started in 1941, a young man left his home town in Province of Hokkien, China to seek his fortune. Among the few belongings he brought with him were some traditional ancient recipes passed down through the generations. Using one of the recipes and using only the highest quality ingredients, the young man produced and sold mooncakes from a tiny shack in Klang Town, Malaysia. As the mooncake popularity spread through the word of mouth, LIAN BEE was established in 1963. Now Mooncakes are baked using the latest technology and are sold worldwide.

Founded in 1963, Bee’s has come a long way striving for sustainable improvement and unparalleled excellence in the bakery business. Starting from a humble family-based venture, our company has successfully carved a niche in our own right with sheer grit and determination spanning four generations. Our unwavering faith and whole-hearted dedication to the production and marketing of quality bread and confectionery has prompted us to move on from a crudely-maintained and manually-handled manufacturing facility to a professionally-run chain of stores with an impressive strength of 200 staff members. The inception of Bee’s Café in 1996 was indicative of our continuous effort to upgrade ourselves in line with the latest trend of management in the industry. The establishment of a fully digitized and centralized factory in April 2000 is yet another telling testament to our pledge for enhanced productivity in the face of stiffer competition. Every bit of ingenuity and hard work actually contribute to what we have achieved today.

Before the organization started, they have their own strategic management whichstrategic managementWhat an organization does to achieve its mission and vision. reflects what a firm is doing to achieve its mission and vision, as seen by its achievement of specific goals and objectives. A more formal definition tells us that the strategic management processstrategic management processA comprehensive and ongoing management process aimed at formulating and implementing effective strategies; it is a way of approaching business opportunities and challenges such that the firm achieves its vision and mission. “is the process by which a firm manages the formulation and implementation of its strategy.” The function of a manager is to make efficient use of resources, challenged with getting things done through people and also has opportunity to use of all the tools of management that any other manager uses. Management success is gained through accomplishment of mission and objectives. Managers fail when they do not accomplish mission and objectives. Success and failure are tied directly to the reasons for being in business. However, accomplishing mission and objectives is not sufficient. Success requires both effectiveness and efficiency. Managers who accomplish their mission and objectives are said to be effective. Efficiency describes the relationship between the amount of resources used (input) and the extent to which objectives were accomplished (output). If the cost of accomplishing an objective is prohibitive, then the objective is not realistic in the context of the firm’s resources. Additional planning is necessary. The concept of strategy is also relevant to all types of organizations. If vision and mission are the heart and soul of planning (in the P-O-L-C framework), then strategy, particularly strategy formulation, would be the brain. The following figure summarizes where strategy formulation (strategizing) and implementation fit in the planning and other components of P-O-L-C. We will focus primarily on the strategy formulation aspects of strategic management because implementation is essentially planning, organizing, leading, and controlling P-O-L-C components.

1.0 Planning

1.0.1 Theory

In management, the most important function is to have a good planning by several processes. There are three stages of the planning process. The first stage is to determine the organization’s mission statement which is a broad decision declaration of the overriding purpose. The second stage is to get the strategy formula which can analyze current situation and development strategies. SWOT analysis is necessary in organization, it can show the strength, weakness, opportunities and threats. Last stage is to get the implementation strategy which allocates resources between groups to ensure strategies are achieved.

In planning, there are four basic steps in planning, these four planning steps can be appropriate to all planning activities, at all organizational levels.

Step 1: Establish a goal or set of goals. Planning begins with decisions about what the organization or subunit wants and needs. Without a clear definition of goals, organizations spread their resources too broadly. Identifying priorities and being specific about their aims enable organizations to focus their resources effectively.

Step 2: Define the present situation. How far is the organization or the subunit from its goals? What resources are available for reaching the goals? Only after the current state of affairs is analyzed can plans be drawn up to chart further progress. Open lines of communication within the organization and between its subunit provide the information-especially financial and statistical data-necessary for this second stage.

Step 3: Identify the aids and barriers to the goals. What factors in the internal and external environments can help the organization reach its goals? What factor might create problem? It is comparatively easy to see what is taking place now, but the future is never clear. Although difficult to do, anticipating future situation, problem and opportunities is an essential part of planning.

Step 4: Develop a plan or set of actions for reaching the goal. The final step in the planning process involves developing various alternative courses of action for reaching the desire goal or goals, evaluating these alternatives, and choosing from among them the most suitable alternative for reaching the goal. This is the step in which decisions about future actions are made and where the guidelines for effective decision making are most relevant.

