The Coffee Pot Case Study

1. Introduction

In designing control systems of the company, the management must know firsthand what they expect from the employees. To know this, it is important for the employers to deeply understand the organization’s objectives first. Objectives, as well as strategies that are derived from said objectives, often provide guidance in developing the most suitable control system to ensure the actions and the results of employees’ works are in accordance with what is expected from them. Understanding objective also helps management in determining how tight or loose a control should be, and reduces the possibility of behavioral displacement problem. Not only the employers have to understand the objective, they also have to predict the possible outcome of employees' behavior in response to the control system. This is to address the possible problems that may arise from implementing control, which are lack of direction, motivational problems, and personal limitation. Predicting employees' behavior may also help in determining the tightness of the control. If the employees’ actions or results deviate from the expectation, the management may need to change or improve the management control systems to solve the problems arisen.

To further understanding the process of designing and improving management control systems of a company, this paper will examine the case of Coffee Pot, in which the owner faces management control problems in the company.

2. Case synopsis

The Coffee Pot is a coffee shop founded in the early 1980s, and has established 8 shops in Springfield to Peoria. It strives to always offer friendly service, quality coffee, and inviting atmosphere. Brooke, the founder’s daughter, recently took over the business. She expressed her concern regarding the continuous loss in the recent years. Her late father refused to change its strategy, which based on being located in shopping mall food courts and depending heavily on walk-by traffic. Therefore, Brooke planned to change the strategy into targeting price-sensitive coffee drinkers to address this problem. Nevertheless, despite the successful attempts in cutting costs, the recent quarterly financial statement showed that The Coffee Pot was still losing money. Brooke is confident that the new strategy will help The Coffee Pot to compete in the market; however, she is concerned about how to make the strategy succeed.

3. Objective

As previously mentioned, The Coffee Pot’s objective is to serve friendly service, quality coffee, and inviting atmosphere. However, the high staff turnover and the continuous loss make The Coffee Pot drifting away from its company objective. Therefore, the objective of this case is to improve and to redesign the management control system of The Coffee Pot in consideration of

...