1. PROBLEM IDENTIFICATION The main problem is, the Ice Cream Division sales were declining over the past four years. Sales revenue presented more than 180millions of Dollars in 1991, but in 1995 presented only 150 millions of Dollars. During this period, growth of consumption of ice cream had slowed and competition in Chattanooga?s markets had increased substantially. Charles Moore try to find the best idea to solve a problem with declining production. 2. PROBLEM ANALYSIS In 1995 for the first time in recent memory of group, the division was unable to dividend cash up to its parent.
Moves and the departure of members of the top management group within five years had also destructive effect on relationships. The first problem is with slowed growth, which is decreasing more and more. Lower sales revenue are the cause of lower profit. The second one is relationships between colleagues. They could communicate really hardly. Their opinions are very different, it?s impossible to synchronize so mixed ideas. 3. SOLUTION PROPOSAL There are some solutions proposals which are from the different people from the company.
Relationships aren?t as well as they can, people from different section have different opinion about situation and Moore is unhappy with the public display of conflict. Barry Walkins, the vice president of marketing thinks, the problem is with product line. They can?t compete with just five flavors and no mix-ins when their competitors offer a dozen or more. There is a proposal to rebuild a portfolio of products, it mean try to insert more of flavor of ice cream or mix-ins. He doesn?t think, they are going to solve the current problem by cutting expenses.
He thinks there are times when you have to spend money to make money, he believe they are in such a situation. All they have to do is toad some excitement and compete head on with Ben & Jerry?s and the others by adding new mix-in flavors. They have to start up a packaging line. Kent Donaldson, the vice president research & development agree with Barry Walkins that the solution lay with expansion not cost reduction. He suggests another set of tactics, try to go to market with non-fat formulation in six months. Billy Fale, the vice president of production has other sense. He thinks the costs for making mix-ins are too high.
He thinks a division can lose money on every order they shipped. He thinks if they were to eliminate chocolate chop they could reduce set-up and cleaning times, lower their production costs and inventories as much as five percent. Stephanie Krane, the vice president & controller try to explain that this is a large complex system and it takes time to develop, test and install it. If things go well, they could be on-line in a couple of months. But if they find a lot of bugs, it takes more time. On the other hand, they don?t have enough money to spend them to promotion. They have to cut expenses three percent.
That way they will be able to stay on the profit plan and deliver the dividend they promised to CFC. They could freeze on salaries for a year. Rest could come from a variety of sources such as eliminating cost-of-living increases in retirees, pensions and healthcare insurance. Frank O?Brien, the vice president personnel took exception to Krane?s suggestion for cutting expenses, he noting that the recent consolidation from three to two production facilities had a negative impact on work force morale. Les Holly, the vice president sales doesn?t agree with his colleaguess. He thinks the problem is with stock.
He thinks, they do a poor job of maintaining inventory. The stores are out of stock and back ordered way too frequently. The problem could solve the freezer chests. They could have more stocks and don?t order so frequently. They can try to spend some money to promotion. Charlie Moore?s task is to make a decision what idea is the best. He has to decide the only way to move quickly. 4. IMPLEMENTATION There are some cases to solve problem in The Chattanooga Ice Cream Division. Leadership is organizing a group of people to achieve a common goal. Somebody whom people follow, or somebody who guides or directs others.
There are many different leadership styles that can be exhibited by leaders in business. In my opinion Charles Moore has to make a change in division. Old system seems bad, if the production is going down. If I were Charles, I will agree with Walkins. Product line is too short, so few products are distributing, that competitive is so high. They have to compete with flavors, not only usual but some unusual and new flavors they have to arrange to their product portfolio. The best sales line is vanilla flavor, so maybe mix-in with other flavor can be good choice. It is a trend to live healthy.
Healthy lifestyle is highlighted by more and more people, it is not trend only between women but men are trying to find bio and eco products to live healthy. Bio and eco product have a future. Probably frozen yogurt is favorite one between nowadays people. It is healthy and tasty, plenty of vitamins. Modern people are searching for these products. On the other hand, if we want to sell new product, we will make a promotion of this product. So without spending some money to marketing it wouldn?t be working. As Barry Walkins said “you have to spend money to make money”, we don?t have to wait for money without any action.
Cutting costs is very difficult, if the division want to implement new products. It will spend some money. If they eliminate for example flavors of ice cream, they wouldn?t compete with other competitors. They have to find new ways to gain control of market. A similar idea with freezing on salaries is quite crazy. It would hurt some employees, lots of them can lost the reason of motivation or wouldn?t be happy at work, their feelings and mood can affect their performance. It is important to know that it can have a negative impact on work force morale.