CASE1.3New Harvest Coffee Roasters Brews Up Fresh BusinessIf you’re one of those people for whom the scent of freshly roasted coffee is irresistible, youhave something in common with RikKleinfeldt. Kleinfeldt, the co‐founder and president ofNew Harvest Coffee Roasters, is a self‐proclaimed coffee fanatic. He dwells on the aroma andflavor of coffee. He measures the freshness of roasted coffee in hours and days, instead ofweeks and months. Kleinfeldt started New Harvest Coffee Roasters ten years ago as a way topay homage to fresh coffee and build a business around it.Kleinfeldt observes Starbucksâ tremendous success at creating gathering places for people toenjoy coffee and teaâas well as baked goodsâin a relaxed social atmosphere. But he alsonotes with humor that, although cafes and coffee bars were thriving a decade ago, thesepopular hang‐outs âweren’t really about coffee. They were about smoothies and cookies. Ithought, maybe it’s time to get back to basics and roast some coffee.â Kleinfeldt recalls thatfriends and colleaguesâfellow coffee fansâfelt the same way. He believed that he had a basisto start a business. âWe’re coffee people,â he explains. âThere is a like‐minded group ofpeople.âKleinfeldt also points out that the movement toward locally grown or produced foods has beena big help in establishing and building support for his business. âThe idea of local coffee startswith the local roaster,â he explains. Although the coffee beans themselves are grownelsewhereâmostly on farms in Costa Ricaâthey are roasted at New Harvest’s facility inRhode Island, where the company is based. âFreshness is a huge factorâ in a good cup ofcoffee, says Kleinfeldt. âOnce it’s roasted, it’s good for about two to twelve days, which is agood incentive to buy local.âBuying local is exactly what retailers and coffee shops like Blue State Coffee do, creating acollaborative relationship with New Harvest. Alex Payson, COO of Blue State Coffeeâathriving shop in Rhode Islandâobserves that most of his customers live within a five or ten ‐minute walk from his business. Blue State customers are educated about the coffee they drink.âThey want to know,â says Payson smiling. âWe connect with our coffee farmers. Ourcustomers ask about the story behind our coffee,â including farming practices and workingconditions. Payson and his colleagues from New Harvest have traveled together to some of thecoffee farms in Costa Rica that grow the beans they purchase. In fact, loyal customers canview the progress of trips like this on New Harvest’s Facebook page.Relationships with companies like Blue State Coffee as well as with consumers are the basisfor New Harvest’s growth as a business. âWe need strategic alliances,â says RikKleinfeldt.âBlue State is a great example of that. âThey buy into what we’re doing and we support whatthey are doing. They collaborate with usâwhat’s good for Blue State is also good for NewHarvest.â Blue State educates its customers and employees about the benefits of buying from alocal firm like New Harvest, which in turn works with certified organic, free trade growers.When Blue State’s workers are able to discuss their products knowledgeably with customersâincluding where and how they are grown, harvested and roastedâa relationship is developed.Sharing activities, comments, news, and anecdotes with customers, retailers, and coffee shopsthrough social media such as Facebook and Twitter allows New Harvest to broaden its basewithout spending more dollars on marketing and advertising. These connections also put apersonal face on the company and allow New Harvest to gain important knowledge about theviews and preferences of its customers. In addition, they provide valuable opportunities toshowcase some of the company’s work in the community as well as its support fororganizations such as the Rainforest Alliance and New England GreenStart.âOur mission is to be the leader in our region in developing the palate and expectations ofcoffee drinkers, in order to create a permanent market for the coffee produced by passionateand skilled growers,â states the New Harvest Web site. For RikKleinfeldt’s company andcustomers, coffee is much more than a hot cup of joe in the morning. Coffeeâorganicallygrown, freshly roasted, and served locallyârepresents a sustainable way to do business.Questions for Critical Thinking1Give examples of each of the four factors of production that New Harvest must rely on to be. a successful operation. How does each contribute to the firm’s success?2.Visit New Harvest’s Facebook page. Note specific examples of the ways in which the firm isusing social media to manage its relationships.3RikKleinfeldt notes the importance of strategic alliances with firms like Blue State Coffee.. Describe how you think New Harvest benefits from alliances with not‐for‐profitorganizations such as Rainforest Alliance, New England GreenStart, and Rhode Island PBS.4New Harvest builds much of its reputation on its efforts toward environmental sustainability.. How does this reputation affect its relationship with consumers?Sources: New Harvest Web site, http://www.newharvestcoffee.com, accessed August 18,2010; Blue State Coffee Web site, http://www.bluestatecoffee.com, accessed August 18, 2010.Copyright © 2011 John Wiley & Sons, Inc. All