EFFECTIVE LEADERSHIP

CASE NO. 5 The Chattanooga Ice Cream Division

EFFECTIVE LEADERSHIPWajeeha Razzaq Munazzah IqbalMaria sharifHiraSamar iqbalMain Features of the Company

This case is about one of the division of Chattanooga Food Corporation (CFC) Ice Cream Division with revenues of $150m.Chattanooga Food Corporation (CFC) is a family controlled enterprise found in the same name in 1936 by Charlie Moores grandfather.In 1996 CFC comprised three divisions: Grocery Products (revenues= $245 m), Specialty Foods (revenues= $215 m) and Ice Cream (revenues= $150 m).It was one of the largest regional manufacturers of ice cream in US. Its having primary supermarkets and related food chains customers, and trading as a producer of mid priced basic flavors of ice creams products. SUMMARY Current Situation

Division has lost its 3rd largest customer Division experienced flat sales, declining operating profitability and increasing cost.Facing aggressive competitionProduct line in dull providing just five flavors and no mix-ins US per capita consumption of ice cream slowed.Its 3 out of 7 members of the top management leave in five years.Not have information system to a more extensive product line.Stores are out of stock and back ordered way too frequently.Division is working on new project of nonfat formulationPrevious Attempts to Improve Performance Charles Moore, who was the grandson of the founder, took over as new President and General Manager.It hired a new vice president of marketing, Barry Walkins, to replace Ben Wedemeyer, who was pressured to take early retirement.Brought in Stephanie Krane to update the divisions information system and control function.In 1994 they introduced new line of frozen yogurt.In 1995 to reduce the cost they closed its original manufacturing plans and consolidated in its two newer plants.

Past leader vs. New One Decision Making Style

Ideas Proposed from Several Department Heads

Replace the volume which was lost from Stay & Shop leavingCut expenses by the same amount as the operating profit losing at Stay & ShopInvest in expanding the product line to compete head on with competitorsEliminate chocolate chip flavor to lower the production cost

Personalities of department Heads

Barry Walkins: He is very creative and had a good intuitive sense of what consumers wanted but disorganized and often lacks follow through; Billy Fale: He is a very knowledgeable and disciplined and competing, vice president of production but a bit rigid in his thinking and anchored in the past.Kent Donaldson: He would be classified as collaborating Vice president of research & development and had conflicts with Walkins. Les Holly: The divisions sales manager who has a tendency to withhold information and sometimes does not follow through. Stephanie Krane: She had a strong record of delivering on her promises.Frank OBrien: He is uncooperative, avoiding and unassertive.

Leadership Style of Charles Moore

Leadership style of Charles Moore is more relationship oriented. He believes in the value of group base decisions, collaborative environment and brings people together formally to share information, consult on decisions and form consensus

Situational Favorableness

Leader-member relationsLeader-member relations are not good as followers are not showing respect towards the leader in morning meeting. Leader did not build trust and department heads are reluctant to give opinions on any matter. There is high turnover of employees due to which employees morale is down. Task StructureTask structure is unstructured and ambiguous work with no clear objectives and guidelines. Leader did not provide directions to complete the task.Position power Charles Moore has strong position power to influence his subordinates. He can use this power to assign projects and reward them on their accomplishments.

The theory states that instead of using just one style, successful leaders should change their leadership styles based on the maturity of the people they're leading and the details of the task.

Charlie Moore Leadership StyleAccording to Harshey and Blencherds situational leadership theory Charlie moore is using participative style focusing more on relationship and less on direction.His leadership style did not match with followers readiness, so was unsuccessful.

Followers readiness level and Recommended styles. ManagersReadiness level Recommended StyleBarry WalkinsR3: Able & unwillingParticipating Billy Fale R1: Unable & unwillingTellingStephanie kraneR1: Unable & UnwillingTellingLes Holly R4: Able & WillingDelegatingKent Donaldson R2: Unable & WillingSelling Frank OBrien R3: Able & UnwillingParticipating

The Path-Goal model is a theory based on specifying a leader's style or behavior that best fits the employee and work environment in order to achieve goals (House, Mitchell, 1974)LEADERSHIP BEHAVIORDirective SupportiveParticipativeAchievement orientedOUTCOMESPerformancesatisfaction

Environmental contingency factorTask structureFormal authority systemWork group

Subordinate contingency factorLocus of controlExperiencePerceived ability16PARTICIPATIVEDIRECTIVESubordinateAuthoritarianism lowHighLOCInternal ExternalAbilityHigh LowEnvironmentTask StructureComplex / non repetitiveComplex / non repetitiveFormal AuthorityBoth HighWork Group Strong Week Victor Vroom Normative leadership modelTime-driven modelDevelopment-driven modelCharlie at current position using the consult leadership style for getting better solution in order to recover his business from failureFocused on employee developmentBelieved in group base discussion, information sharing, consult on decision and build consensus. They would get to know each other, discover each others strength and develop mutual respectDecide significanceImportance of commitmentLeader expertiseLikelihood of commitmentGroup supportsGroup expertiseTeam competence HighHighModerate HighLow HighLowConsult Group

Decide Significance

Third-largest customer Stay & Shop at $6.5 million or 25%Intense competition from Sealtest, Beyers, Drayers and EdysFlat sales and declining profitability over the past four years Dividend cash up to its parent company

Importance of Commitment

Decision acceptance is critical to effective implementation

Leader Expertise

Knowledge and expertise related to specific decisionCharlie doesnt like making decision alone rather feel comfortable working behind the consensus of the groupHe is still puzzled in selection of ideas

21Likelihood of Commitment

There is less need to involve followers in decision making when they like and want to implement decision. At the time of Charlies grandfather, need to consult subordinates in decision making process rarely felt.

Group expertise

Krane gave idea of Cutting expenses about 3%Less Holly suggests growth as the solution in term of increase in sales volumeSupporting Holly, Walkins recommended product line expansion either with half a dozen new mix-in flavors or five-gallon bulk packaging lineContracting in term of cutting chocolate chip would probably reduce set-up, cleaning times, lengthen our runs, cut down packaging and production expanses up to 5% said by Billy Fale

Group support

management teams inter-departmental disputes and figure-pointing was not normal and indicative of an unhealthy environmentThey always laid the blame for error or problems at the feet of another departmentDepartmental heads are reluctant to opine on any matters outside of their own functional domains

Team competence

Failure of key managers to see eye to eye on a recovery planThey usually questioned the competence and trustworthiness of one another

Appropriate leadership style

Moore really needed to take charge, make some leadership decision and do the right things in moving the company forward.

Decide leadership style

Decide significanceImportance of commitmentLeader expertiseLikelihood of commitmentGroup supportsGroup expertiseTeam competence HighHighModerate High- --Cutting cost seemed more certain means of resorting profitabilityFifteen percent of CFCs common shares were owned by an employee stock ownership plan Price of the share had barely kept up with inflation in cent years and it would suffer further if the divisions profits were allowed to erode precipitously.Results in negative impact on work force moraleContraction probably not be the right decisionCutting out chocolate chip, as suggested by the Vice President of Production, could have negative consequences for the companys image and the perception of the clients.Need to spend some money to make more money They need to invest in new markets, new outlet as scoop shops, need to look at what seems to be a trend of paying for shelf space or in production of mix-in flavors.