A Case Study On
TOP STAR BAKERY
By:
GROUP 3
Arienda, Shane
Bernardo, Crisza Marienella
Manahan, Tricia
Paraiso, Gee-lyn
Zafra, Vincent Paul
CASE CONTEXT
In October 1975, Top Star Bakery was established as a Nacida-registered cottage
industry engaged in the production of bakery products. Eleven years after, Top Star
entered into a medium-term contract with a local hamburger chain in 1986 and has grown
ever since, with an expansion program due to high demand to triple its production output.
The management of Top Star has been paternalistic. As the bakery started as a
family business, the employees are close to the employers and most of the workers are
related to each other. Some were even descendants of the original employees. Labor
turnover is low because of this and employees are enjoying various benefits.
On 1982, the then production manager Angel Cruz started a system of
compensation that avoided the payment of overtime. When one employee is absent, his
work is divided equally among those present and so is his salary. Before it was
implemented, the employees could adjust their working time by either slowing or rushing
their movements. With the implementation of this scheme, the management could control
the direct labor costs without spending too much time supervising the workers.
When Manny Bautista was assigned as production manager, many workers
complained that the absentee’s salary should not be shared equally because there are
others who don’t share in the extra tasks. The workers suggested that they be paid hourly
for their overtimes. Bautista agreed with this but was also concerned about not being able
to control direct labor costs. He assessed that even if twenty five percent of the workers
were absent, the target output could still be achieved and he realized that the production
section was over-staffed.
Then on May 2, 1987, Top Star accepted an order for 20,000 pieces of buns to
bake. Bautista became furious when forty percent of the workers didn’t turn up and the
remaining employees would not consent to work overtime to finish the production.
Because of this incident, Bautista was convinced that the overtime-sharing scheme
Unable to
produce
customer
requirement
Workers
boycott
operation
Low job
satisfaction
Defiance to
new
leadership
style
should be ceased. He decided to enforce a new system. To implement it, he thought of
setting targets for each employee and a regular evaluation of their performance. Also, in
order to achieve effective control over direct labor costs, Bautista planned to terminate
roughly twenty percent of the employees
PROBLEM STATEMENT
1. Problem Flow Diagram
2. Problem Statement
What is the best course of action that Mr. Manny Bautista shall take in order to
introduce his proposed system and what other corporate changes must he implement
to foster workforce productivity and effectiveness?
OBJECTIVES:
1. To come up with a feasible strategy that would be both beneficial to the workers
and the company.
2. To successfully enforce this new system, make sure that employees understand
its importance and prevent possible outrage within the workforce
3. To make plans for a new scheme for the company’s system with regards to
handling employees; thus motivating them to work
4. To effectively monitor and control the direct labor costs without compromising the
production output
ANALYSIS OF RELEVANT CASE FACTS
A. External Environment Analysis
With regards to their primary customer, Top Star Bakery is providing “sesame seed
buns” to a local hamburger chain that had a total branch network of more than 20 stores
in 1987. This customer became the main contributor to the baker’s growth and has been
a critical factor on the expansion decisions of the company. Seeing with the status quo, if
Top Star Baker fails to meet its requirements, the relationship between these parties may
sever and the local hamburger chain may opt to look for another supplier. This will be a
big loss to the company.
B. Internal Environment Analysis
1. Company Analysis
As mentioned in the case context, the culture of Top Star Bakery is that the
management is seen by workers as paternalistic or compassionate to them. The workers
are accustomed to this. Any changes in their treatment may create tension and create
violent reactions among them.
2. Management Quality and Style
Leadership
Principle
Believed that
employees should
be coerced; Task-
performance
behavior
Believed in building
positive
interpersonal
relationship with
employees; Group-
maintenance
Manny Bautista
Angel Cruz
