Case Study - Montaigne’s Candies

Contents

Executive Summary..........................................................................................3
1. Issues Identification....................................................................................4
2. Environmental and Root Cause Analysis...................................................6
3. Alternatives and/or Options........................................................................8
4. Recommendation and Implementation.....................................................11
5. Monitor and Control.................................................................................15
References...................................................................................................... 17

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 Case Study - Montaigne’s Candies

Executive Summary

“Chocolate is happiness that you can eat, says Ursula Kohaupt.

Montaigne’s Chocolates, Inc. is a Quebec City-based chocolate manufacturer and distributor.

With over 35 years of experience in the chocolate industry, they aimed to expand and acquired
the following companies in 2013: Gummies (based in Winnipeg) and Lemon Drops, which
augmented their capability to increase their production and market presence.

Despite their increasing operations in around five cities across Canada, it was not long before the
management visibly raised concerns over lost synergies that should have been their core
advantage to generate revenues for the organization. As the knowledge management coordinators
in the Research and Development (R&D) department responsible for providing modelling and
simulation services to our company, we have conducted a detailed examination of short-term and
long-term issues, as well as an analysis of environmental factors, and discovered that the
company's lack of coordination, which was initially provided as the sole reason for issues, had
much more causes on a deeper level of the case. The root cause of the problem was the absence
of a suitable platform for knowledge sharing and a motivational plan to encourage it.

To overcome these challenges and achieve sustained business growth, five alternatives from both
technical and managerial perspectives have been proposed in this report in order to promote
knowledge sharing throughout the company. These alternatives involve the utilization of both
cloud and on-premises platforms, as well as the implementation of a knowledge-sharing
incentive plan to address both short-term and long-term challenges. After a careful analysis, the
optimal solution is presented in this document, along with a comprehensive implementation plan,
a contingency plan for unforeseen circumstances, and techniques for monitoring and maintaining
progress. All of these have been meticulously devised and explained for the benefit of the
company, as we strive towards promoting knowledge sharing and achieving business growth.

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1. Issues Identification

1.1 Short-Term Issues

 Hoarding Essential Information

With globalization in the market, information sharing and processes have become
increasingly popular due to technological advancements. Professionals and businesses are
now able to make key decisions on various business proposals. However, humans'
dispositions towards information sharing are often guided by their own emotions and
ways of thinking. While the acquisition should have resulted in the parent company,
Montaigne Candies, experiencing increased economies of scale, We observed that soon
the management was concerned about lost synergies. Due to a lack of familiarity between
each organization’s employees, territorial and guarded behaviors were adopted regarding
data from sales representatives and even supplier sales representatives.

 Operational inefficiency
Companies that concentrate on definite objectives generate innovation and achieve record
profits. (Sinek et al.,2018) This benefits them not only when things are stable but also
when things are unstable. One of the problems at Montaigne Candies was the absence of
data exchange between accounts. Additionally, the organization was losing out on sales
from cross-selling its products as bundles because of the decentralized nature of the
organizations. Additionally, the operational bottleneck was complicating day-to-day
operations by impeding their client service on various levels.
 Unproductive Legacy Systems
Lemon Drops and Gummies were both family-run businesses. They neglected the
requirement to create a synchronized system between them because they did not want to
offend their suppliers, customers, or employees. However, this was a mistake because it

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should have been embraced and merged over time because the risks and replacement
costs were too high. The incapacity of these systems to manage high transaction volumes,
the difficulty of aggregating orders, and the complexity and upkeep of the technology
were some additional problems that were mentioned.

1.2 Long-Term Issues

 Increased Capital Expenditure

If these organizations do not eventually combine their systems. It's possible that the
information on rising expenses for raw materials, such cocoa, whose prices had increased
by 40%. The company is missing out on potential cost savings, which will hurt its ability
to compete in the market going forward.

