(i)

Executive Summary
Igor and Ludmilla started Iggys bread of the world. The companys goal was to provide high quality
bread and not to consider customers as mere numbers. They treated employees as an intrinsic part
of the company. The passion and hard work of the founders resulted in companys success to
establish itself as a high quality supplier of the bread. In order to meet demands of new big
customers, the founders thought of expanding the business and hired McRae as COO. McRae started
to build new management team by recruiting the members who were either his family members or
friends. The working style of the new management team was not in line with the companys culture
and employees were not happy with the new team. McRae hired an executive without consulting
the founders which has resulted in conflict between them. When Igor asked for possible explanation
McRae submitted his resignation citing that the founders were not ready to accept him. Though he
took back the resignation, Igor realised and found that McRae was not happy with his compensation
and want better pay and bonuses based on profit. The founders and Board of the directors had to
decide whether to accept his demands for pay increase. After analysing the situation, it is
recommended that the company should scale back and develop a new management team under
the guidance of Ludmilla for expansion.






























(ii)

TABLE OF CONTENTS
Letter of Transmittal i
Executive Summary ii
THE REPORT
1.Situation Analysis.................................................................................................................. 1
2.The Problem .......................................................................................................................... 2
3.Options/Alternatives ............................................................................................................. 2
4.Criteria for Evaluation ......................................................................................................... 2
5.Evaluation of Alternatives .................................................................................................... 2
6.Recommendation................................................................................................................... 2
7.Action Plan ............................................................................................................................ 3


















Situation Analysis
Igor and Ludmilla who were passionate about bread making and its business respectively have
started Iggys Bread of the world. They were using all natural organic ingredients that has
differentiated them from other bread makers .The mission of the company was to provide high
quality bread, nurture respectful work environment and not to treat customers as merely numbers.
Igor installed state of art ovens and insisted that that much of the work to be done by hand. Along
with one of his bakers, Igor travelled around the world to find new recipes and recruited experts to
help them out in new areas.
Igor and Ludmilla have generated leads by taking samples of their bread to speciality food stores and
kitchens. Customers were excited and agreed to have contract with them as vendors. Soon, the sales
of the company had grown to a million dollar and Iggys was featured in a monthly Magazine. The
success was attributed to the founders passion and hard work, word of the mouth and the high
quality of the product.
Ludmilla treated employees as an intrinsic part of the business and wanted them to get pleasure out
of what they do. The hierarchy of the organisation was flat and Ludmilla encouraged employees to
approach her or manager, even if the problem was personal. She did not want person problems to
spill over into the bread, into the product. Her ultimate goal was to fully include all of Iggys
employees in every aspect of the business and make them understand all of the parts of the
business. It was difficult to integrate the immigrant workers in to the business. Menezes, the
production manager, tried to bring the workers together through soccer games.
Igor preferred to hire kitchen workers with no previous baking experience, so that they could be
trained to bake bread the Iggys way.
Nikola, Igors younger brother used to help them and as the organisation grew over time, Nikola
took more responsibilities and became general manager of Iggys. Ludmilla was no longer working at
the bakery in any formal capacity as she was busy in taking care of her children. Day to day
operational decisions was left to Nikola and employees and the founders were involved in bigger
decisions.
The business had grown rapidly and Igor and Ludmilla faced a critical business decision. They
required capital to expand and to serve new big customers. Ludmilla was not comfortable in selling
part of the business to Venture Capitalist and for the first time in companys history they took debt.
Igor advised Ludmilla that they have to hire real business people to expand the business. They hired
Matthew McRae whom Ludmilla know as a passionate individual. He acted as a consultant and soon
assumed the position of COO. McRae started to assemble his management team and hired his
relative and friends as executives. Igor and Ludmilla were worried that the changes were happening
too quickly and employees felt that they were isolated from the operations.
McRae hired two executives without consulting the founders and one of them were not performing
as expected and McRae was unwilling to change the executive. The relationship between founders
and McRae became strained to the point that they were not communicating effectively. Igor
approached McRae for the possible explanation and McRae submitted resignation citing that the
founders are not ready to accept him. Though, McRae wanted to take back resignation, Igor realised
1
that the McRae was unhappy that he was undercompensated and he wanted significant raise as well
as bonuses based on profit. Igor and Ludmilla and their board of directors were to decide on how to
respond to COO McRaes demands.
The Problem
Iggys bread of the world, an in-between bakery has to decide whether it should agree to the
demand of its COO McRae, may be as any other start up or hire new management team or scale
back
The options
Accept McRaes demands and expand the business
Fire McRae and search for management team and expand the business
Scale back and under Ludmilas guidance build a leadership program. Recruit graduates from
b schools and mould them to fit Iggys culture and expand slowly.
Criteria for evaluation
Maintain the core values and mission on which Iggys bread of the world was built.
Meet the demand of the new customers by expanding the business.
Evaluation of Options
Accept McRaes demands: By accepting McRaes demands, founders can expand the business but
the intention of the McRae seems to generate more profit and also his style of working is not in line
with the organisations core values and mission. Thus, Criteria 1 is not satisfied.
Fire McRae and search for new Management team: It is highly not possible to predict whether the
new teams work style will be aligned with the companys core values and mission. Thus, Criteria 1 is
not satisfied.
Scale back and develop a leadership program: Iggys bread of the world can scale back and remove
the entire management team built by McRae. Ludmilla can start concentrating on the business at
least in the first few days of the development of leadership program. Recruits from b schools can be
trained under the guidance of the Ludmilla and impart the Iggys culture into them. New hires can be
given the expansion responsibilities under Ludmillas leadership. Thus, Criteria 1 is satisfied.

Recommendation
It is recommended that Iggys bread of the world should fire McRae and scrap his management
team. It should scale back and develop a new management team under the guidance of Ludmilla for
expansion.



2
Action Plan
Scale back the business operations
Ludmilla can start involving in the business
She can develop a leadership program that is suitable for Iggys culture with the help of
external HR consultants.
Recruit fresh graduates from b schools with the help of search firms.
Train the graduates to mould them to suit the Iggys culture.
Expand the business slowly by monitoring the operations and new management team
working style.