In planning usually top management will use strategic planning which is use as long term plans and middle management will use tactical goal and plans as their ways to plan. It is involving to decide on the resources to be mobilized to achieve strategic plans. It is consider as short term operational plans. It is a blue print of business growth and a road map of development. It helps in deciding objectives both in quantitative and qualitative terms. It is setting of goals on the basis of objectives and keeping in the resources.

1.0.2 Real life case

Opinion from Bee’s company manager state that a good planning must consist of SMART, that is Specific, Measurable, Achievable, Realistic and Timely. The steps in planning of sales plan in Bee’s company. Sales Planning in Bee’s Marketing (Bee’s) is only one part of Bee’s “Marketing Plan”. “Marketing Plan” consists of “Product Plan”, “Sales Plan”, “Market Plan” and “Sales Force Plan”.

Firstly is, “Marketing Plan” begins with setting sales and product objectives that go in line with company’s strategic objective. Company’s strategic objective normally defined the overall company growth in term of sales turnover, bottom line profits and product portfolio development depending on market environment, company resources and capabilities.

Secondly, Bee’s “Sales Plan” defined the total sales turnover that Bee’s target and budget to achieve within the coming or new financial period normally begin in March of a new calendar year and end at February of subsequent calendar year. Total Sales Turnover decision normally arrived from Sales Turnover of current financial period coupled with market environment and product development status.

Thirdly, “Product Plan” defined the Sales Turnover, Sales Quantity and Gross Profit for each existing product lines. In addition, the product plan also guides the new product development and new product introduction.

“Market Plan” defined the exiting market penetration in term of sales zones, number and types of outlets; and new sales zones and other types of outlets that Bee’s intend to capture.

Lastly is, “Sales Force Plan” detailed the Sales Force strength status and the recruitment and training requirement to build the sales force in order to meet the above Sales and Market Expansion objectives.

The operational plans of sales plan of Bee’s company are those that use in every day routine function or operation in a company. Example of an Operation Plan in Bee’s is the “SRO Planning”. “SRO Planning” is a plan that work out the quantity of every type of products need to order from Bee’s production factory or supplier for every sales route or salesman for every working day (Monday to Saturday)of the new working week. Bee’s Sales Manager is responsible to get the “SRO Planning” ready at least 2 working days before the beginning of every new working week. This completed “SRO Plan” will be converted into actual production order for supply of products to our sales route or salesman in the coming working week.

The Sales Manager of Bee’s company will overcoming the barriers in sales plan by do the first round of planning based on actual sales performances achieve so far, sales team available and reference to Annual Work Plan which set out the number of working and rest days. The “SRO Plan” will then passed over to the Sales Supervisors (Route Supervisor) to discuss with every Salesman before it was finalized.

Example of barriers in “SRO Planning”, are Salesman reluctant to plan and always plan below they are capable to achieve.

The reluctant to plan was overcome with the help of Route Supervisor who will explain every product and background of every customer or outlet to the Salesman. In the event if the salesman still did not plan on time, the Route Supervisor will help or stand in for them.

In Bee’s company there is common that planning below once capability to achieve is a common behaviour of salesman. Salesmen are always afraid that the sales target will be set higher and higher, so that it will be more difficult to earn higher sales commissions. Fear like this cannot be totally eliminated, but we can manage them into acceptable level. Bee’s salesman and sales team can access to sales figures and commission earning nearly at real time. As such, the Sales quantity of each product they can achieve is very transparent. While doing their own planning, they can see what other salesmen had planned. If they intentional under plan, they will have not enough products for sales and earn lower commission also. Next the sales commission rates are also transparent and higher than others offered in the same confectionery industry.

1.0.3Compare

It has clearly shows that step 1 and 2 in planning process there are similar in theory and real life case, shown that these two steps are basic steps in planning process, after that start from step 3 there is vary between theory and real life case. This is due to Bee’s company has already launch for few decade, so Bee’s company no need go through the planning process step by step. It can straight away continue their business activities by create new product, open new outlet or training employees in order to expand their business.

Operational plan of Bee’s company is approach to the theory. Theory states that operational plan is a blue print of business growth and a road map of development. It helps in deciding objectives both in quantitative and qualitative terms. It is setting of goals on the basis of objectives and keeping in the resources, this theory has implied in Bee’s company because they use operational plan every day in routine function or operation in a company, and also a plan that work out the quantity of every type of products need to order from Bee’s production factory or supplier for every sales route or salesman for every working day (Monday to Saturday) of the new working week.

1.2 Organizing

1.2.1 Theory

In management, organizing function usually follows after planning.

