Reference no: EM133560699

Case Study: MERRITTSBAKERY by Steven L. McShane, University of Newcastle (Australia)In 1979, Larry Merritt and his wife, Bobbie, bought The Cake Box, asmall business located in a tiny 450 square-foot store in Tulsa,Oklahoma. The couple were the only employees."I would makecakes and Bobbie would come in and decorate them," Larry recalls.Bobbie Merritt was already skilled in decorating cakes, whereasbaking was a new occupation for Larry Merritt, who previouslyworked as a discount store manager. So, Larry spent hours pouringover baking books in the local library and testing recipes throughtrial-and-error experimentation."i threw away a lot of ingredientsthat first year" he recalls. Sales were initially slow. Then, a doughnut shop around the cornerwas put up for sale and its owner made it possible for the Merritts tobuy that business. They moved to the larger location and changedthe company's name to Merritt's Bakery to reflect the broader varietyof products sold. The Merritts hired their first two employees, whoperformed front store sales and service. Over the next decade,Merritt's Bakery's physical space doubled and its revenues increased13-fold. The company employed 20 people by the time it made itsnext move. In 1993,Merritt's Bakery moved to a 6,000 square-foot locationacross the street. The business became so popular that customerswere lining up down the street to buy its fresh-baked goods."Thatlooks like success to a lot of people, but that was failure," saysBobbie Merritt. The problem was that the couple didn't want todelegate production to employees, but they couldn't produce theirbaked goods or decorate their carefully crafted cakes fast enough tokeep up with demand. "We felt like failures because we had to workthose 20 hours (per day)," she reflects. At some point, the Merritts realized that they had to becomebusiness owners and managers rather than bakers. They devised aplan to grow the business and drew up an organizational structurethat formalized roles and responsibilities. When a second Merritt'sBakery

Discussion Questions

1. How have the division and coordination of labour evolved atMerritt's Bakery from its beginnings to today?

2. What form of departmentalization currently exists at Merritt'sBakery? Would you recommend this form of departmentalizationto this company? Why or why not?