 Possibility of a Failed Investment

Each company has its own ERP; hence, data integration is almost impossible and costly
with the existing fragmented IT infrastructure. Without understanding the requirements
for operating as a whole (including gummies and lemon drops), the organization was
growing at a rapid pace, with the employees failing to adapt to these situations quickly. If
the employees do not understand their needs due to a lack of transparency, we could miss
out on key information in our decision-making about adopting either BOB or ERP, which
have their own benefits and challenges.

 Supply Chain Challenges

Montaigne’s Candies have obvious supply chain challenges. With the closed knowledge
sharing processes that they have, each entity does not have access to a list of customers,
suppliers, and manufacturing facilities. However, we do agree that some emerging
multinationals tend to let overseas businesses they buy run independently. It is interesting
to note that each organization, despite operating in the same industry, has its own unique
method of doing similar processes. Montaigne’s Candies fails to realize that each entity is
dealing with such complex processes in terms of procurement, sourcing, and

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transportation in their own ways, which could potentially be beneficial to other entities as
well.

2. Environmental and Root Cause Analysis

Strengths Weaknesses

- Demonstration of growth mindset. Decreased productivity- crashing ERP systems,

-IT involvement- Usage of softwares such as
Microsoft Dynamics GP showing initiative to
compete in the market.
-Entity Uniqueness- evidently, each entity
produces brands that are popular and distinct;
helping customer-retention.
creating error-prone and labourious tasks.
Terroritarial Behavior- Data is guarded by human
emotions which are fear and loss of customers.
Untapped Knowledge Management-All three
entities have employees which have similar roles;
sharing their tacit knowledge.

SWOT
ANALYSIS
Opportunities
ERP and Bob Systemes: There are many ERP
systems and the best systems are available in the
market.
Acquisition synergies: Complementary divisions
can deliver synergies such as supplier base
consolidation, increased market access, economies
of scale, in-depth knowledge of contracts and
purchasing strategies Consistency.
Innovation goals: As IT systems improve,
employees can focus on innovation and revenue
generation.
Risks
IT replacement risk: Replacing existing IT systems
can disrupt external stakeholders, with customers
fearing a temporary drop in service quality and
suppliers worrying about aggressive pricing
tactics.
Commodity price fluctuations: Rising prices for
key raw materials such as sugar and cocoa could
negatively impact a company's bottom line.
Additionally, the expected deficit in the global
sugar.

The root of the problem arises when a successful company like Montaigne's Candies decides to
join forces with two other companies (Gummies and Lemon Drops), but in reality, each of them
works independently and without synergy between them, which has seriously affected

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coordination in the supply chain and, with it, the reputation of the brand among customers. In
addition to the financial impact on each of the divisions, this is largely because the acquisition of
the companies was not carried out with a long-term strategy but with the purpose of capturing
adjacent market segments, which, as a result of all this, has resulted in a fragmented and
inefficient operating model.

The Five Why Technique is going to be used to find out the root cause of the analysis:

1. Why is there no willingness among the companies to integrate their data?

They fear controlling the supply-demand bases and data of clients being stolen and used for their
own benefits.

2. Why does the company want to revamp the existing application framework?

Inefficient processes caused issues, such as systems not being able to handle transactions during
peak periods, financial inventory being updated once per month, and various workloads over
systems.

3. Why did Montaigne’s management not undertake the initiative to align the companies to
adopt the Microsoft platform?

Since both companies were family owned, they wanted to avoid agitating suppliers, customers,
and employees. Not only this, but as long as the current IT support served their business, the risk
and cost of replacement were high.

4. Why did Montaigne’s Candy never introduce the other merged companies to each other?

They were all based in different cities. Gradually, they thought business processes and IT could
be improved at once.

5. Why was it necessary to have software that catered to multiple divisions?

Because this entails several benefits for all three divisions:

1. a) Greater visibility and control of the business, since it would facilitate decision-making
by managers and middle managers in each division, but the most important thing is that
there is visibility at a central level.
2. b) Greater productivity and competitiveness, since the outline would be made for the
three businesses, optimizing the use of available resources.
3. c) Better financial management because repetitive activities, operating costs, and much of
the administrative work would be reduced.
4. d) Greater security. Since the security, trust, and confidentiality of the information that is
stored will be greatly strengthened.