According to Ernest Dale, he describes organizing as a multistep process:-

Detailing all the work that must be done to attain the organization’s goals. Every organization is created with a set of purpose. Each of these purposes will obviously be accomplished in a different way. For the organization’s goals to be achieved, therefore, the task of the organization as a whole must first be determined.

Dividing the total work load into activities that can logically and comfortably be performed by one person or by a group of individuals. Organizations are created because the work they are meant to accomplish cannot be performed by one person alone. Thus, the work of the organization must be appropriately divided among its members.

Combining the work of the organization’s members in a logical and efficient manner. As an organization expands in size and hires more people to perform various activities, it becomes necessary to group individuals whose assigned tasks are related. Sales, human resources, production, accounting and marketing are some typical departments in manufacturing organization in a given department are workers with a number if different skills and level of expertise, whose interactions with one another are governed by established procedures. This aggregation of work is generally referred to as departmentalization.

Setting up a mechanism to coordinate the work of organization members into a unified, harmonious whole. As individuals and departments carry out their specialized activities, the overall goals of the organization may become submerged or conflicts between organization members may develop. Coordinating mechanism enable members of the organization to keep sight of the organization’s goals and reduce inefficiency and harmful conflicts.

Monitoring the effectiveness of the organization and making adjustments to maintain or increase effectiveness. Because organizing is an ongoing process, periodic reassessment of the four preceding steps in necessary. As organizations grow and situations change, the organization’s structure must be revaluated to be sure it is consistent with effective and efficient operation to meet present needs.

Furthermore, organizing can be thought of as the process of making the organizational structure fit with its objectives, resources and environment. Organizational structure can defined as the arrangement and interrelationship of the component parts and positions of a company. An organization’s structure specifies its division of work activities and shows the level of specialization of work activities. It also indicates the organization’s hierarchy and authority structure, and shows its reporting relationship.(The authors are indebted to Professor Thomas P. Ference and his colleagues at Columbia University’s Graduate School of Business for the basic form of this figure. See also Harold J. Leavitt, ” Applied Organizational Change in Industry.” In W. W. Cooper, H. J. Leavitt, and M. W. Shelly II, eds., New Perspective in Organizational Research (New York: Wiley, 1964), pp.53-71.)

PRESIDENT

VICE-PRESIDENT

Production

VICE-PRESIDENT

Marketing

VICE-PRESIDENT

Human Resources

VICE-PRESIDENT

Finance

Figure 2.1 Functional organization chart for a manufacturing company.

Each vice-president is in charge of a major organizational function .

President

Vice-President

Finance

Vice-President

Production

Vice-President

Marketing

Vice-President

Research and Development

General Manager

Proprietary Products

General Manager

Personal Care Products

General Manager

Pharmaceutical Products

Figure 2.2 Market organization chart for a manufacturing company: Division by product

Each general manager is charge of a major category of products, and the vice-president of the functional areas provided supporting services to the general managers.

President

Vice-President

Human Resources

Vice-President

Production

Vice-President

Marketing

Vice-President

Finance

Vice-President

Europe, Africa, and Middle East

Vice-President

Latin America and Far East

Vice-President

North America

Figure 2.3 Market organization chart for a manufacturing company : Division by geography. Each area vice-president is in charge of the company’s business in one geographic area. The functional vice-presidents provide supporting services and coordination assistance for their areas of responsibility.

President

Vice-President

Industrial Products

Vice-President

Military Products

Vice-President

Consumer Products

Figure 2.4 Market organization chart for a manufacturing company :

Division by customer

Each vice-president is in charge of a set of products according to the type of customer to whom they will be marketed.

1.2.2 Real life case

The organizing process in sales plan of Bee’s company. Bee’s Sales Force was organized in to 4 Sales Zones, such as Zone A for Sales Routes within Selangor West; Zone B for Selangor South and East; Zone C for Selangor North, Zone D for Kuala Lumpur.

Every Sales Zone will have 8 Sales Routes where each salesman will drive one Van and service about 50 to 60 retailers within their respective Sales Route.

Each Sales Zone will head by a Route Supervisor and supported by a Senior Salesman (Spare Driver).

There are total 32 Sales Routes and Bee’s need to maintain 35 Vans (3 spare vans) as some vans need to stop for servicing, repairs and JPJ Inspection.

Bee’s Organization Structure is by Function on the Administrative level and by Location or Sales Zone & Route at the Sales Operation Level.

1.2.3 Compare

It is clearly shows that Bee’s company has use the theory of market organization chart division by geography, can see figure 2.3, this chart logically bring all activities together in one department that perform in the region where the unit conducts its business.

