A Report on

Iggys Bread of the World

Submitted to Prof. Madhushri Shrivastava in partial

fulfillment of the requirement of the WAC course

by

Nitish Mohan Saxena

2013PGP261
Section E
IIM Indore

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Letter of Transmittal
3rd March, 2014
Prof. Madhusri Shrivastava,
Department of Communication,
Indian Institute of Management Indore,
Indore -453331.

Subject: Submission of Report on the Case Iggys Bread of the World

Dear Maam,

As per your instructions following the preliminary discussions in the class, I am submitting a
report on Iggys Bread of the World for the partial fulfillment of the course Written Analysis
and Communication as a part of the PGDM Curriculum.

The case analyzes the dilemma faced by Ivanovic couple while deciding whether to accept
McRaes proposal of higher compensation and become peaceful with the existing work culture.
I hope you find this report satisfactory and up to the mark.
Regards,
Nitish Mohan Saxena
2013PGP261
Section E
IIM Indore

EXECUTIVE SUMMARY
Igor and Ludmilla Ivanovic started Iggys Bread of the World to shape their passion for
baking into a business. They created a warm and productive culture for employees and
influenced them to have positive attitude, keeping them involved it almost every aspect of
business. The popularity of their bread reached skies and difficulties arise with huge
demand in place. McRae was hired as COO to handle the business aspect and he developed
a new management team. The corporate culture had an adverse affect on the work culture.
Now with McRae demanding huge compensation, prerogative lies with Ivanovics wherein
they need to decide whether to retain him by accepting his proposal or to let him go
keeping the organizations work culture in mind. It is recommended that considering the
vision of company, Igor should ask McRae to leave the firm and entrust the responsibility of
firm to Nikola.

TABLE OF CONTENTS
Situation Analysis ................................................................................................................................................. 1
Problem Statement ............................................................................................................................................... 2
Options ...................................................................................................................................................................... 2
Criteria for Evaluation......................................................................................................................................... 2
Evaluation of Options .......................................................................................................................................... 2
Recommendation .................................................................................................................................................. 4
Action Plan ............................................................................................................................................................... 4
Contingency Plan................................................................................................................................................... 4

SITUATION ANALYSIS
Igor Ivanovic and his wife Ludmilla Ivanovic started their first bakery in Pain dAvignon with two
other partners. This served as groundwork for them to shape their dreams and passion. They
sold their share of business after one year and scout a new venue for opening a bakery.
Market research indicated Boston to be a wide open market for their products, and therefore,
they set up Iggys Bread of the World. The idea behind Iggys was to provide good quality
product, maintain a healthy business for the employees to enjoy their work and to create long
lasting relationships with their customers by providing them with a unique experience.
The couple put in all their efforts towards the growth and success of this bakery. It became
very popular for the quality of its bread in a short time span and was soon supplying bread to
many of the most prestigious accounts in Boston, without any need of advertisements. Both
founders were personally involved in the bakerys operations and ensured that Iggys
employees were also involved in every aspect of the business. However, as time passed,
Ludmilla was finding it hard to strike a balance between her responsibilities towards the
business and her family. The owners were apprehensive that they would lose out on business if
they continued to turn down orders from their prestigious customers. The sudden surge in
demand compelled them to take loans to expand. Nikola, Igors younger brother started looking
after the finances of the business.
In order to cope up with increasing administrative burden they moved to Cambridge, took
strategic decisions to buy seven new delivery vans, increase kitchen by 15, and took loans for
the first time. The overwhelming situation compelled them to hire Matthew McRae as COO.
McRae took the charge and started assembling his own management team which moved the
company away from the original culture of community to a corporate culture which eventually
led to employee discontentment. In response to Igors confrontation regarding some hiring
decisions, McRae presented a vindictive letter of resignation which he later retracted claiming
that he used poor judgment and overreacted to the situation. However, McRae also claimed
that he was not being compensated enough for his time and efforts to steer Iggys towards
future success. His proposal for a raise was staggering to the Ivanovics, who now had to
decide how to proceed with Matthew McRaes role in the company.

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Problem Statement:
Igor and Ludmilla need to decide the future course of action for Iggys in light of Matthew
McRaes proposal and growing discontent among the employees.