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2.2 Fishbone Analysis

3. Alternatives and/or Options

3.1.1 Employee Integration

M&A processes come into existence due to several motives and have different intentions for
various stakeholders. (Haspeslagh and Jemison 1991), while there are various motives, their
existence reframes the organizations IT, business and human management processes involved.
(Meglio and Risberg 2010). Within each division and corporate headquarters, the M&A process
was defining their business operationally and strategically impaired and failed to benefit from the
synergies it should have created. Our research teams feel that early communication is the glue
that holds everything together; the communication plan lays a foundation for the combined
organization’s future success. As the company did not make the organization introduce the
employees of each organization, there is a sense of alienation amongst them, leading to
unacceptance of the merger process and the agreement on a common system to integrate. We

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propose that initially, key stakeholders such as the high-level managers and reporting employees
are introduced to their respective business processes to further understand how they could benefit
from each other. It is obvious that each company has its own products; tacit knowledge from
each sales representative and managers as well. Employees from Lemon Candy share their
expertise in terms of manufacturing, recipe management and packaging with the employees from
Gummies; this could lead to strong tacit knowledge sharing which could be applied back to their
own respective organizations. Furthermore, it can reduce the system implementation cost and
duration as there will be chances that decisions are taken as per the decisions based on unity.

Pros
Strategic tacit knowledge sharing can occur.
Familiarity within employees leads to
smoother integration processes.
Strengthens company processes against other
competitors in the market.
Cons
Threat of Information- In order to win over
potential clients, there could be tensions
amongst sales representatives who could not
be willing to share their data over fear of loss
of clients.
Issues arising during requests from
employees-
Due to the nature of each business conducting
their operations differently, there could be
issues amongst employees who could have
some requests being treated differently with
the common argument presented of ‘that’s
how it is done here.’ This could impact
overall decisions in revamping the system
with tensions already rising within employees
Processes could be delayed; if employees
hold off requests in regards to either aspects
of finance or production or even purchasing.

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3.1.2 Develop an Intranet.

Intranet systems aim to support employees by fostering a shared culture and providing an
armada of optimistic elements to the business. For instance, Alima’s concern with adopting
either of the systems was that she wanted to reduce costs and workload on the employees and the
IT department wanted to integrate a system that was easy-to-maintain. Her biggest concern
aligned with measuring the total cost of ownership. This is where intranet systems can address
such issues with ease. Developing a merged intranet after it has been designed for both
organizations will have their flaws; higher-level managers can establish goals for the new
organization and the intranet. To elaborate further, Montaigne’s candidates can direct their
current organization plans towards producing a single corporate culture, through different
activities and materials which can be shared over intranet systems. This encourages familiarity
amongst business employees, creates positive employee experience and would aim to develop
standards and processes. Additionally, usage of intranet systems can give possible ideas to
management as to what their expectations could be from the model that would suit their
organizational needs. The inability to access customer information across divisions leads to the
loss of marketing opportunities for each unique product that was considered to grow business. As
well as, managing supplier bases at the company

Pros
Addressing specific concerns beforehand
purchasing or implementing a specific
software.
Access to multiple service providers; could
lead to cost-cutting as implementation costs
less but the services and maintained increase
those bottom line prices.
Variety of features can be trained upon using
documents, content management and learning
management as they are all available in one
shared location
Cons
Leads to lost productivity and frustration-
employees can respond negatively towards
systems that are not user-friendly
Since, the companies are based in different
cities. Employees would not be able to
socialize.
Customization and time can be stretched out,
especially if it the business faces difficulties
in having to select the features that are
suitable for their needs.

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4. Recommendation and Implementation

4.1 Tactical Issues - Short Term:

4.2 Lack of a Centralized Information System:

 In the short term, the absence of a centralized system for accessing and sharing
information among the three distinct companies poses operational challenges. Without a
unified platform, employees may struggle to collaborate efficiently, leading to potential
data silos and difficulties in accessing critical information. Immediate steps should be
taken to address this issue by either implementing a common system or improving data-
sharing protocols.

