Jacques Truman Ice Cream

Jacques Truman Ice Cream

I find this case to be a very interesting one, and have often times in my managerial career experienced similar conundrums. The base question for Jacques is this: are the areas of dismal performance a product of managerial incompetence or are there extraneous circumstances to blame for underperformance, and if so, to what extent.

        Jacques Trumen took over his father’s summer ice cream business in 2007 and like any son looking to make his own mark, embarked on an ambitious expansion plan. He had made good progress and by 2009 the company was market leader in eastern France northeastern Spain and northern Italy, Jacques had also planned to set up a year-round ice cream operation in Paris. Jacques had three main areas of concentration, Italy, France and Spain, for which he had three capable heads of department, with the head office overlooking the finances. His strategy had centered around market penetration of new specialty ice creams that had high grade ingredients and obviously yielded higher margins. Each fiscal year for the company started on the 1st of January and in preparation, each head of department was required to submit a profit plan that outlined the expansion strategy for each sector. Jacques used this plan as the basis for top level management meetings and made sure to thoroughly go through each plan from each region to narrow down new and lucrative investment opportunities and make sure that cash generated from operations was enough to account for them. In short, the profit plan was key to Jacques management technique.

        By and large the company overall had performed well, and this had been the trend since Jacques had taken over it seems. He tirelessly made trips to the various regions to keep a hands-on management approach even though decision making was ultimately decentralized. France had exceeded profit plan expectations with their profit before tax figures and its dynamic new manager who had risen from the ranks had not failed to impress. France’s ice cream sales were however padded by the fact that they transferred ice cream to Spain who struggled with new machinery. These transfers were regarded as sales, complete with manufacturer margins. That said, Jean Pinoux had negotiated with new vendors and suppliers and arranged distribution to the west coast of France rather successfully. Even though this took away from his time in other areas the sector, he made up for these short comings by perhaps paving the way for the Compagnie du Froid to perhaps branch into the distribution business. Whether Jacques would consider this part of the company’s future plans was yet to be seen but the initiative was commendable. Meanwhile Italy, under experienced manager Pierre Giraux was performing perfectly. This region exceeded profit plan estimations as well and the manager seemed to have a good grip on the market in spite of old machinery. While assessing this success we must take into account that Italy benefitted from hotter than usual weather. Spain however was not a similar story. Andreas Molas, who had grown the division from scratch had a pristine record of success up till 2009 when the Spanish division reported losses before tax and needless to say did not meet the profit plan expectations. Jacques main reason for introspection comes due to these less than adequate results. The reasons for this are two-fold, firstly there has been unfavorable weather in the sector that would see sales figures fall and secondly because new machinery that was bought failed to love up to expectations. Due to this, goods had to be transferred from another region and the transfer costs were born primarily by Spain. On the one hand the buck stops at the manager, on the other there are undoubtedly sometimes circumstances in which even the best managers cannot avoid failure, Jacques had to figure out which of these two lines of thought to go with.