OPTIONS
1. Accept the proposal made by Mathew McRae
2. Reject his proposal, dismiss him and hire new management team
3. Reject his proposal, dismiss him and take charge himself
4. Retain McRae and negotiate the proposal Ask McRae to revise the proposal and
arrive at a mutually accepted level of raise and bonus
5. Reject the proposal and let Nikola lead with a support team

CRITERIA FOR EVALUATION

1. Impact on Business operations: In order to ensure that business is able to grow and
expand profitably
2. Impact on Iggys reputation: Alignment with the vision of the owners with which the
company was started which allowed them to create a positive reputation in the
market by word-of-mouth publicity.
3. Impact on Work culture and employees: In order to maintain the work culture and
friendly environment at Iggys with involvement of employees in every aspect of
business and keeping them motivated.

EVALUATION OF OPTIONS

Accept the proposal: If the Ivanovics accept the proposal put forth by Matthew
McRae, they will have to comply with profit levels which are far lower than expected
(along with agreeing to pay a higher salary). The image of Iggys to deliver high
quality products might be hampered due to tension among the employees and the
management team. The deteriorating work culture at the bakery might encourage
the employees to look for jobs elsewhere thereby, increasing the attrition rate at
Iggys. Since it takes six months to fully train a baker and considerable effort for
training the foreign unskilled kitchen workers, Iggys cannot afford to lose its
employees. Thus, the proposal should not be accepted.
Reject the proposal, dismiss him and his team and hire new management team:
Hiring a new management team altogether will be an extremely challenging task for

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the Ivanovics, because they will have to look for a team which is equally passionate
about the business and should be able to absorb the work culture of Iggys. There
will be an uncertainty regarding new management teams ability to mix with the
employees and fuel the growth of the organization is uncertain. It would also lead to
sudden impact on the business growth of Iggys till the new team is well amalgamated
with the current team culture.
Reject the proposal, dismiss him and his team and take charge himself: This
alternative will make Igor take charge of the business back from the management team and
continue with the expansion of Iggy by himself. However, it might have a very negative impact
on the business growth provided that Igor is not experienced in business management. He is
great in baking and training the employees to bake breads. Initially also his wife was

the one who looked the operations and younger brother Nikola looked after
finances. A simple baker like Igor might not be able to retain the profitability of the
business in a long run.
Retain McRae and negotiate the proposal: The positives in the favor of McRae
which made him an appropriate choice were his prior experience, knowledge, and
passion for the company. Though he took many decisions without consulting to Igor
but his objective was profitability. Head hunting for someone with similar level of
dedication would be difficult. Therefore, his raise and bonus could be discussed and
a consensus should be reached on the same. But again his working style will remain
incoherent with the vision of the company and will lead to negative impact on the
employee morale. Moreover, the PAT of the company has gone down significantly in
his tenure, questioning his ability to drive firm profitably.
Reject the proposal, dismiss McRae and let Nikola lead with a support team:
Nikola was involved with the firm since its initial days and was well aware of the
working culture. He played an important role in keeping the firm on the path of
growth by being the general manager and running the financial end. Moreover, he
has full understanding of the people there and knows the work-culture that should
be created in this unusual firm. He would be an appropriate fit to make a support
team and lead it to the put the company back in its position.
Options
Criteria

Accept the
proposal

Business impact
Companys reputation
Work Culture and
Employees

May Be
X
X

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Reject and
hire new
management
team
Maybe
Maybe
Maybe

Reject and
take charge
himself

Negotiate
and retain
McRae

Reject and let

Nikola create
support team

X
X

RECOMMENDATION
On the basis of above analysis, I recommend that Igor should let go McRae and entrust the
responsibility of firm to Nikola with his decision to hire professionals who could support
him throughout the process of companys growth.

ACTION PLAN
The following steps should be taken by Igor:

Reject McRae proposal of higher compensation and ask him to resign again.
Ask Nikola to take on higher responsibility while keeping the work culture intact as
it was before McRae was hired
Along with Ludmilla and Nikola, conduct interview to make a support team for
Nikola, who will assist him in sustaining the profitability and in business expansion
plans.

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