Comparison of Old Town and Pizza Hut

White Cafe Sdn Bhd (Old Town) founded in 1999, made history when the company became the first and pioneer White Coffee Producer to manufacture and launch the famous Malaysian Ipoh White Coffee as a 3-in-1 Instant Blend. The Company single-handedly captured the original authentic taste of an otherwise localized white coffee, turning it into a mobile commodity and become one of the fast moving consumer good (FMCG ), capturing the South East Asia market. As the owner of the well-known OLDTOWN Brand, the company makes a great effort to be Malaysia’s Leading White Coffee producer with profitable growth through a combination of organic growth coupled and strong aftermarket business.

In Wichita, brothers Frank and Dan Carney opened the first Pizza Hut restaurant on June 15, 1958. They had been approached by the owner of a small building who wanted a nice neighborhoods business, and had read the Post’s article about pizza. Pizza Hut is incorporated and owned her first franchise unit in Topeka, Kansas in 1959. After 6 years, “Putt-Putt to Pizza Hut” musical jingle is developed for Pizza Hut’s first television commercial. In 1967, A Pizza Hut restaurant was built in five days by franchisees at the Oklahoma State Fair. World’s largest pizza is baked and served at the grand opening of the Fort Worth, Texas Pizza Hut. 2 years later, Pizza Hut entered the International market with the opening of the first Pizza Hut branch in Surrey, B.C., and Canada. Pizza Hut serves a million people a week at its 310 locations.

Analyze

In 2005, old town white coffee company has launched of the first food and beverage (F&B) outlet. Today, old town has open 135th outlet over the Malaysia. In this shorter period, Old town was growth and expansion their business over the country even the international such as Singapore. The company goal is “To let everyone enjoy every sip of authentic Malaysian Ipoh White Coffee, “anytime, anywhere” (Web: http://www.oldtown.com.my/). Old town want to focus on every area in Malaysia, thus, everyone in the country can enjoy every sip of authentic Malaysia Ipoh White Coffee. Therefore, company was used the geographic structure (Appendix 1) to run their business. The first layer of organization chart is Operator Director who is responsible to set the organization goal and define planning. In second layer, the organization involve of Assistance operation Manager, support Assistance, area manager and assistance manager. The Assistance operation Manager is to assist the operation director managing and oversee the operation in every area. In addition, area manager is responsible for a number of outlets in each area. Work closely with outlet managers to plan, co-ordinate, maintain and develop each outlet performance. The last layer involves restaurant manager, assistance restaurant manager, supervisor, assistance supervisor and worker. The missions in this layer are to controlling the operation of the outlet and make sure the restaurant provide good services to customer.

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Pizza Hut is a globalization cooperates which was found in 1958. The organization has their own strong organization structure in order to compete with other competitor. Pizza Hut used the functional structure (Appendix 2) to oversee and manage their global business. The Division Vice president is in the top of the organization hierarchy and is responsible for the entire organization. The middle level of the organization involves Finance, Franchise development, delivery development, real estate, facility development and etc. Those departments manager will directly report to the division vice president and provided leadership on strategic and operational issues across the division. Beside that, market manager and area manager are at the second line management level. They are responsibility to implement the strategies and delivering the profit to the organization. Furthermore, the first line management level involves those people who are work at outlet such as unit manager, shift manager, production employees, cross-trained employees and service employees. The mission of this level people is to provided good services to the customer and the outlet manager has responsible to motive the subordinate in order to achieve the organization goal.

Compare and Contrast

Old Town White Coffee and Pizza Huts are from the food and beverage (F&B) industry. Both companies are operating in Malaysia and providing a good customer services in each outlet, but, both have different organization structure to manage and oversee the work of employee. We can compare and contrast both companies operation by applying several concepts such as work specialization, chain of command, span of control and etc.

Work Specialization. Since the old town white coffee company start to growth and expansion their company in this few years, therefore, they do not specialized the task into different department. Old town only separate the work into different area such as Kuala Lumpur, Ipoh, Johor and etc. Each area has their area manager respectively. The area managers will perform the marketing and promotion of the business, implementing the strategy and monitoring the operation within the outlet in their specific area. In addition, the area manager also training, motivate and developing the management staff. Pizza Hut has separation the task into few departments such as finance, Franchise development, facility development, human resource and etc. Each department has their manager, assistance manager and employees. They will perform the tasks relevant to their specialized function. Beside that, the work also specializes in each restaurant which consists of manager, shift manager production line, cross-trained line and service line.

Chain of Command. Both companies practice unity of command. Each employee is only report the task to one supervisor. From the old town white coffee organization chart in Appendix 1, each restaurant managers report the performance of the restaurant to their area manager, who in turn report to the assistance operation manager, who in turn report to operation director. According to the research by J.Kendall Middaugh, II II from Wake Forest University, he posted that the pizza hut’s restaurant manager report to the area managers who turn the report to the market manager. The market manager will report the performance of each area to the vice president operation who will report to the division president. Other than that, Pizza Hut Company has work specialized, thus, each department managers will report the performance of the department to the division vice president.

Line versus Staff Authority. Both companies have a same line function activity which is provide a service and food to the customer. Staff authority in old town white coffee is only the Area manager. He provided the advice to the restaurant manager. Beside that, the line staff of old town is same as pizza hut which is work under the restaurant manager and provided the service and selling the food to customer. Furthermore, in Pizza Hut organization, vice president operation, manager of the departments are staff authority. They provided the advice to the line staff and do not contribute to creating or selling the organization’s product but instead support line activity. The line staffs of pizza hut involve those people who work under the unit (restaurant) manager. They provided the services and selling the pizza hut to the customers.

