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Harvard Case 2
Transcript of Harvard Case 2
Questions Question 1 Question 2 Question 4 Question 5 Question 3 Define Calveta's key success factors to date. What role (if any) have Calveta's values played in the organisation's success? Calveta's fifth goal is profitable growth. Goals one through four are more ethical in nature. Is goal five inconsistent with the first four? What are the internal challenges and external threats that Calveta is facing? How, if at all, should Calveta's organisational structure and practices be changed to accommodate growth and effective communication, while still maintaining the company's culture? Evaluate Calveta's possible sources of future growth. Should Frank Calveta move forward with an expansion into the hospitality sector? With the proposed acquisition? 1. Define Calveta's key success factors to date. What role (if any) have
Calveta's values played in the organisation's success?
2. Calveta's fifth goal is profitable growth. Goals one through four are
more ethical in nature. Is goal five inconsistent with the first four?
3. What are the internal challenges and external threats that Calveta is
4. How, if at all, should Calveta's organisational structure and practices
be changed to accommodate growth and effective communication,
while maintaining the company's culture?
5. Evaluate Calveta's possible sources of future growth. Should Frank
Calveta move forward with an expansion into the hospitality sector?
With the proposed acquisition? Critical Success Factors 1. Product quality
2. Service quality
3. Customer satisfaction
5. Cost control
7. Employee engagement
8. Employee satisfaction
9. Employee retention
10. Profitable growth Service
Profitability Calveta Values Calveta's Culture: Antonio's Way 1. To provide the highest quality food and personalised service to the
residents of the SLFs we serve.
2. To hew the budgets of our SLF clients and our own company.
3. To innovate constantly, developing new service features as
determinedly as new menu items.
4. To develop every Calveta employee to his or her full potential.
5. To grow profitably, generating the funds needed to generate even
greater growth in future years. Struggle to find growth strategy which fits core competencies well
Lack of infrastructure
Cash management process is contrary to growth goals
Calveta core competency is focus on employee development - is hindering acquisition
and External Threats Less leniency in staff transfers and also the process in which staff move position.
Staff training in which Antonio's way is assimilated into the employees
Annually or bi-annually to keep everyone up to date
Creating new managerial positions to bridge the gap that current growth is creating
Implement channels for communication between regions and staff on individual clients What will need to change? Values already don't flow down to entry level staff
Managers may be stretched too thinly, damaging personal relationships with clients and losing touch with core values
Risk losing the 'clients and staff first, profit second' ideal
Managers are distanced from the clients and often communication doesn't flow through How will growth affect culture and communication? 1. Acquire more share of the SLF market Aging population of the baby boomers is increasing and by 2030 expected to be 70 million, which equates to 20% of the US population.
Capacity rates of SLFs are up to 87.9%. Showing increasing trend. Hence demand for dining services will increase as well.
However will not reach target of doubled revenues in 5 years. 2. Expand into Hospital Sector Current US economy still struggling, growth at
USA Healthcare will take cuts of up to $155 billion over the next 10 years.
Missed entry point into market due to competitors already locking in contracts.
Viable option within the coming years. 3. Cleaning services for Hospitals and SLFs Potentially run as outside subsidiary.
Low margins, Calveta will struggle to operate profitably.
Again, will not achieve target of doubled revenues in 5 years. 4. Education sector Obama and Romney both announced they will aim to cut costs for colleges.
Younger consumer base, staff will need to adapt to different demographics. Will require training.
Dealing with students means generally paying more than $10 for food is questionable.
An avenue of growth to be continually considered. 5. Takeover of Great Southwest Dining Services GSD does not overlap geographical locations, provides revenues near that of Calveta ($1.5 billion) and has almost achieved the same revenue 'growth' as Calveta.
Will need to take on debt, something Calveta is not akin to doing.
Will need to address problems of GSD to make them more in line with Calveta's values. Q & A Frank is trying to do what is best for his father and not his business. It is for this reason that Calveta should stay within their niche and continue to do what has made them successful to date.
75% of the market is still un-contracted. Final notes "The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organisation."
"They are the few key areas where 'things must go right' for the business to flourish. If results in these areas are not adequate, the organisation's efforts for the period will be less than desired."
"Critical success factors are areas of activity that should receive constant and careful attention from management."
"Performance in each area should be continually measured, and that information should be made available."
- John F. Rockart
Harvard Business Review, 1979 Competitors use contradicting business structure
Internal hiring - managers regularly re-assigned
Due to expansion - core values will suffer
Threats from competitors inevitable
Need for low cost services in economic climate
Budget cuts and hospital facilities closing down