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Honest Tea Case Study Solution

Background and Facts

Honest Tea an office products store for little and medium sized companies has recently been associated with planning for a merger with its rival Home Deport, which has actually impacted efficiency degrees in departmentswith the senior manager associated with legal problems presented by the federal Profession Payment. With the Advertising and marketing Head putting forward the information of his departure from the company in one year, Jeannie Lewis, the existing head of operations has been asked to take the duty in the near future. With obstacles in the type of a possible cultural change as well as low staff member morale, the organization wants a total reengineering initiative at the marketing division.

Problem Statement
Porter's 5 Forces Analysis
The possible cultural modification at the advertising division of Honest Tea is boosting unpredictability in the workplace leading to different obstacles for the Jeannie Lewis that would be replacing the head of the division in one year. nalysis

PEST analysis

Political Factors: Political factors play a major role in influencing calculated choices because Stapes Inc. had to desert its strategies of combining with Office Deport after the Federal Profession Commission's treatment while doing so. Provided the reality that the store has an international presence with branches in UK, USA, Canada and Germany, political factors in each of these nations may have the ability to affect performance or tactical goals. Federal Trade Compensation's antitrust suit versus the merging took up useful time of the company's senior management recommending that 'political' factors can have serious implications for a worldwide company.

Economic Factors: Economic factors such as the appearance of small businesses in the international situation suggest that Honest Tea is prospering in an environment where there is possible development of organisations. In addition to this, reality that shop clients are primarily looking for office supplies for office suggests that the marketplace has an increasing trend of business owners and also home based businesses.

Social factors: Social patterns in the economy reveal that consumers are trying to find benefit along with eye-catching prices. Market research demonstrates how the client for Honest Tea lacks awareness about discovering options which can provide a combination of convenience and inexpensive.

Technical factors: Modern technology plays an essential function in Honest Tea's company strategy particularly as the company is piloting Innovation centers which would use modern technology sales as well as assistance in the form of memory upgrades, outer setups. (Recap of PEST in appendix 2).

OB Issues and also Manifestations.

Several underlying Organizational Habits concerns can be seen in Honest Tea's case as highlighted in this area.

Apprehensions about cultural adjustment: There is worry concerning a cultural adjustment that would certainly happen when Todd Krasnow leaves from his position as the Exec Vice President of Advertising with the majority of the employee currently showing unhappiness over this potential move. This expected adjustment has developed stress and anxiety in the workplace which has been coupled with the previous tension of preparing the firm for a prospective merger with House Deport.
Pest Analysis
Stressful Task Environment for Newcomers: There is scarcity of workers that can match the demanding environment of a fast-paced company. Not just does this result in trouble in locating the ideal people, it places stress on brand-new hires as can not hold up against the rate and pressure that the organization expects them to birth.

Double Coverage Lines: Novices discover this organizational culture troublesome and hard to manage particularly as populated line partnerships are implied to be weak generally and objective setup and also performance analysis is still done by the strong line supervisor. This indicates that newbies could shed clearness about their particular functions and also goals particularly as dotted line reporting does not keep them in direct interaction with the solid line supervisors.

Resentment From Cross Departmental Hiring: Krasnow's choice to make Lewis his successor instead of Bridget Coles although it had been speculated that the latter would take Krasnow's position came as a strike to her spirits. Lewis might have been capable as well as ideal for the task yet the truth that Kransnow's separation would make Coles a straight record to Lewis may have been the factor for Coles' resignation from services.

Worry & Work Insecurity: Fear and also insecurity can be determined as two major problems that Lewis would be handling especially as the merging has currently be cancelled and two senior executives of the marketing department would certainly be leaving. The entire responsibility of the department would be falling on Lewis's shoulders who would not just be in charge of brining about a cultural change yet would certainly also need to confirm herself in her brand-new role.

Incompatible Administration Style of Leader: Lewis's monitoring design as well as its conflict with the advertising department's function can additionally be seen as an OB challenge particularly as she has been used to taking care of concerns in the operations division where workers are shown to concentrate on procedures and also get them right. The advertising division on the other hand can be viewed as a group of individuals that are made use of to being supported by Krasnow that concentrated more on result than procedures.

