CASE NO.

5
THE CHATTANOOGA ICE CREAM DIVISION

EFFECTIVE LEADERSHIP
MAI N 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 SI TUATI ON

DIVISION HAS LOST ITS 3
RD
LARGEST CUSTOMER
DIVISION EXPERIENCED FLAT SALES, DECLINING OPERATING PROFITABILITY
AND INCREASING COST.
FACING AGGRESSIVE COMPETITION
PRODUCT 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 FORMULATION
PREVI OUS ATTEMPTS TO I MPROVE 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 DECI SI ON MAKI NG STYLE

Moore's Predecessor
Knew more about the business
than anyone else
Well-developed network for
gathering & communicating
information.
Rarely felt the need to consult
his subordinates
Reserved important decisions
to himself.
Charlie Moore
Believes in the value of group
base decisions
Collaborative and bring people
together formally to share
information
Consult on decisions
Form consensus
I DEAS PROPOSED FROM SEVERAL DEPARTMENT
HEADS

1. REPLACE THE VOLUME WHICH WAS LOST FROM STAY &
SHOP LEAVING
2. CUT EXPENSES BY THE SAME AMOUNT AS THE
OPERATING PROFIT LOSING AT STAY & SHOP
3. INVEST IN EXPANDING THE PRODUCT LINE TO COMPETE
HEAD ON WITH COMPETITORS
4. ELIMINATE CHOCOLATE CHIP FLAVOR TO LOWER THE
PRODUCTION COST



PERSONALI TY CHARACTERI STI CS 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.

LEADERSHI P 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.

SI TUATI ONAL FAVORABLENESS

LEADER-MEMBER RELATIONS
LEADER-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 (PG. 2).THERE IS HIGH TURNOVER OF EMPLOYEES
DUE TO WHICH EMPLOYEES MORALE IS DOWN (PG. 2).
TASK STRUCTURE
TASK STRUCTURE IS UNSTRUCTURED AND AMBIGUOUS WORK WITH NO
CLEAR OBJECTIVES AND GUIDELINES. LEADER DID NOT PROVIDE
DIRECTIONS TO COMPLETE THE TASK. (MORNING MEETING)
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.

Fiedlers Contingency Model


TO HARSHEY AND BLENCHERDS SITUATIONAL LEADERSHIP
THEORY
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 MOORES LEADERSHIP STYLE
ACCORDING 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.
Managers Readiness level Recommended Style
Barry Walkins R3: Able & unwilling Participating
Billy Fale R1: Unable &
unwilling
Telling
Stephanie krane R1: Unable &
Unwilling
Telling
Les Holly R4: Able & Willing Delegating
Kent Donaldson R2: Unable & Willing Selling
Frank OBrien R3: Able & Unwilling Participating



PATH-GOAL LEADERSHI P THEORY
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 BEHAVIOR
Directive
Supportive
Participative
Achievement oriented
OUTCOMES
Performance
satisfaction


Environmental contingency
factor
Task structure
Formal authority system
Work group

Subordinate contingency factor
Locus of control
Experience
Perceived ability
Path-goal leadership Model
PARTICIPATIVE
(Current style)
DIRECTIVE
(Suggested)
S
u
b
o
r
d
i
n
a
t
e
Authoritarianism low High
LOC Internal External
Ability High Low
E
n
v
i
r
o
n
m
e
n
t
Task Structure
Complex /
non repetitive
Complex /
non repetitive
Formal Authority Both High
Work Group Strong Week
Path-goal leadership Model Variables
VI CTOR VROOM NORMATI VE LEADERSHI P MODEL
TIME-DRIVEN MODEL
DEVELOPMENT-DRIVEN MODEL
CHARLIE AT CURRENT POSITION USING THE CONSULT
LEADERSHIP STYLE FOR GETTING BETTER SOLUTION IN
ORDER TO RECOVER HIS BUSINESS FROM FAILURE
FOCUSED ON EMPLOYEE DEVELOPMENT
BELIEVED 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
RESPECT
Decide
significance
Importance
of
commitment
Leader
expertise
Likelihood
of
commitment
Group
supports
Group
expertise
Team
competence
High High Moderate High Low High Low
Consult Group

DECI DE SI GNI FI CANCE

THIRD-LARGEST CUSTOMER STAY & SHOP AT $6.5 MILLION OR 25%
INTENSE COMPETITION FROM SEALTEST, BEYERS, DRAYERS AND
EDYS
FLAT SALES AND DECLINING PROFITABILITY OVER THE PAST FOUR
YEARS
DIVIDEND CASH UP TO ITS PARENT COMPANY

I MPORTANCE OF COMMI TMENT

DECISION ACCEPTANCE IS CRITICAL TO EFFECTIVE IMPLEMENTATION

LEADER EXPERTI SE

KNOWLEDGE AND EXPERTISE RELATED TO SPECIFIC DECISION
HE IS STILL PUZZLED IN SELECTION OF IDEAS



LI KELI HOOD OF COMMI TMENT

CHARLIE DOESNT LIKE MAKING DECISION ALONE RATHER FEEL
COMFORTABLE WORKING BEHIND THE CONSENSUS OF THE GROUP

GROUP EXPERTI SE

KRANE GAVE IDEA OF CUTTING EXPENSES ABOUT 3%
LESS HOLLY SUGGESTS GROWTH AS THE SOLUTION IN TERM OF INCREASE
IN SALES VOLUME
SUPPORTING HOLLY, WALKINS RECOMMENDED PRODUCT LINE EXPANSION
EITHER WITH HALF A DOZEN NEW MIX-IN FLAVORS OR FIVE-GALLON BULK
PACKAGING LINE
CONTRACTING 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 environment
They always laid the blame for error or problems at the feet of another
department
Departmental 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 plan
They usually questioned the competence and trustworthiness of one
another


APPROPRI ATE LEADERSHI P 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
significance
Importance
of
commitment
Leader
expertise
Likelihood
of
commitment
Group
supports
Group
expertise
Team
competence
High High Moderate High - - -
CUTTING COST SEEMED MORE CERTAIN MEANS OF RESORTING
PROFITABILITY
FIFTEEN 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 MORALE
CONTRACTION PROBABLY NOT BE THE RIGHT DECISION
CUTTING 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.