Trader Joe’s Case Study
Management Issues – After reading the case a couple of times, I think that Trader Joe’s may only have a couple of issues. One issue that I think may be their largest is the fact that they choose to have small stores. People feel cramped and they tend to become agitated, than in return can rub off on other customers and their employees. I think they can have a slightly larger store, keeping the same amount of products. This would make the store have more room in the isles and for people to move around more easily. The other issue I found could be their locations. They tend to have locations that are out of the ordinary and a place people would not normally go grocery shopping. This tends to turn most people off from shopping at certain locations.
Discussion Questions
1. I believe Trader Joe’s uses the management process in many different ways. Planning- Most supermarkets carry upwards of 45 thousand different products, while Trader Joe’s only carries about 4 thousand. This gives people a lesser variety but a greater chance of buying the product. It is less of a chore to pick between 4 different brands than 12. When they have a product that is not making a profit or not enough profit, they remove it from their inventory and bring in something new. They also use customer feedback for this process as well, which keeps their customers satisfied and coming back to their stores. Another way of planning for Trader Joe’s is their marketing. They spend about 0.2% of their sales on marketing while super and mega markets are spending roughly 4%. Trader Joe’s goes by word of mouth also, so this is a huge advertising cost that they do not have to spend money on. This is another reason Trader Joe’s prides itself on customer satisfaction and retention. Organization – Each employee of Trader Joe’s is to not only learn about the products they offer but they are encouraged to try them for themselves as well. This enables the employees to involve themselves with the customers on their own familiarities and preference of the products as well. As the book states, most customers can recall when a helpful employee has been there to help them when they needed it. Leading – Trader Joe’s has many incentives for their employees. Their incentives plan keeps the morale and productivity up. Trader Joe’s employees can earn just about 20% more than others at leading competitor supermarkets. They have starting benefits like medical, dental, vision, paid retirement, plans, 10% discounts in-store, and many more. Their “future leaders” or “potential managers” are sent to programs like Trader Joe’s University that teaches them how to run the stores to the company and customer’s expectations. This means that they only hire management from within the company. This gives a long-term responsible employee the opportunity to grow from having a job to a career. Controlling – Trader Joe’s barely avoided a boycott when it was tangled in a controversy over its opposition to the Campaign for fair Foods. Trader Joe’s insisted that they already followed the guidelines of the campaign; however the CIW demanded an increase of transparency. Trader Joe’s agreed and signed an agreement days before the boycott was about to begin. I believed that they signed the agreement because they were going to lose more in profits and lost wages than in the increase of wages for the Florida produce field workers. I also believe that they didn’t want their hard working employees to be without income in their homes and they didn’t want their customers shopping at their competitors stores.
2. One down fall to international business is Intellectual Theft. A company’s largest asset is intellectual capital. It is used to create value in a company with decision making, creativity, and insight. Another setback would be job migration, shifting of jobs from one country to another. The U.S. has become a “net loser”, as the book states, when it comes to other countries such as India, the Philippines, and China for job migration.
Problem Solving – I think that Hazel would be able to go to work and start with assessing the people she is in charge of. This gives her a chance to know the people and understand how to approach them. She should be respectful and open to what they have to say. If Hazel goes to work being too assertive, than she has the possibility of the employees rebelling against her and in this situation could have the possibility of their personalities clashing and them not getting along. This in return, will hurt morale and productivity in the business itself.
Further Research – After reading several articles online, trader Joe’s has a completely different management and operation style that its competitors. From the way they stock the shelves, to the way the treat their employees, to the way that they pick their next location for the store. Their stores may be a lot smaller than their competitors and they may pick a location that other supermarkets would never dare to open a store but they are constantly changing to meet their customers’ needs and satisfaction and retention. Trader Joe’s is constantly evolving and their competitors are unable to retaliate. I believe that Trader Joe’s does have the right management approach and business model to have continued success. Their stores maybe small and cramped at times however, their employees and customers are happy and keep coming back. Isn’t that what running a business is all about?