This is a great case study published in Harvard Business Review. Drop a request if you would like to reference the article.
This paper was an assg for our Business IT class and can share the perspective that we viewed the company from circa 1988.
The case is fascinating on many levels. The IT solutions (TPS, MIS, and DSS) developed by Randy Fields, Stanford graduate of economics, were incredibly advanced for its time. The architecture and software became proprietary and were sold as solutions to other companies. Its success became a spinoff of Mrs. Fields, eventually Park City Group.
There is also the romantic family story of their partnership and entrepreneurial venture.
Additionally, it is interesting to focus on the results of the La Petite Boulangerie acquisition from PepsiCo and to observe the distinct roles played by Debbi, Randy, shareholders, and private equity firms.
Mrs. Fields' story.
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Sharing some questions and answers on IT and Mrs. Fields 'Cookies"
Background: Mrs. Fields’ Cookies were well established, well known cookies stores, which were spread out in a different states, as well as internationally. Because of their started principle “Baking great cookies”, they were achieving what they were looking for. Their business also run through the first two steps of economic cycle, mean to say expansion, prosperity. In the stage of expansion, business explodes dramatically, as result they were able to open lots of stores state-wise as well as internationally.
• Why did they take these actions?
Then it falls into the prosperity phase and earned the max point of the success, if it would keep continuing with same business then they would go with remain phase of the economic cycle: contraction, and recession, but in the main time, the acquiring LPB occurred which was need of change on business.
• What were Fields’ initial actions upon acquiring LPB?
The initial actions upon acquiring LPB was kind of suspicious for Fields, because their principle was going to change, their control system was going to change, and they should close lots of stores which could not take parts in acquisition. Of course, anybody will be in such dilemma when big change will take place in their business. Now the question can rise, they were in good condition before acquisition, why did they take these actions? “Business is to expand not staying where it was”. Randy wanted to form their business as corporate business, expanding their target customers, from cookies customers to bakery customers. Before their store was just for cookies, which was specified and narrowed down to the customer who likes cookies. But the LPB is the compeieting company for their stores, who were targeting all kinds of customers, providing cookies, soups, sandwiches etc this is an business prospective. In addition to the synergy of the storefronts, Randy can absorb most of the LPB administration into the existing Mrs. Fields MIS and Enterprise Resource Planning (ERP) processing. The Sales, General, and Administration (SG&A) cost savings alone will yield significantly higher profit margins than both companies are capable of separately. Those opportunities lead their business to acquire with LPB.
• Put yourself in the position of an LPB store manager at this time. What’s your view of this?
As an LPB manager, I would be proud to be as manager of such store who has long term strategy as corporate strategy: “Our Bakery Strategy”. It would quite hard in the initial to run the business because of the new policy, new rules and regulation and to present new approaches to the customers who were used to shop in Mrs. Fields Cookies but I would start business with lots of browsers which would explain about the expansion of Mrs. Fields Cookies with LPB, so customers would feel that they are in the same store with more choices. The information system will be more systematic under the Enterprises Resources Planning (ERP) system; administrative functions will be automated by so I can spend more time to store development, creating new sales and so on. Working as a manager of the LPB would be better then working as a manager of Mrs. Fields Cookies that’s because the career will develop in corporate environment rather than spending vacation time in a store. Mrs. Fields’ store management is a low-skilled, high turnover position, whereas LPB would have a more complex set of store management activities
• Debbi and Randy clearly see the LPB business as being similar to their own in terms of products, customers, management challenges, and so on. How do you see this?
I see LPB is quite different then Mrs. Fields Cookies. LPB hold wide area of the customers with more production lines for the customer. I don’t think there are more customer who doesn’t like cookies, but the desire and taste is different individually, so there are some chance that some customers doesn’t like cookies, but sandwiches, soups who can be customers of the LPB but not of the Mrs. Fields Cookies. And other difference was their strategic goal. Mrs. Fields Cookies had strategy of “Bake Great Cookies”, but the LPB had strategy “Our bakery Strategy”. One more difference between them is information system and administrative system. Mrs. Fields Cookies were in traditional management system that’s why they were paying for more administrative staffs with traditional information system, but LPB had ERP system which had automated system for most repetitive actions, and manager had more report generation job then administrative.
• How do you see the Fields' information systems being used at LPB? How "portable" are these systems?
Most of the software are customizable as the change in business, the only problem can occur when the business is totally changed like franchise to book store, gift store to restaurant, but in the case of Fields to LPB is the same kind of business, just the product lines are expanded, and the title. In this condition, the information systems being used by Fields’ can be used at LPB, just need to customize little bit. Information system is really dependent with the business process. If business process is different then it will hard to use the same information system. More than just integrating accounting systems, Mrs. Fields seeks to integrate very different products, management, and culture. The Mrs. Fields MIS architecture is scalable, commercial-off-the-shelf (COTS) equipment, but the software is highly customized to running the cookie business.
• What do you make of Randy’s explanation of the losses after the acquisition?
The expected greater profit generated by the combination stores, and possibility of opening new stores with those profit convince Randy’s explanation of the losses after the acquisition. He also convinced with expectation of the more stores.
• What do you think is going to be the future of LPB and its employees, including store managers, when Fields begins bringing in its marriage of management structure and information technologies?
The future of LPB and its employees seems to be good, because the Mrs. Fields’ Cookies was running in profit itself with its product just cookies, now they have broad scope and their target customers is expanded to the customers of sandwiches and soups too. The real business is applying the efficiency of automation and management systems to multi-location operations and eliminating the different overhead expenses, repetitive tasks which will increase the profit rate. It will be the business which is updated with the change of its business environment which will lead to the optimize profit with optimum utilization of the resources.
At last but not least, I think the acquisition is done in the right time for the Mrs. Fields’ Cookies which save those stores from the stages (contraction, and recession) of the Economic Cycle, which can make the business down from its profit margin. They might have to consider some of the challenges like two different scale skills of managers, software application customization, and information system review etc. which are normal changes when acquisition happen with the store.
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