Calveta Dining Services, Inc.: A Recipe for Growth?
Core issuesrelated to the case:
·
To maintain the reputation it had earned over a period
of time and a Fear of losing Calveta’s solid reputation as a leader in
the health-care sector due to expansion of business into different segments.
·
Conflicting objectives of preserving the company
culture and achieving aggressive growth simultaneously.
·
To have well versed employees in the organisation who
can strongly follow the Antonio way of doing things in the organisation.
·
Conflicts and a sense of confusions in decisions
related to expansion and diversification of business into other segments and
acquisition of GSD. Financial Problems in Expansion of business beyond
the SLF segment to hospital segment in order to double the revenue of the
organisation.
·
Financial Problems in Expansion of business
beyond the SLF segment to hospital segment in order to double the revenue of
the organisation.
·
Losing of contracts and rising of Customers’
dissatisfaction due to frequent changes in management and account managers at
different facility centers.
Analysis of data for the root cause/s of the problem
Preserving the company culture and achieving aggressive
growth were conflicting objectives Frank knew that organization already showed
signs of strain, “and his sister and more than one of her colleagues on
Calveta’s executive team agreed that would
rather save the culture than spread themselves too rapidly into new
businesses.
Despite the growth of an aging population, and despite
Calveta’s impressive business growth, it seemed highly unlikely to Frank and
the executive team that the company could double its revenues in five years
unless it branched out beyond the SLF segment.
And despite growth in the hospital sector, Hospitals were,
in the aftermath of the 2008–2009 recession, facing cutbacks in equipment and
service due to decreases in charitable donations, reduced government
assistance, and declining patient-stay lengths. Calveta expected such cutbacks
to result in hospital closings, possibly reducing the potential market size.
Frank feared that Calveta’s solid reputation as a leader in
the health-care sector might become threatened as its relative size shrank
versus the competition.
Considering the financial challenges of getting into the
hospital segment, the upbeat angles seemed a bit pie-in-the-sky as Calveta
shouldered little debt. Because the company had been able to fuel its growth
through prudent cash flow management, it did not need to rely on debt to
finance kitchen equipment and renovations. If Calveta chose to pursue growth
through acquisition, however, its no-debt philosophy would almost certainly
need to be set aside. Calveta’s unique culture also served as an impediment to
growth through acquisition.
Lost contracts typically resulted from changes in management
at an SLF; only rarely did an SLF drop Calveta citing poor performance. For
several years, Frank Calveta had heard about such defections, and he believed
that the vice president of account management had been dealing with them
effectively. But when he’d begun reading the company’s annual client
satisfaction survey results from the perspective of the CEO’s chair, Frank
recognized that client frustrations with employee progression policies had
worsened.
Frank felt that the organizational structure of the firm was
partly to blame for the customer dissatisfaction. While he’d been CFO, Frank
had expressed concern that the design of the organization might have gotten
knocked out of alignment as the company grew, but little had been done as Jennifer,
speaking as COO, had disagreed with Frank. But Upon reading the latest surveys,
Frank decided to have another look at the company’s organizational chart.
Frank also worried about a rising diversity in the skills of
area and account managers. It was becoming harder to find operations managers
who fully embraced Antonio’s Way which can pose a problem in maintaining core
values of the organisation. Recent development in the organisation has posed a
rising diversity in the skills of area and account managers and new joinees
lacked the industry experience.
As per Jenifer, GSD from Great Southwest don’t have the best
reputation. They’ve had labor problems and substantial turnover in their
management ranks. However, Frank was
confident that maybe Calveta’s best managers could slowly move GSD’s culture
toward Antonio’s Way.
Probablesolutions based on the root cause to solve the problems:-
Looking into scenario and objectives of the organisation,
Calveta must opt for expansion of its business in different business segments
particularly hospital segment as they are leaders in health segments. As the
statistical data also proved that there is a sharp increase in aging population
and 75 % market remained untapped. So Calveta must exploit this opportunity and
target to achieve the goal of doubling its revenue in five years. Though
Company have had no debt in its financial structure but in order to ensure its
growth and expansion plan they must lever its financial structure and take
advantage of reputation of company in getting debts from the market. Instead of
hiring fresh graduates, company should focus on hiring those candidates who are
ready to work in ANTONIO’s way, a work culture set by the founder of the
company and the company should train them accordingly in order to maintain in
reputation in the market. The company should go for acquisition of GSD as this
company can help in expansion of the business in great southwest, the place
where Calveta is not operational. The problems of labor problems can be sorted
out by hiring competent employees and training them to cater the needs of
company.
