Introduction to Management

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PANERA BREAD COMPANY

I. EXECUTIVE SUMMARY

Panera bread Ronald Shaich, CEO and chair man of Panera bread made a phenomenal growth in revenue of the company from $350.8 million to $ 977.1 million in just 3 years from year 2000 to 2003. However the growth has continued slowing down from that year on so a strategy is being strategized to help Panera Bread survive.

The objective is to make Panera a nationally dominating brand by following a corporate strategy of growth by the combination of company and franchise efforts. With a clear objective it would help the company and its staff to know their goal and what they are achieving for.

The concept is to deliver against the key consumer trends; to present a fast casual dining experience but also providing varieties of new and healthier menus to cater for the market segments. Improvements are done not only the product but also improving the overall operating systems, design and real estates. For the company’s image participating in the local community charity for corporate social responsibility.

The policies are all franchisees are to follow the same standards for product quality, menu, site selection, and bakery café construction as the company’s. The company believed that the employee was a critical part of successful product and a unique company so by entrusting the employees to the fresh dough and support center operations with skilled associates and invested in training programs to ensure the quality and its operations.

Recommended strategy

Panera is to adopt Growth strategy through horizontal integration and using franchising as its key component to Panera’s growth strategy. The reason for continuing the horizontal integration is because does not have the capabilities to employ full backward/ forward integration. Thus vertical integration is not suitable in this case. The horizontal integration matches with the Panera’s concept bakery-cafes and it is the way for Panera to be able to grow more rapidly.

Competitive strategy used is Differentiation, employing the Differentiation strategy; Panera will be able to charge higher prices to cover the increasing fixed costs. However with higher quality products than of fast food chains’, tailored menus, upscale décor and Panera’s commitment to customer it is very possible to charge higher price.

Improvements should be made in the Human Resource department in compensation & benefits system. Salaried staffs get product discount, bonuses, incentive programs, training, and employee stock ownership plans however salaried worker should be rewarded too through recognition & award system or giving out vouchers to the non salaried workers.

Management team

The management team would be lead by all the executives and presidents in the company who has and extensive experience in managing and executing the Panera business. Mainly to manage all the important sectors like the Concept, Development, Joint Venture, Franchise, Supply Chain, Operating, Financial and the Administrative.

II. COMPANY BACKGROUND

Panera bread has been around from 1976. Ronald Shaich, CEO and chairman of Panera bread was the person who created the company together with the master baker called Shaich who combined ingredients. The duo made the phenomenal growth of the company with the guidance of Shaich, the revenue of Panera bread rose from franchise of 419 shops, the average annualized unit volumes (AUVs) increased from 9.1% to 12% a well but in the consecutive year the increase slow down from 0.2% to 0.5%.

Before it became a very successful company, there was Au Bon Pain which was purchased by Louis Kane in 1978. The bakery faced a $3 million in debt while struggling with 13 stores but 10 was shut down. Ronald Shaich came into the picture when Kane was about to declare bankrupt. Shaich who owned a bakery: Cookie Jar merged together with Au Bon Pain in 1981 these was to...
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