 Limited Knowledge Sharing: Effective knowledge sharing is crucial for organizational

growth and innovation. The lack of knowledge sharing among employees and
departments can hinder the organization's ability to leverage collective expertise. It's
essential to foster a culture of knowledge sharing and establish mechanisms to facilitate
information flow within the organization.

 Absence of Standardized Processes: Inefficient and non-standardized business processes

can lead to operational bottlenecks, increased costs, and reduced agility. Short-term
efforts should focus on identifying and standardizing core business processes to enhance
efficiency and effectiveness.

 Varied Business Processes: Each company operating as a separate entity with its own
business processes can lead to inconsistencies and inefficiencies. It's critical to address
these variations and work towards streamlining and optimizing business processes to
achieve consistency and improve overall performance.

 Employee Resistance to Merger or Acquisition: Employee buy-in is crucial for the

success of any organizational change, especially following a merger or acquisition.
Addressing employee resistance through effective communication, training, and change
management strategies is a short-term priority.

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 Operational Disruptions: Operational disruptions during critical go-live dates can impact
customer service and financial processes. Identifying the root causes of these disruptions
and implementing measures to prevent or mitigate them in the short term is essential for
maintaining smooth operations.

4.3 Strategic Issues:

• Lack of a Clear Strategic Vision: The absence of a clear strategic vision for the future
direction of the organization can result in a lack of alignment and integration among the three
companies. A well-defined strategic vision is needed to guide decision-making and ensure that
all efforts are directed toward common goals.

• System Alignment with Business Strategy: Determining whether to implement an ERP

system or adopt a best-of-breed approach is a strategic decision with far-reaching implications.
The choice should align with the broader business strategy and objectives, considering factors
such as flexibility, scalability, and the need for specialized functionalities.

• Sales Expansion: Expanding sales across all three companies and their respective
channels represents a strategic growth opportunity. It involves identifying synergies, cross-
selling opportunities, and market expansion strategies to increase revenue and market share.

• Increasing Market Share: To thrive in a competitive market, Montaigne's Candies needs

to focus on gaining a larger share of the market. This strategic objective requires comprehensive
market analysis, effective marketing strategies, and product innovation.

• Supplier Evaluation and Optimization: Supplier relationships play a pivotal role in the
supply chain. Evaluating and optimizing supplier relationships can lead to cost savings, better
negotiation leverage, and improved supply chain efficiency.

• Production Facilities Optimization: Optimizing production facilities, including potential

consolidation of inefficient facilities, aligns with long-term growth objectives. This strategic
initiative aims to improve production efficiency and reduce operational costs.

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• Distribution Chain Enhancement: A review of the distribution chain, including

warehouse operations, is necessary to accommodate the growing demand. Strategic decisions
regarding warehouse locations, technology adoption, and distribution logistics can impact
customer service and cost management.

• Centralized Data Warehouse: Establishing a centralized data warehouse is a strategic

move toward data-driven decision-making. It ensures that data is consistent, accurate, and readily
available for analysis, reporting, and business intelligence purposes.

• Alternative Procurement Sources: Identifying alternative sources for critical ingredients

like sugar and cocoa is a strategic risk mitigation measure. Ensuring a stable supply chain for
essential raw materials is essential to prevent disruptions in production.

Addressing the tactical issues is crucial for immediate operational improvements while tackling
the strategic issues will pave the way for long-term growth, competitiveness, and alignment with
the organization's goals and vision. Balancing short-term and long-term priorities is key to the
success of Montaigne's Candies.

Recommendatio Activity Who When

n
1. Implement a  Select an appropriate information Chief within 6
centralized system or ERP software. Information
months
information  Customize it to meet the Officer
system. company's specific needs. (CIO) and
 Ensure compatibility with Intranet IT
existing systems. Department.
 Test and deploy the system
across all locations.
 Monitor system performance and
make necessary adjustments.