Interdepartmental Differences: Interdepartmental disputes in between 3 departments, advertising, merchandizing and also procedures specifically over the appropriation of the marketing mix can be recognized as another OB concern. Although the advertising department does not share the same vision as the other 2 departments relating to the aloocation of the advertising and marketing mix twoards promos and also advertsing, the merchandizing as well as procedures departments do not concur over the advertising mix allocation amongst one another either.

Fragmentation in Advertising And Marketing Division: Disintegration in between the advertising and marketing departments can be recognized as an additional OB problem which might require further attention. The truth that the advertising and marketing areas in the advertising and marketing division are detached is avoiding both divisions from gaining from each other's experience and also know-how. Integration of marketing with merchandising and also operations would end up being harder if the advertising and marketing division itself is disintegrated which can be another potential OB issue.

Honest Tea Analysis

Various concepts have been used to discuss the circumstances to obtain further clarity regarding the scenario handy.
Swot Analysis
McGregor's Concept X & Y: According to Douglas McGregor's Theory X, a lot of managers think that staffs are easy and lazy, have little passion and stand up to change. The tough version of this concept highlighted browbeating, tight controls, risks and also penalties. Over time it produces low productivity, subtle sabotage and also rivalry (Bargain, 2003). Although the situation at Honest Tea is not completely complying with Concept X, it can be seen that new hires are discovering this environment instead difficult which may at some point result in a better inclination of the monitoring in the direction of Theory X. Based on McGregor's promoted view, which he called Concept Y, the necessary job of the administration is to prepare organizational problems to make sure that people can achieve their very own goals best by guiding their efforts towards organizational benefits. If people discover no complete satisfaction in their work, the management would certainly have little choice but to count on theory X and also external control (Bargain, 2003). Also while examining Lewis's monitoring design, theory X may have appropriated in the procedures department somewhat however the Advertising and marketing department would need reliance on Concept Y in order to get the creative thinking as well as originality from the groups.

Tuckman's Team effort Concept: Regarding Lewis's issue regarding bringing harmony between the marketing and advertising department is concerned, this would initially bring about clash as talked about by Bruce Tuckman in his 'Synergy Theory'. (Tuckman, 1965). According to Tuckman's theory received appendix 3, throughout the first stage of group development, people might not bond, as they are hectic finding their area in the team. By integrating the marketing and advertising division's work, there might be the same first separate which might bring about the 2nd phase of 'storming' where the groups test one another. Nevertheless, it is only throughout the third stage or 'norming' when they would integrate to share suggestions before the group can produce synergy in the fourth stage 'doing'.

Bridges' Shift Design: According To William Bridge's concept (appendix 4), people are rather uncomfortable with modification, which is apparent by the circumstance at Honest Tea The circumstance can be viewed as a typical program of life if is studied as per Bridge's theory where he clarifies that individuals go through three stages of change when they experience change. 'Closing, losing and Releasing', The Neutral Area and also 'The New Starting' (Bridges, 2004). When people exist with change, they enter phase one therefore there may be emotions like despair, unpredictability, stress, temper, fear, rejection and disorientation.The scenario at the advertising and marketing division of Honest Tea is similar so Lewis can get comfortable with the concept that it is not extraordinary behavior. In the 2nd phase, there may be a need to connect the space in between the new and also old culture so Lewis might have to face this ordeal when Krasnow leaves. There may be reduced spirits and reduced performance at this phase which need to not be taken as a setback. It is during this stage that Lewis will certainly need to give advice to the division so that they can find an orientation. It can be seen just how Krasnow has currently made this change less complicated by making Lewis obtain involved in the department a year before his real separation. As per Bridges' Design, stage three will produce openness to understanding, High power and commitment as people will accept the modification (Bridges, 2004).
Vrio Analysis
Maslow's Need power structure: The OB issue related to instability at the work environment has actually been caused to start with by the change in administration as well as secondly by the reality that the merger will certainly no longer be started. Abraham Maslow in his Theory of 'Needs Hierarchy' (appendix 5) has goes over the importance of 'security requires as being a lower level need of a human for causing motivation. As seen in the pyramid cooperated appendix 3, we can see how 'the need to really feel safe and secure and also safe' goes to the 2nd level of demands. Before an employee can be made to establish mentally, he requires to have his 'Physical 'as well as 'Safety and security' requires satisfied. This indicates that unless the employees are made to feel secure about their existing employment status in Honest Tea they might not get to 'Self-Fulfillment'. (King, 2009).

