Found in approximately 1000 supermarkets and 300 restaurants, Azalea Seafood and Gumbo Shoppe is among the largest producers of ready-to-eat gumbo with annual revenues in 2000 of more than $1 million. The companys gumbo was their best selling item earning nearly 90% of yearly sales. Although Azalea has a competitive advantage with its tasty gumbo, Azalea is looking to maintain long-term growth and obtain a sustainable competitive advantage. In order increase its profitability, the company needs to consider options to improve its business strategies.
Currently Azaleas facilities are located in a small country side building and many large restaurants do not find it at par with their standards. This causes Azalea to lose sales from businesses like Applebees and Cracker Barrel. In addition, major highways for the rapid distribution of their product are not available and easily accessible. Despite the location, Azaleas owners are satisfied with the new facility and its improved capabilities, compared to that of their old location. In order to increase sales by 50% and help Azalea to obtain a sustainable competitive advantage, the company needs to develop four strategic plans.
The first one includes staying in their current location. Staying at this location will maintain their satisfaction with the facility and allow them to maximize their efficiency. Next, Azalea should implement a Total Quality Management (TQM) operation to focus more on the product and less on profit. Targeting smaller restaurants and focusing mainly on the Southeast region will further help to increase sales. Implementation Plan- TQM Adopting a Total Quality Management strategy will allow Azalea to focus their attention on the value chain and the product. TQM will also permit Azalea to continuously improve the quality of the product.
The first measure the company could take is to set quality standards in each production phase. Azalea currently purchases their supply of crab meat and crawfish from Gulf Coast Fisheries, which is more expensive than the California Coast. So, Azalea should change its crab meat and craw fish suppliers to one in California, which will save them money. In order to acquire the best raw materials from the best suppliers, Azalea must create and maintain positive relationships with them. This will also help Azalea negotiate prices and quality of their key ingredients.
Azalea also needs to continue to purchase processed vegetables and seafood to reduce waste and allow for shorter clean up periods and reduced labor. Another step that Azalea must take to improve the quality of the product is to change their packaging method. Presently, Azalea uses boil-in bags only for half-gallon and gallon packages and the fill-in process for quarts and pint containers. The fill-in process creates extra labor and mess due to the overflowing of gumbo in the smaller containers. Therefore, Azalea should eliminate the fill-in process and implement the boil-in bags for all packages.
Azalea has one kitchen manager that watches over three full time and two part time employees. By implementing the above changes in Azaleas production, the company should eliminate one of the part time employees. The use of boil-in bags for all containers reduces packaging time, increases efficiency, and minimizes spills and clean up. This cuts down labor time and a need for a part time workers contribution. With the loss of this part time employee, Mike Rathle and John Addisons mechanistic hierarchy will not be affected too much; however, they must change the tasks of each individual.
Keeping the mechanistic hierarchy, Rathle and Addison are still the owners and hold the power. Both of these men are in charge of the sales force and oversees the entire business. They spend their time in their building doing paper work and paying bills because they have one kitchen manager under them. This kitchen manager makes sure that production of their products (gumbo) is made correctly and all equipment stays up to par. This employee acts like a liaison between the two owners and the kitchen employees.
Another responsibility of the kitchen manager is to order all supplies and raw materials when necessary. Rathle and Addison help him out with some of this, but he has to make sure he tells these two men when supplies are running low so they can re-stock. The kitchen manager is also responsible for making sure Azaleas production facility is clean. Below the kitchen manager is three full time employees and one part time worker. These four workers actually create and produce Azaleas product. They have a lot of value added in the success of Azalea because they actually produce Azaleas gumbo.
These employees are accountable for that actual labor, production, using boil-in bags, and clean up after everyday of work. Even though there is vertical structure of power in this company, all employees and owners communicate freely and have a strong inner culture. Every two weeks all seven employees of Azalea will have a meeting where they can discuss their progress and establish and review any goals. These meetings will be very beneficial for the success of this company because they encourage high performance and continuous improvement of Azaleas success.