Case Analysis ‘A’ – Chick-fil-A: A Bird of a Different Feather
Question 1
From a strategic management perspective, describe the ways that CFA differs from the typical business organization as it applies to – Mission, Stakeholders, Culture, and Managerial Succession?
CFA significantly differs from a typical business organization with regard to its mission statement, stakeholders, culture, and managerial succession. CFA expresses its mission as a purpose statement. The mission statement says, “To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A.” Typical business organizations exercise religious neutrality. However, CFA requires that its employees and operators should be religious and be trusting in God. Typical business organizations do not require their employees to hold any religious beliefs, and neither do their mission statements involve religious utterances. Most organizations adhere to Title VII of the Civil Rights Act enacted in 1964, which protects employees from different forms of discrimination including religious discrimination.
CFA’s stakeholders include the management, operators, employees, customers, and the community at large. The management differs in that their personal values are highly reflected in the operations of the business. The operators must hold certain ethical and religious values before they can run a franchise. This makes them different from other typical stakeholders in other business organizations such as KFC. With regard to culture, CFA’s culture mainly reflects the personal values and beliefs of the owners. There is no distinction between the organizational culture and the owner’s culture. In typical business organizations, a distinct organizational culture transcends the owner’s culture or personal views. For instance at CFA, the owner may fire an employee if the employee has done something sinful to his/her family members. In typical business organizations, this may not apply as the organization may adopt a different identify from that of the owners.
Managerial succession in CFA follows the family line. Typical business organizations that are family owned have a thirty percent chance of inheritance by second generation, and twelve percent chance by third generation. Fourth generation has less than five percent chance of acquiring the business (Hitt, Ireland, & Hoskisson, 2014). Yet, this situation is different at CFA. Statistics indicate that 88 percent of family members believe that the business will still be part of the family over the next five years. CFA has a robust succession plan that ensures the business remains part of the family.
Question 2
On what internal capabilities has Chick-fil-A based its strategic design? What factors from the external environment have gone unheeded? What are the risks of relying only on a resource-based model to establish the firm’s strategy?
CFA bases its strategic design on certain internal capabilities. First, CFA bases its strategic design on the ability to cook a fresh and unique chicken sandwich. CFA serves fresh chicken sandwich to customers, making their chicken sandwich more delicious. The company applies a formula that has 20 ingredients. CFA is able to make fresh chicken because they cook boneless chicken meat using a special pressure cooker that uses oil. As such, the chicken takes only four minutes to cook, which is a plus since this eliminates the need to precook the chicken and put it under a heater. Another internal capability is a strong corporate culture. CFA has managed to develop a strong corporate culture among operators and employees. The strong corporate culture emphasizes on developing personal relationships rather focusing on profits and short-term growth. This has resulted in a strong and highly loyal customer base. Another capability is a focus on employees. The company places a high emphasis on employee welfare, as per the Golden Rule Philosophy (Hitt, Ireland, & Hoskisson, 2014). This has resulted in high knowledge retention rates due to low employee turnover.
A number of factors from the external environment have gone unheeded. CFA has not heeded to the social and cultural forces that shape the society. In the last decade, the social and cultural forces have changed in favor of same-sex marriages, culminating to the legalization of same-sex marriages. CFA is resistant to change, preferring to hold strong preference for the traditional family notion. This has not augured well with gay and lesbian communities, who at one point held demonstrations to protest against the hotel’s anti-gay sentiments in 2012. A close factor to social and cultural forces is public opinion. CFA has largely ignored public opinion on various issues including gay and lesbian rights, religious freedom, and personal freedom. The risk of relying purely on a resource-based model to establish the firm’s strategy lies in the model’s static nature. The model fails to address issues to do with strategic change, and hence termed as static (Arndt, 2008). By looking at CFA, there is a lot of rigidity especially when it comes to expanding to new markets or locations.