SWOT Analysis for Honest Tea Case Study

Effects of Analysis.

The OB analysis has taken a look at numerous concepts to comprehend just how to deal with the existing circumstance available. The adhering to three alternatives have actually been suggested to help Lewis deal with the business challenges in the advertising and marketing division. Each of these alternatives has been proposed for reducing the shift needed to bring the marketing department according to the demands of the marketplace as well as for making the cultural adjustment that would adhere to when the current leader leaves.

Integration of marketing and advertising features. Dividing Adverting and also Production functions. Combination of Advertising with Workflow.

Analysis of Alternatives.

Judith Shapiro that has earlier been spoken with by Lewis during the earlier merger days has competence in business-to-business advertising and marketing along with agency and also retail advertising experience. When Krasnow leaves, Lewis can employ Shapiro as an EVP for advertising to take care of both advertising and marketing and also marketing functions.

The advantage of this approach is that it will certainly incorporate both functions while reducing the need for employing an additional source for advertising and marketing. Lewis would be heading the marketing department as well as in any type of case her substitute would certainly be required for the present function that she is carrying out. The disadvantage of this alternative is that exterior hiring might cause resentment from internal employees who may be considering the position of EVP after Lewis takes over Krasnow's setting.

Dividing Adverting and Manufacturing: Offered the affordable pressures and high quality work required from the advertising agency, it is suggested that Lewis ought to permit the manufacturing unit to be a different feature from the advertising device. Given that most ad agency had these 2 features as separate units, it makes even more feeling to follow the norm. Both functions may be able to concentrate on their core triggers a lot more successfully. The drawback of this approach would be that additional expenses would have to be birthed for establishing up separate manufacturing functions. A manufacturing head may have to be employed which could enhance expenses for the company.

Integration of Advertising with Workflows: Because Lewis is already looking after the marketing and procedures divisions at the same time; it makes sense to integrate the two features given that she has actually been successfully caring for both ends. The fact that the two divisions currently have major distinctions over allocation of resources suggests that this assimilation might be able to bring about consistency especially as Lewis would certainly be heading both ends.However there are various downsides of this step particularly as it would certainly place way too much problem over Lewis's shoulders. The reality that Lewis has to adjust her administration style for the advertising division suggests that these two divisions would certainly be culturally varied. Along with this, Lewis might not have the ability to use one sort of leadership design to both departments which could cause ineffectiveness in either one of both features.


An analysis of the 3 choices indicates that combination of marketing and procedures would certainly not be a practical action because of the substantial distinctions in between both divisions despite the fact that presently Lewis is dealing with both. While separation of the production function may have been a desirable move for the advertising department, the truth that it would indicate positioning a 3rd feature under Lewis's wing implies this must be stayed clear of. The combination of the advertising and marketing department is the most effective choice in regards to obtaining the optimum arise from the division. An activity prepare for this alternative is reviewed below.

Action Strategy.
Lewis will take control of the role of EVP Marketing after Krasnow leaves.

Advertising and Marketing functions would be combined.

Judith Shapiro will be hired to take Lewis's location as SVP of advertising and marketing.

Manufacturing function will stay part of marketing under advertising function.

Lewis will certainly separate herself from operations.

A democratic leadership style with employee empowerment will certainly be utilized in advertising division.

Open up door plan as well as focus on cross department interaction will be targeted at eliminating dissonance.

Contingency plan.

If the integration does not work out as planned, a backup plan would certainly comply with which would divide the production feature from the marketing function to lower the load on the SVP of marketing and advertising. In case Judith Shapiro does not get worked with, Lewis will certainly be heading the marketing department without an SVP. In that case the manufacturing function will certainly be divided by putting it under an SVP manufacturing.