Analysis of

Iggys Bread of the World

Submitted to
Prof. Madhushri Shrivastav
In partial fulfillment of the requirement of the
Written analysis and communication (WAC) course

Submitted By
Vasu Kachhawaha (2013PGP433)

Date: 3rd March 2014

LETTER OF TRANSMITTAL
A Report on case Iggys Bread of the World

Prof. Madhushri Shrivastav

Faculty, Written Analysis and Communication Course
IIM Indore

Dear Madam
As per your instructions, the case Iggys Bread of the World has been analyzed as part of the
Written Analysis and Communication course requirement. The report that contains the
results of the analysis is attached. It is recommended that the Ivanovics should reject McRaes
proposal and let go the entire existing management team and hire a new team that is culturally fit to
the organization.

Yours sincerely
Vasu Kachhawaha
Section E
2013PGP433
IIM Indore

Executive Summary:
Iggys bread of the world, the culmination of the dreams of Igor and Ludmilla Ivanovic, saw a
phenomenal success in the absence of any form of advertising and solely on the basis of their
superior product quality and word of mouth. In order to supplement the explosion of demand, the
Ivanovics took loans to support their expansion plans and also hired McRae as the COO to deal with
the increased managerial burden. The new COO hired a new management staff but the employees
felt the "new management team to be too isolated from the operations and culture" which were at
the core of Iggys. The new management team was more focused on expanding the business and
their own pay plans as McRae pointed out in his proposal to Igor. Since the company needed
professional managers to supplement its growth and expansion and the present management team
was hampering the very culture of the organization which was at its core, the Ivanovics were in a
dilemma as to what they should do. It is recommended that the company should reject his proposal
and get rid of McRae and his team and hire a new management team that is competent and
culturally fit to the organization.

CONTENTS

Situation Analysis ...........................................................................................................................5

Problem .........................................................................................................................................6
Criteria for Evaluation ....................................................................................................................6
Evaluation of options .....................................................................................................................6
Recommendation ...........................................................................................................................7
Action Plan.....................................................................................................................................7

Situation Analysis
Iggys Bread of the world was founded by Igor Ivanovic along with his wife Ludmilla in 1994. It was a
culmination of their dreams: Igor had a passion for baking and Ludmillas passion was to open a
restaurant, so they decided to merge their dreams and open a bakery. Iggys vision was
threefold. Firstly, the bakery promised to deliver the highest quality of bread with the highest
standards of service and integrity. Secondly, the owners wanted it to be a place which provided a
nurturing and respectful environment at the workplace and fostered cooperation, communication
and a sense of accomplishment for all employees. Thirdly, Iggys was looking to create long standing
relationship with its customers; Iggys wanted to make a difference by not treating the customers as
numbers.
Iggys became very popular for the quality of its bread, its signature taste and texture in a short time
span and was soon supplying bread to many of the most prestigious accounts. Igor and Ludmilla
were personally involved in the bakerys operations: Igor focused his energies on the baking side of
the company while Ludmilla thrived to create a nurturing environment and a positive experience for
all its employees. She believed that the energy the employees have, goes through their hand into
the bread and so she emphasized that the employees should sort out their differences before work.
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. Most of the day to day decisions were taken by the employees and Igor and Ludmilla
personally intervened only when a significant issue needed their attention. Even though the owners
chose not to advertise, Iggys popularity was growing by leaps and bounds. Their business had grown
to such an extent that they were functioning beyond capacity and were unable to take on any new
accounts and were saying no to big name customers. The owners were apprehensive that they
would lose out on business if they continued to turndown orders from their prestigious customers.
Also they thought that it was almost easier to maintain the value system of an organization when
one is larger than one that is in-between size. They were weighing their options whether to bring
in outsiders to cope with the increased administrative burden or not if they expand. They feared that
if they did so it would dilute Iggys uniqueness. They decided to expand and hence took loans for the
same.
Matthew McRae was brought in as a COO. Soon after, he began to assemble his own management
team. The Ivanovics were worried that changes were happening too quickly and McRae was not
giving himself time to get accustomed to Iggys before hiring. Many of the employees felt that the
new management was too isolated from the operations and the culture at Iggys which were at the
heart of the company. 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,
which he later wanted to take back. McRae was not fulfilling the role he was expected to do and he
was not satisfied with his current compensation. Igor suggested McRae to put together some figures
of what he thought he should be making and theyll look at them. His proposal included a significant
raise as well as bonuses based on profit, beginning at profit levels below those which had been
reached before he was hired.

Problem Statement
Should the Ivanovics accept the proposal put forth by Matthew McRae?
Options

Accept the proposal put forth by McRae

Reject the proposal, let McRae go and downscale
Reject the proposal, let McRae go and hire a new management
Request McRae to revise his proposal and arrive at a mutually agreeable pay

Criteria for Evaluation

1.
2.
3.
4.

High Business growth of Iggys

Work culture and environment is retained
High employee morale
Control by the Ivanovics is retained

Evaluation of Options:
Accept the proposal put forth by Mc Rae:
If the Ivanovics accept the proposal it may be possible that through his managerial skills and
experience McRae brings about a positive impact on the business at Iggys. But definitely it will have
a negative impact on the work culture and environment which are at the core of the business and
employee morale will go down. Also McRae would be in a better position to exercise control over
the firm and control by Ivanovics will reduce.
Reject the proposal, let McRae go and downscale
The Ivanovics can decide to downscale the business and takeover the management but this is not a
good idea because the investment has been made. In such a case business growth of Iggys would
fall, but since they were already familiar with Iggys staff, there would be no delay in them bonding
as a team and the employee morale will go up, the culture would be maintained and the control
would be retained by the Ivanovics.
Reject the proposal, let go of McRae and hire a new COO
If a new COO is hired which is culture fit with the organizations goals and aspirations, all the four
criterion will be met.
Request McRae to revise his proposal and arrive at a mutually agreeable pay
Since McRaes demand of bonuses based on profits that were too low is totally unjust, the Ivanovics
can negotiate the terms to arrive at a mutually agreeable pay that will make both the parties happy.
It may result in the business growth of the company but the company culture will suffer and
employee morale will go down. Also there are less chances that the control will be retained by the
Ivanovics.

High Business
Growth

Work Culture is
retained

Employee morale is Control is retained

high
by Ivanovics

Accept proposal

May be

Reject proposal,
downscale

Reject proposal,
Hire new COO

Negotiate terms,
keep McRae

May be

May be

Recommendation
The Ivanovics should reject McRaes proposal and fire him and his entire management team, as
neither they were able to fulfil the task they were hired for nor did they have any understanding of
the company and its culture which was at the core to the company.

Action Plan
These are the steps the Ivanovics should take:
1. They should ask for a few days to McRae in reaching to a final decision. Meanwhile they
should start their search for a new management team.
2. They may use the services of hiring consultants so as to avoid the mistakes they initially did
while hiring McRae so that they are able to find a team that is culturally fit to the
organization using personality tests.
3. Once they find the right team they should let go the existing team and should introduce the
new team to the staff and the organization.