Situation Analysis:

Iggys Bakery of the World was set up by Igor Ivanovic along with his wife Ludmilla, with a view to pursue his passion for baking and create a quality product. Iggys vision was threefold. Firstly, the bakery promised to deliver a very high quality of bread. Secondly, the owners wanted it to be a good bakery and a healthy business; a place where employees enjoyed their work and were involved in the process. Thirdly, Iggys was looking to create long standing relationships with its customers. Iggys became very popular for the quality of its bread in a short time span and was soon supplying bread to many of the most prestigious accounts in Boston. Igor and Ludmilla were personally involved in the bakerys operations and ensured that Iggys employees were also involved in every aspect of the business. However, as time passed, Ludmilla was finding it hard to strike a balance between her responsibilities towards the business and her family. She gradually became less involved with the business. Igor and Ludmilla trusted their employees to make the right decisions when it came to small matters, and personally intervened only when a significant issue needed their attention. Even though the owners chose not to advertise, Iggys came to be renowned and the business grew quickly. Within a year, their business had grown to such an extent that they were functioning beyond capacity and were unable to take on any new accounts. The owners were apprehensive that they would lose out on business if they continued to turn down orders from their prestigious customers. The sudden surge in demand compelled them to take loans to expand. Igor and Ludmilla were reluctant to bring in outsiders to cope with the increased administrative burden because they feared that this would dilute Iggys uniqueness. In the following year Iggys was moved to Cambridge, and Matthew McRae was brought in as a COO to cope with the overwhelming situation. Soon after, he began to assemble his own management team. The Ivanovics were worried that changes were happening too quickly. Many of the employees felt that the new management was too

isolated from the operations and the culture at Iggys. The Ivanovics began to feel out of touch with the organization. The situation deteriorated further, and McRae and his team even began to take crucial decisions without Igors consent. When Igor confronted McRae with the situation, McRae presented a letter of resignation. In spite of the squabble, Igor suggested that McRae put together a proposal Iggys

The Problem:
Should the Ivanovics accept the proposal put forth by Matthew McRae?

Options:
1. 2. 3. 4. Accept the proposal put forth by Matthew McRae Reject the proposal, let go of McRae and let Igor take over the management Reject the proposal, let go of McRae and hire a new management Request McRae to revise his proposal and arrive at a mutual understanding after negotiating the raise and bonus

Criteria for Evaluation:

1. Impact on the business at Iggys 2. Impact on Iggys reputation 3. Impact on the work culture and environment amongst the already demoralized staff

Evaluation of Options:
Accept the proposal put forth by Matthew McRae: In the proposal made by McRae, he promised profit levels for Iggys which were far lower than those which the Iggys had otherwise achieved when the Ivanovics were themselves managing the company. Many of the employees were already disconcerted because of the lack of involvement of the McRaes team in the operations and culture that Iggys stood by. The image of high quality that the Ivanovics had built around Iggys was

also at stake. There was also a question as to whether McRae and his team would be able to sustain the profits at the current levels. Further, the Ivanovics would have to comply with Matthew McRaes request for a significant raise, as well as bonuses based on profit. Reject the proposal, let go of McRae and let Igor take over the management Igor could step in and take over the reins of the company once again. Since Igor was already familiar with Iggys staff, there would be no delay in them bonding as a team and quickly adopting a strategy to cope with the current situation. This would also save Igor a lot of time and money which would otherwise have to be incurred if they chose to hire a new COO. Igor would also be able to restore Iggys reputation for being a company supplying quality bread with a personal touch. Reject the proposal, let go of McRae and hire a new COO The new management would have to be quick to imbibe the Iggy way and restore momentum to the operations at Iggys.