Report on the Case

“Iggy’s Bread of the World”

In partial fulfilment of WAC course

PGP 2018-20
Term - II
 Executive Summary
Igor and Ludmilla Ivanovic founded Iggy's Bread of the World in 1994. The bakery focused on
quality of the product, relationship with employees and value creation for its customers. This idea
led to the creation of a healthy organizational culture that helped Iggy's to grow rapidly. As the
company grew Igor and Ludmilla realized that they weren't able to cater to the growing demand.
To handle the increase in accounts and ensure the growth and expansion of the company they hired
Matthew McRae who previously ran a leasing company, as the COO. Matthew brought about
different changes in the company that degraded the company's culture and strained his relationship
with the founders. Eventually, Matthew comes up with a staggering proposal. This report analyzes
different options and suggests how the Ivanovics should respond to the proposal.
 Contents

1. Situation Analysis
2. Problem Statement
3. Options
4. Criteria for Evaluation
5. Evaluation of Options
6. Recommendation
7. Plan of Action
 Situation Analysis

Iggy's Bread of the World was the culmination of Igor and Ludmilla Ivanovic's dreams. Igor was
passionate about baking and creating products that made the customers happy, and Ludmilla
wanted to create an environment that fostered cooperation, communication and a sense of
accomplishment for all employees.
Before opening Iggy's Bread of the world in 1994, the Ivanovics opened their first
bakery- Pain d'Avignon in the year 1992. Though the business was successful, Igor and Ludmilla
had differences with their partners and eventually got out of the business.
As the business grew, Igor and Ludmilla found it difficult to open new accounts and
turned down big-name customers. They physically expanded the company and felt the need of an
experienced person who could help them with the financial and administrative side of the business.
They hired a person called Matthew McRae as a consultant. Matthew previously ran a leasing
company. He understood and developed a passion for the company. Eventually, he was hired as
the COO in October 1994.
Soon after McRae assumed the position of COO, he brought in significant changes. He built
his own management team. The Ivanovics felt that the changes were happening too quickly and
that McRae was hiring people behind their back. Also, the employees at Iggy's felt that the
management team wasn't giving importance to the culture of the company.
Also, Igor confronted Matthew about Diane Coleman's poor performance. Diane Coleman
was hired by Matthew as the Vice President of Sales and Marketing. Moreover, Matthew and
Diane hired another top manager without the consent of Igor and Ludmilla. This led to worsening
the relationship between Matthew and the Ivanovics. As a result, Matthew wrote a letter of
resignation but later withdrew it. Matthew was unhappy and felt that he was under-compensated.
So he came back with a staggering proposal and presented it to the board. The board members
and, Igor and Ludmilla didn't know how to respond.

Problem Statement

How should the Ivanovics respond to Matthew’s staggering proposal?

 Options

 Say no to Matthew's proposal and hire another person who is going to preserve the
company's culture while taking care of the company's expansion.

 Accept Matthew's proposal of giving him a significant raise as well as bonuses based on
profit.

 Reject Matthew's proposal and manage the business on their own.

Criteria for Evaluation

1) Culture of the company – Since the culture developed inside the company was the reason
for its success, it is critical to keep the culture alive for the company’s well being.

2) Growth of the company – The company has seen remarkable growth and a significant
increase in demand for its products. It should ensure that it has the required resources to
handle this increase in demand.

3) Quality of the product – It’s the high quality of the company’s product that helped the
company grow. Care should be taken so that any changes made will not degrade the quality
of the products.
 Evaluation of Alternatives

Serial No. Options for Evaluations Reject Accept Reject the

proposal Matthew’s proposal
and hire a proposal and
new person manage on
their own

1. Culture of the company ✓ × ✓

2. Growth of the company ✓ - ×

(subjective)

3. Quality of the product ✓ - ✓

(subjective)

Say no to Matthew’s proposal and hire another person who respects the company’s culture-
Since the employees are passionate about their work, and the top management knowing the
employees is at the heart of the company's culture, hiring a new person who has relevant experience
and respect for the company' culture would help the company grow and also keep the employees
satisfied and happy. Moreover, it strengthens the belief among the employees that their founders
value the organizational culture above anything else. But it could also be very difficult to find the
right person for the position.

Accepting Matthew's proposal - Given that the changes Matthew brought in the company left
most of the employees feeling isolated, if Matthew continues the same leadership style, it's possible
that some talented and passionate employees will quit. Also, the feeling of isolation could affect
the quality of the product resulting in a decline in the company's growth. Since there is a significant
difference in the leadership styles of Matthew and, Igor and Ludmilla, there is a great chance of
future clashes between them.

Reject Matthew's proposal and manage the business on their own - Igor and Ludmilla felt that
they lacked the required skills to expand the business and hence hired Matthew to take care of the
expansion. Running the company by themselves will help the company regain its culture and let
the employees work passionately. But the growth of the company could stagnate due to the lack
of a proper management team that is responsible for developing a growth strategy for the company.

Recommendation

Based on the above analysis, I recommend that the Ivanovics go with the first option of saying no
to Matthew's proposal and eventually hiring a person who culturally fits in the organization. Doing
this will reaffirm the belief among the employees that Igor and Ludmilla give utmost importance
to knowing all their employees. The employees will be happy, and the management team can focus
on developing and implementing a growth strategy for the company.

Plan of Action
After Matthew's presentation, the board of advisory must inform Matthew that the board is not
willing to accept the proposal put forward by him.

Eventually, the company must try and hire a person with suitable experience. Most importantly
the company must hire a person who is passionate and respects the company's culture.

Also, Igor and Ludmilla should make sure that the values the company follows are clearly
communicated to everyone in the organization. It is also important that the newly hired person is
not given full autonomy to take decisions.