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Critical Management Issues

Discuss about the Case Study of Five Star Beer Brewing Company.

This case is related to the Five Star Beer Brewing Company, which is a part of the ASIMCO. The president of Alliance Brewing Group and the general manager of Five Star Brewing Company Ltd decided to meet up in order to discuss about the pay for performance process that had been implemented by the general manager of the organization Mr. Zhao. The process was introduced at two breweries of Five Star Company over the previous few months. The main objective of the meeting was for Mr. McMullen to determine whether the incentive process that was introduced was constructed in a precise manner in order to make sure that the breweries would manufacture higher beer quality increasingly at a decreasing cost. The basic scope of analysis has been to determine whether the implemented process would create improve quality product at a lower cost. In case, the implemented process if not effective then the manager has the motive of transforming the processes and the systems in order to accomplish the quality and the cost objectives of Alliance Brewing. The limitations of the case has been to understand the effectiveness of the pay for performance system within the two breweries of Five Star Brewing Company. The basic assumption has been that the highest quality has been provided at the lowest cost. 

There are various management issues that have been discovered in the case study and it is important for the management to highlight the most significant issues that have been identified has been as follows:

Decreasing Market Share

Five Star Beer Company had to fight in the area of Beijing with various beer companies. The company even had to fight with companies even operating outside the Beijing region as in the earlier times, the company had achieved greater extent of market share in various areas by obtaining the agreements of licensing among them and the various other regional brewers. In the current scenario, it is seen that Five Star is not only the single company operating in the area but has many other companies that has raised their competition and has even decreased their aggregate level of market share. This issue has influenced the companies to sell their product effectively in the market.

Quality Problem

There was a time when ASIMCO revealed that Five Star Beer had issues regarding their quality and one of the critical management issues has been looking after the quality of the product.  It is seen that quality has been core factor for the organization. On the other hand, ASIMCO discovered that there existed an extreme issue related to the quality of Five Star Beer. The main factor has been due to the fact that the organization constructed very rapidly and went in to several licensing agreements that was out of their ability. The company provided the brand of “Five Star” to the regional brewery company without providing them with the technical assistance and the generalized process that lead to the manufacture of products of poor quality. Now with the increase in competition there has been a concern for the organization to improve their product quality.

Key Issue

Pay per Performance

Pay per performance has been a distinct system that was introduced by Mr. Zhao and this system was introduced in order to improve the performance of the employees of Five Star and the employees of the associated regional breweries. The pay for performance system has been a success within the organization but has been ineffective for the associated organizations and therefore had an impact on Five Star.

Out of the three critical issues that have been recognized earlier, it is seen that issue related the quality of the product is the most significant. This is due to the fact that with the rise in completion and rivals in the brewery industry in China, it has become important to improve the quality of the product in order to retain the existing customers and to attract new and potential customers as well. The maintenance of efficient product quality would lead to maintenance of the existing market share and sustenance of the profit level. 

With respect to the most critical issue discussed earlier, it is seen that there are various players associated with them. It is seen that product quality has been major issue and its maintenance is dependent on the management, employees and the regional breweries with whom the company has undertaken licensing agreement. It is the duty of the management to gain control over the supervision of the operational activities. It is even seen that it is essential for the management to appoint managers and supervisors in order to manage the production process in an effective manner. It is observed that the employees are a key player as they play a significant role in the enhancement of the product quality. The regional associated breweries even requires to be technical assistance as well as awareness about the standard procedure so that they may gain knowledge about the effective processes in order to improve the operational activities as well as the quality of the product.

The evaluation of the critical issues that have been identified would be appropriately analyzed with the help of the Kluckhohn & Strodtbeck model. This model has identified six dimensions of culture. With respect to the cultures that have been identified, it is seen that the critical issues have developed due to the nature of people who are performing in the operational activity of the company. The nature of the people and their attitude towards the production quality has an impact on the organization the second issue has been the relationship with nature. It is seen that the employees does not have a positive attitude towards the responsibilities and the rights and nature around them and thereby has an impact on the operations. Finally, duty towards others and the organization where the employees operate leads to poor quality of product manufacture.

Key Players

From the perspective of the management it is seen that they have been ineffective in understanding the needs of the employees and the demands that were deemed by the associated breweries. The implementation of the pay for performance system has influenced the employees to concentrate on the amount of production and thereby have neglected the quality of the product and thereby had an impact on the effective product quality in the competitive environment. The associated companies were neglected by the management of the organization and they were unaware of the standard procedure and were restricted from the technical assistance, which influenced them to manufacture beer in their own way neglecting the strategies of Five Star Beer.

Conclusion

The analysis and the critical assessment of the case study have been helpful for the development of certain feasible solutions. It is seen that the management needs to transform their pay for performance policy as it has been ineffective in a highly competitive economy. It is even seen that the management needs to establish a cordial relationship with the associated companies and the employees working under them in order to motivate them to give out their best potential. Effective awareness programs like rewards and recognition and training programs needs to be delivered in order to create a sense of unity among the employees, associated organizations and the management. The employees on the other hand needs to develop a sense of belongingness towards the company and take adequate measures to improve the quality of the product and thereby maintain their competitive edge. A collaborative relationship with the associated companies would influence them to work harder and maintain a specific standard that would be influential for the maintenance of effective quality as desired by Five Star Beer. The use of the mentioned strategies would improve the product quality of Fie Star Beer and on the same hand enhance the relationship between the management, employees and other associated organizations.

Barmeyer, C., & Franklin, P. (2016). Achieving Complementarity and Synergy: The Third Step to Leveraging Diversity in Intercultural Management. Intercultural Management: A Case-Based Approach to Achieving Complementarity and Synergy, 199.

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Robinson-Easley, C. (2014). Beyond diversity and intercultural management. Springer.

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