Related: Chick-fil-A Strategic Planning
Question 3
While the merits of Chick-fil-A’s strategy can be argued with favor or criticism, how would you appraise the effectiveness of Cathy and his sons in their roles as strategic leaders as it applies to Determining strategic direction, Establishing balanced organizational controls, Effectively managing the firm’s resource portfolio, Sustaining an effective organizational culture, and Emphasizing ethical practices of the organization?
The effectiveness of Cathy and his sons with regard to strategic direction is average. Although they have managed to build a huge customer base, they seem wary of expanding the business. For instance, the business model emphasizes on allowing one franchise per operator, which limits expansion. Cathy and sons have an excellent portfolio in establishing balanced organizational controls. This is demonstrated by the ability of the family to control the quality and mode of operation of all operators. The family abandoned the earlier strategic decision involving licensing since this gave them little control over the restaurants. Instead, they opted for franchising which gave them more control over how the restaurants were operated. Balanced organizational control is also evident in the management of the restaurants. There is no evidence of internal wrangles among family members. In addition, there are clear steps on how family members can benefit from the restaurants, including the recommendation to clear college and two-year experience working outside CFA.
Cathy and sons have effectively been able to manage the firm’s resource portfolio. The firm is currently ranked among the top quick-serve restaurant franchises (Hitt, Ireland, & Hoskisson, 2014). In 2011, CFA was ranked second to KFC, indicating appropriate resource utilization. Cathy and sons have performed above average in sustaining an effective organizational culture. CFA’s culture and management philosophy heavily dwell on the biblical principles. While looking for operators, Cathy and sons conduct thorough scrutiny to ensure that the potential operators have desired values and beliefs. According to Hitt, Ireland, and Hoskisson (2014), the interview process may take up to one year, during which they determine whether an individual have appropriate values and behaviors to operate a franchise. Cathy and sons also hold an excellent record in ensuring that the ethical practices of the organization are demonstrated including among the operators. Cathy and sons ensure they maintain close relationship with operators to ensure their operational models conforms to their requirements.
Question 4
Discuss the actions that have strained relations with gay and lesbian advocacy groups in recent years. What is the real or potential impact of these actions on the Chick-fil-A brand?
A number of actions have strained the relationship between CFA and gay and lesbian communities in the recent years. In 2012, CFA’s COO, Dan Truett, made remarks that were against the gay and lesbian communities. The remarks seemed to support the Biblical definition of marriage, which sparked protests from the gay and lesbian communities. The remarks favored the traditional view of marriage that it comprises of opposites. Apart from protests, the restaurant faced boycotts and litigation from the gay and lesbian community. Nonetheless, the boycotts did not achieve their intended purpose. Another action regards the restaurant’s emphasis on Biblical principles among employees. The restaurant emphasizes that employees must demonstrate Christian ethics, including being in stable relationships. The restaurant believes that married workers are more responsible compared to those who are not married. While recruiting employees, the management may require marriage certificate or proof of having a family. Such actions may anger the gay and lesbian groups.
These actions by the restaurant owners have significant repercussions on its operations. One of the potential impacts is a tainted image of the restaurant. The discriminatory stance taken by the restaurant may lead to a negative image among the public. This is because it goes against the current values or norms held in society, which are largely in favor of gay and lesbian rights. Another impact is legal litigation. Following the remarks made by Dan Truett concerning gay and lesbian community, a number of legal suits emerged in a number of states. Legal suits could be expensive especially if the restaurant loses the case. Another impact is difficulty expanding the business into new areas or states, especially those that are largely pro-gay and pro-lesbian. For instance, following the remarks by Dan Truett, some individuals vowed to prevent the restaurant from constructing a new outlet in Chicago (Hitt, Ireland, & Hoskisson, 2014). Overall, this could lead to loss of business.
References
Arndt, F. (2008). Managing Dynamic Capabilities in Alliance Portfolios. Retrieved from http://www.worldcat.org/title/managing-dynamic-capabilities-in-alliance- portfolios/oclc/958025737
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2014). Strategic management: Concepts and cases: Competitiveness and globalization. Mason, OH: South-Western Cengage.