2. Establish Identify suitable platforms for HR and Within 4

knowledge sharing (e.g., collaboration Knowledge
knowledge- months.
software, intranet). Management
sharing platforms Team.
Implement the chosen platforms.

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Create guidelines and procedures for

sharing knowledge.

Train employees on using the

platforms for knowledge sharing.

Encourage and facilitate the sharing of

information among employees and
departments.

Monitor and assess the effectiveness of

knowledge sharing.
3. Standardize and Conduct a comprehensive review of Process Address
existing business processes. Variations -
address, variations Improvement
Within 9
and critical Identify commonalities and areas for Team and months.
standardization and variations among
business processes the three companies. Cross- Standardized
functional Processes -
Develop standardized procedures and
workflows. Teams Ongoing with
Implement refined standardized milestones
processes across all divisions.
Provide training and resources to
ensure compliance.
Continuously monitor and refine
standardized processes.
4. Manage Identify key stakeholders and potential Change Ongoing with
sources of resistance. Management
employee milestones.
Team.
resistance Develop a change management plan.

effectively Communicate the benefits of

integration and change.
Provide training and support for
employees.
Address concerns and feedback
proactively.
Monitor employee engagement and

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address issues promptly.

5. Develop Identify potential operational Operations Within 3

contingency plans disruptions and risks. and Risk months.
for operational Management
Develop contingency plans for each
disruptions. Teams.
identified risk.
Test and validate contingency plans.
Establish communication protocols
during disruptions.
Train employees on following
contingency plans.

5. Monitor and Control

5.1 Financial
Once the financial information of the three divisions is merged, we will review the following
categories: profitability, liquidity, efficiency, valuation, and leverage; by analyzing the following
indicators:

 Revenue.
 Profit margin (net and gross).
 Current ratio, working capital ratio and quick ratio.
 Inventory Turnover.
 Total Asset Turnover.
 Return on Assets.
 Operating cash flow.

The objective is to increase profits with at least 12% of the profit margin verified quarterly.

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5.2 Customer Service

Although the three divisions currently have several clients, it is proposed to improve customer
service and increase brand awareness, in which clients from one division can be included in the
other two, with the objective of increasing sales, retaining our current clients, and creating new
ones.

To verify compliance with these goals, the following indicators will be reviewed quarterly:

 Customer acquisition costs.

 Lifetime Value of a Customer.
 Marketing qualified leads.
 Sales Qualified Leads.
 Follower Growth.
 Customer Retention.

In the end, we will be verifying that all our clients are satisfied with the entire range of brand
products and taking the necessary measures to improve the areas of opportunity found in this
area.

5.3 Internal Business Process

The business structure will be reviewed, and a mapping of processes and execution methods will
be established. The use of the new ERP system will be implemented, and collaborative planning,
forecasting, and refurbishment actions will be taken to meet the demand of our customers while
reducing the cost. To verify compliance with the above, the following will be reviewed:

 Mapping of organizational structure and processes

 ERP system implemented in the three divisions
 Monthly reports are generated in the system.
 Customer satisfaction surveys.
 Defined customer satisfaction metrics.

It should be noted that it must be verified that the system database is fully integrated, including
clients and suppliers, as well as all financial, legal, and operational activities of the three
divisions, adjusting it to the new organizational structure.

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5.4 Training

It is necessary to verify that the employees of the three divisions receive training in the use of the
system in addition to the processes and structure of the business, raising awareness of the
company's organizational culture. To do this, the following will be verified:

 Internal audit.
 Employee Evaluations.
 Employee efficiency.
 Employee productivity.

This is intended to ensure that each of the people who make up the organization has knowledge
of the objectives sought, the structure of the company, and the knowledge to use the new system.

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References

 Haspeslagh, P. C, & Jemison, D. B. 1991. Managing acquisitions: Creating value

through corporate renewal. New York: Free Press
 Meglio, O. & Risberg, A. 2010. Mergers and acquisitions--Time for a
methodological rejuvenation of the field? Scandinavian Journal of Management, 26,
87-95
 Mead, David., Docker,Peter., Sinek, Simon (2019). The Infinite Game, 27-31

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