Span of control. The Old Town white coffee has a wide span of control which is also known as flat structure. The company has 5 subordinate works under the assistance operation manager. In each area, the area manager/assistance area manager will supervise their area respectively and they will direct report the performance of the area to the assistance operation manager. As compare to the old town, the organization chart of pizza huts can consider as a tall structure which has a narrow span of control. In this organization, 9 subordinates are work under the division president. In each of the department consist of a manager and assistance manager. They will direct report to the division vice president. In addition, a market manager will directly report to the vice president operation whereas the area manager is work under the market manager. He/she will direct report the progress to the market manager. Beside that, 32 subordinate area work under the restaurant manager who will direct report to the area manager. The Old Town White Coffee is an organization smaller than Pizza Hut which has already have globalization. Therefore, old town only used a flat structure which will easily to communicate and coordinate. The organization chart of the pizza hut is considered as a tall structure which usually is more formal but weak in communication and decision making.

Advantages and Disadvantages

1) OLD TOWN

There are many foods and beverage (F&B) Company using the geographic organization structure, this structure can separate the work easily into different area and will helps the area manager as they can focus to their specific area. Due to the work specialization, this will help them easy to train, monitor and motivate their employees with a better plan. In addition, experience gained in a regional division is often an excellent training for management at higher levels. OLDTOWN had decentralization to local or regional units, by that the decision making are faster by the area manager, when the small problem occurs in their specific area, area manager can respond faster since decision making are faster and improve the performance. The vast areas of Malaysia exhibit very different cultural, ethnic diversities and economic activities, this will affect different area needs and demand. With a good chain of command, OLDTOWN able to respond to market changes by knowing the local market situation and implement their competitive strategies.

Separation work to each area division will increase the operating cost and duplication of resources because each division must have its own functional specialists, and production facilities. This problem will lead to isolation of specialists since the functional specialist cannot be shared from other area. OLDTOWN is a fast growing food and beverage Company in Malaysia, but this geographic organization structure will definitely discourages company expansion and many problems will occurs. These problems are hard to tracking and evaluate by top management because all the problems are only reported to the area manager. Beside that, this also occur a lot of conflicts between area managers such as conflict between each location’s branches. Sometimes, the conflict cause by compete for organizational resources between area manager.

2) Pizza Hut

Functional organization structure grouping coordination of work according to managers and employee expertise and the resources they use to perform their jobs. This will lead the standardization to the company since each department focuses on their work respectively. Beside that, the organization able to ensures that every branch can maintain the same standard with others. In addition, superiors and subordinates can share their common expertise and experience. With this kind of control, managers will be easier to train their employees within functional area and save a lot of time. The advantages of grouping will increase the efficient use of resources, provide high-quality technical decision making and increase performance. This will enhance the company growing especially to the international franchise company. Furthermore, by the existing of line staff and vice president operation, Pizza serves their customers more efficiently without conflict to each other.

There are 34,000 franchises in 100 countries; the coordination of work across functional boundaries may become a difficult management challenge to the PIZZA HUT. This tall structure of organization will lost the control of their employees since difficulty of monitoring by the functional manager and weakness of intercommunion and decision making. In the realistic world, there exist a lot of external environment affect to the organization, but PIZZA HUT had a slow response to internal changes since decision authority is located near the top of the organization and slow down the decision making. As PIZZA HUT grows in the size and spreads to multiple geographical locations, they cannot respond for the customer needs and demands in short time and this will cause a lot of loses of customer.

Recommendation

A simple geographical structure is definitely not fit to OLD TOWN nowadays. As OLD TOWN growing faster and faster, different of departments such as HR, Financial department should be developed in order to increase the work efficiency. Soon, every department can contribute in their own field so that the conflicts would not exist anymore. A unique market department, or in other words, a survey department can be developed out to oversee the market needs and response quickly. On the other hand, the outlet in each area is getting more and more, therefore, we suggest that old town should set a assistance area manager in order to reduce the work load of the area manager.

A duplication of work fields for each position can be viewed in the organization chart of Pizza Hut. For instance, there are 2 market managers who take responsibility in the similar field that actually causes waste in resources. As a suggestion, 1 particular manager is enough for that position so that there would not work across and occurs conflicts. Since the organization of Pizza Hut is tall, problems in communication and decision making always occurs. As Pizza Hut has a tremendous number of branches in over the world, decision should be make fast. Due to that, a flat type of organization is needed to counter this problem. Similar to OLD TOWN, Pizza Hut should develop a market department to fulfill the market demands. As we mention early, each restaurant has 3 shift managers to implement the same job. We would like to suggest that, the number of shift manager should be reduced. As we know that, the service line is very important to increase the reputation of the pizza hut. Therefore, company should build a service department to train the worker to become more effectiveness and efficiency in order to provide a good service to the customer.

Conclusion

The purposes of this report are comparing and contrast two similar companies structure which can be divided into several concepts such as work specialization, chain of command, line versus staff authority and span of control. From the analyze of the two company, we found that both companies have different organization structure to manage and oversee the work of employer, which the Old town used geographic structure to run their business Pizza Hut used the functional structure to oversee and manage their global business. .

As the result of the compare and contrast, we found that there are many problems discourage Old Town expansion. We also found that Pizza Hut had a slow response to the external and the internal environment which will bring a lot of loss. To overcome this problem, we had suggested that Old Town and Pizza Hut should develop a survey department out to oversee the market needs and response quickly. Even though both companies had a good success in the Food and beverage, but they still need to a lot of changes to compete in the market.