As for functional organization chart, Bee’s company has used it to organize their company, this is because this is the most logical and basic form of departmentalization, it can be see in figure 2.1. Functional organization generally used by smaller firms that offer a limited line of products, because it makes efficient use of specialized resources. Another reason that Bee’s company used this structure is it can makes supervision easier, because each manager just expert in only a narrow range of skill.

1.3Leading

1.3.1 Theory

Leading is the process of inspire others to work hard to accomplish important tasks. There are few ways of looking motivation. Distinctions are made on the basis of content theories, which focus on the “what” of motivation, and process theories, which focus on “how” of motivation. Reinforcement theories, a third approach, emphasize the ways in which behavior is learned.

Lyman Porter and Raymond Miles have suggested that a systems perspective of motivation will be most useful to managers. By systems perspective they mean that the entire set, or system, of forces operating on the employee must be considered before the employee’s motivation and behavior can be adequately understood. They believe that system consists of three sets of variable affecting motivation in organization: individual characteristic, job characteristics, and work situation characteristics.

Individuals characteristics are the interests, attitudes, and needs a person brings to the work situation. Obviously, people differ in these characteristics, and their motivations will therefore differ. For example, one person may desire prestige, and so may be motivated by a job with an impressive title. Another may desire money, and so may be motivated to earn a high salary.

Job characteristics are the attributes of the employee’s tasks and include the amount of responsibility, the variety of tasks, and the extent to which the job itself has characteristics that people find satisfying. A job that is intrinsically satisfying will be more motivating for many people than a job that is not.

Work situation characteristics are factors in the work environment of the individual. Do colleagues encourage the individual to perform to a high standard, or do they encourage low productivity? Do superiors reward high performance, or do they ignore it? Does the organization’s culture foster concern for members of the organization-or does it encourage cold and indifferent formality?

Characteristics of the work situation, that will affect job motivation, consist of two categories: the actions, policies, and culture of the organization as a whole and the immediate work environment.

Organization policies, Reward Systems, and Culture. The overall personnel policies of the organization, its methods for rewarding individual employees, and culture of the organization’s culture all translate into organizational actions that influence and motivate workers.

Personnel policies, such as wage scales and employees benefits (vacations, pensions, and the like), generally have little impact on individual performance. But these policies do affect the desire of employees to remain with or leave the organization and its ability to attract new employees.

The reward system of the organization guides the actions that generally have the greatest impact on the motivation and performance of individual employees. Salary increases, bonuses, and promotions can be strong motivators of individual performance, provided they effectively administered. The reward or compensation must justify, in the employee’s mind, the extra effort improved performance requires; the reward must be directly associated with that improved performance so that it is clear why the reward has been given; and it must be seen as fair by others in the work group so that they will not feel resentful and retaliate by lowering their own performance levels.

1.3.2 Real life case

Bee’s Manager and Supervisor always lead by example. Manager and supervisor are always in the field to help the salesmen. Even the Managing Director is visiting the customers every now and then.

The information on sales and performance are transparent and near real time. Salesman can see their sales performance and commission earn updated every day. Whereas, only Sales Manager and senior staff of competitor’s company can see these information normally not at real time.

Bee’s company culture and its personnel and reward policies affect motivation by pays above average remuneration to the employee. For example, Sales Commission average from 4% to 5% compare to industry standard at 2% to 3%.

Salesmen will receive their sales commission payment at the beginning of next working month, i.e. Commission earned in January will be pay at early February. Competitors always delay payment of commission due to system problem and other reasons. I.e. January commission will be pay only in March.

The Performance Evaluation method was more objective and fair. Every outstanding employee will have fair chance for promotion.

1.3.3 Compare

As we can see that Bee’s company has applied the theory of work situation characteristic in their company, this is because the reward system generally have the largest impact on motivation and performance of individual employees. When wages, bonuses increase and promotions can acts as strong motivators of individuals performance. As for the personnel policies, such as wage scales and employee benefits, although it just has little impact on individual performance. But these policies will affect the lust of employees to stay with or leave the organization and its capability to attract new employees.

1.4 Controlling

1.4.1 Theory

Mockler’s definition divides control into four steps.

First step is to establish standards and methods for measuring performance. This step might involve standards and measurements for everything from sales and production targets to worker attendance and safety records. For this step to be effective, the standards must be specified in meaningful terms and accepted as accurate. An organization may set an objective to become the “leader in its field,” but this standard is little more than verbal inspiration if it is not defined and if a system of measurements is not established.

