Taco Bell Case

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TACO BELL – CASE Study

1) Did Taco Bell’s success result from a top down or bottom-up approach to change? What situations drove this change, and what leadership approach did John Martin use? What was the old (previous) leadership style and what was its limitation?

• Taco Bell’s success resulted from a top down approach to change. Along with the new organizational structure came the job position of Market Manager. Management added this new position to send a strong signal that they wanted different behavior. They wanted people to be broader managers, good at managing P & L, to be decisive and to take ownership. The Market Managers had a lot of responsibility because management had pushed down a large deal of decision making. • One of the situations that spurred this change is the notion of self sufficiency or the fact that a restaurant can operate by itself. John Martin knew this had to be done because there were 1500 Taco Bell restaurants and it is too much extra work to have to constantly monitor all of them. Management realized that they needed new production techniques to serve customers more efficiently. They also knew that they need new training and development methods to be more competitive and to have more uniformity in the products they were serving. Management also knew that they needed to install Operational Information Systems in all of the restaurants in order to keep up with their competitors. These are just a few of the many factors that drove the change of Taco Bell. • John Martin introduced the democratic style of leadership to the Taco Bell chain. John Martin acted as a leader who involved his employees in the decision making process and delegated a great deal of authority to lower level positions. In addition, Martin encouraged participation in deciding work methods and goals and used feedback to coach his employees. • The laissez-faire style of leadership that had been previously used at the Taco Bell restaurants. This means that the leader gave his employees a great deal of freedom to make decisions and to decide on work methods. The limitation of this method was that employees had too much freedom and were not working to their full potential. In addition, this method failed because all of the restaurants were operating differently which hurt the organization as a whole.

2) Was change incremental and continuous or was change reengineered? What management level was “delayered” (eliminated)? Suggest an organization table (not chart) that lists positions by title and number before and after the changes to prove which level was eliminated?

• The changes that John Martin implemented were incremental and continuous. Some of these changes included remodeling, new signage, drive through windows, modern looking uniforms, and increased seating capacity. Martin also introduced new items to the menu like nachos, taco salad, and Mexican pizza. • The level of management that was eliminated was the District Manager position. District Managers basically watched over the shoulder of the Restaurant Manager making sure everything was alright. Now the job of Market Managers (formerly District Managers) was to be a coach as well as being a business leader. • Before the changes implemented by John Martin the organizational table looked like this: Vice President-General Manager (3)

Vice President-Operations (3)

Zone Director-Operations (13)

Area Managers (60)

District Managers (320)

Restaurant Managers (1,800)

Assistant Restaurant Managers (3,500)

• After the changes made by John Martin the organizational table looked like this: National Vice President-Operations

Zone Vice President-Operations

Market Manager

Restaurant General Manager

Assistant Restaurant General Manager

3) Did TB raise or lower food costs as part of its “customer value” strategy as a percentage of sales? What store operational changes were made to improve sales volume...
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