The second step is measure the performance. Like all aspects of control, this is an ongoing, repetitive process, with the actual frequency dependent on the type of activity being measured. Safe levels of gas particles in the air. Does performance match the statement? In the ways, this is the easiest step in the control process. The final step is to take corrective action if performance falls short of standards and the analysis indicates action is required. This corrective action may involve a change in the one or more activities of the organization’s operation, or it may involved a change in standards originally established. The control process must be carried out by managers throughout the organization. Because of the prominence of financial controls, some people assume that control responsibility can be left largely in the hands of accounts and controllers.

Pre-action Controls

Pre-action controls (sometimes called precontrols) ensure that before an action is undertaken the necessary human, material, and financial resources have been budgeted. When the time for the time for action occurs, budgets make sure the requisite resources will be available in the types, quality, quantities, and locations needed. Budgets may call for the hiring and training of new employees, the purchase of new equipment and supplies, and the design and engineering of materials or products.

It is designed to detect deviations from some standard or goal and to allow corrections to be made before a particular sequence of action is completed. The term ‘steering controls’ is derived from the driving of an automobile. The driver steers the car to prevent it from going off the road or in wrong direction so the proper destination will be reached.

Yes/No or Screening Controls

Yes/No control provides a screening process in which specific aspects of a procedure must be approved or specific conditions met before operations may continues. It provide a means for taking corrective action while a program is still viable, they are usually more important and more important and more widely used than other types of control. However, steering controls are rarely perfect, and so yes/no controls become particular useful as ‘double-check’ devices. Where safety is a key factor, as in aircraft design , or where large expenditures are involved, as in construction programs, yes/no controls provide managers with an extra margin of security.

Post-action Controls

Post action controls measure the results of a completed action. The causes of any deviation from the plan or standard are determined, and the findings are applied to similar future activities. Post-action controls are also used as a basis for rewarding or encouraging employees.

1.4.2 Real life case

Apart from Sales Manager, Route Supervisor and Managing Director visiting customers. Bee’s uses various reports to monitor sales performances and controlling the salesman.

“Daily Issue Report” used by Bee’s company to monitor the products supply by production to salesman, so that any non fulfillment and over supply can be detected quickly, in order to control adequate supply of products. Percentage variance in “Daily Issue Reports” will be feedback to Production, so that appropriate action can be taken by them to improve supply efficiency.

“Sales & Reject Report” used to monitor and control the Sales to and Rejects from the trades. Salesman can see the sales turnover everyday with sales commission calculated automatically. Sales manager, route supervisor can step in to push and help salesman to improve sales if they fall behind.

1.4.3 Compare

According to theory it has 4 steps in control process. First, that is establish standards and methods for measuring performance. Second is measure the performance, third is measure do the performance match with standards. Lastly is take corrective action to correct the problem. But in real life, Bee’s company uses various reports to monitor sales performances and controlling the salesman. Bee’s company does not go through all the steps that include in the theory, this is because is complicated to accomplish in a competitive real life.

In the production of Bee’s company it shows that there is a similar in theory and real life case, post action controls measure the results of a completed action. The causes of any deviation from the plan or standard are determined, and the findings are applied to similar future activities.

Conclusion

Without the management function, a company is disable to achieve its mission and vision which also means cannot make profit for the organization. The function of a manager is to make efficient use of resources, challenged with getting things done through people and also has opportunity to use of all the tools of management that any other manager uses. Management success is gained through accomplishment of mission and objectives. Management is generic. Management principles are general rather than specific to a type of firm or organization. However, management is universal only if the manager has become familiar with the specific situation in which it is applied. Production technology, customer characteristics and the culture of the industry are examples of specifics that managers need to learn to be effective in applying their generic management skills. Planning is the foundation area of management. It is the base upon which the all the areas of management should be built. Planning requires administration to assess; where the company is presently set, and where it would be in the upcoming. From there an appropriate course of action is determined and implemented to attain the company’s goals and objectives. The second function of the management is getting prepared, getting organized. Management must organize all its resources well before in hand to put into practice the course of action to decide that has been planned in the base function. Through this process, management will now determine the inside directorial configuration; establish and maintain relationships, and also assign required resources. Leading is the third function of the management. Working under this function helps the management to control and supervise the actions of the staff. This helps them to assist the staff in achieving the company’s goals and also accomplishing their personal or career goals which can be powered by motivation, communication, department dynamics, and department leadership. Control is the last of four functions of management which includes establishing performance standards which are of course based on the company’s objectives. It also involves evaluating and reporting of actual job performance. When these points are studied by the management then it is necessary to compare both the things. This study on comparison of both decides further.