rights reserved.CASE9.3Kimpton Hotels: âOur Employees Are Our BrandâThe hotel and restaurant industry caters to its guests, but it has always had a reputation forbeing somewhat inhospitable to its employees. Traditionally, hotel and restaurant workers putin long hours for low pay and little or no recognition; they’re the invisible hosts who fluff thepillows and sweep away crumbs. But Kimpton Hotels is setting a new example by treating itsemployees as something better than family: they are, in many ways, business partners.Kimpton Hotels was founded in 1981 by Bill Kimpton, an investment banker with a vision forboutique hotels: small, luxurious hotels with impeccably intimate service and gourmetrestaurants. Today, Kimpton operates 50 hotels and restaurants around the country, eachbeautifully designed and furnished. âBut more than that,â notes COONikiLeondakis, âthepeople really separate usâ from other hotels. As COO, Leondakis knows first‐hand thedifference at Kimpton. Leondakis talks about her company’s full‐blown commitment toempowering employees to make decisions, to take part in running the business, to grow asprofessionals. âThe employee of today wants more and expects more, and is not willing just tobe a servant, loyal worker, or soldier,â she says. Leondakis is proud of that fact and of thearmy of top‐flight employees and managers who work at Kimpton’s various locations.One of those managers is Peggy Trott, the general manager of the Kimpton Hotel Palomar inPhiladelphia. Trott explains how Kimpton empowers its employees. âKimpton wants eachgeneral manager to be an entrepreneur,â she says. âThey want you to operate your hotel as if itis your own business. So there’s a lot of leeway.â While some managers might argue that thisputs undue pressure on them to perform as business owners, Trott views the challenge as anopportunity. She notes that the attitude toward empowerment travels from the top down in theorganization. She says that each of her employees is charged with being a hero every day,especially when it comes to guest service. If an employee is acting on behalf of a guest, thenhe or she is free to make the decision on the spot.âI have high expectations, but I think that when you give people high expectations, they rise tothe occasion,â says Trott. For example, if a housekeeper sees that one of her guest rooms ishousing a family of two parents and two children, the housekeeper is expected to stock theroom with extra towels instead of waiting for the guests to call the front desk requesting moretowels. No matter how large or small the task might seem, âWe expect people to be self‐leaders,â notes NikiLeondakis. âWe expect employees to use their heads.âBecause each of the 50 Kimpton hotel and restaurant properties is unique to its location andlocal population, Kimpton actively recruits employees with diverse backgrounds andqualifications, then gives them the authority to serve their guests as they see best. Individualityis nurtured rather than squelched. NikiLeondakis observes that, because her employees comewith a wide range of experience at different locations in the hospitality industry, sometimes itis difficult to get them to leave behind their previous assumptions about their role as hotelworkers. âThe biggest challenge with employee empowerment and communication is thatwe’re all products of our past,â Leondakis says. New employees often have to be retrained tothink outside the box, make decisions, and ârock the boat,â as Leondakis puts it.The results of this retraining toward empowerment have not gone unnoticed. Kimpton Hotelsconsistently win awards for service, and the group has received many accolades for itsapproach to human resource management, including a recent award from the Human RightsCampaign for âWorkplace Equality Innovation.â In addition, Kimpton is regularly named toFortune’s list of â100 Best Companies to Work For.âRecent praise from the industry publication Hospitality Design included a statement fromKimpton CEO, Michael Depatie, crediting NikiLeondakis with much of the company’s HRsuccess. âNiki has an extraordinary ability to connect with people, from guests she meets onthe road to each and every one of our employees,â said Depatie. Leondakis, managers likePeggy Trott, and the entire staff, embody their company’s assertion that âOur employees areour brand.âQuestions for Critical Thinking1Give three specific reasons why empowerment is key to the success of a firm like Kimpton. Hotels. How might this distinguish it from other hotel companies?2.Select the concept of either a problem‐solving team or a self‐managed team. How might thisteam function at a Kimpton hotel? Who might be on the team, and what role might it play inthe running of the hotel?3Give an example of a situation in which informal communication would function well. among empowered employees at a Kimpton hotel.4Currently all Kimpton hotels are located in the U.S., which is a low‐context culture. If the. firm decided to open a hotel in a high‐context culture such as Japan, how mightcommunication between staff and guests differ?Sources: Kimpton Hotels & Restaurants Web site, http://www.kimptonhotels.com, accessedAugust 22, 2010; âWhy Work for Kimpton?,â http://www.imkimpton.com, accessed August 22,2010; Sam Guidino, Mike Desimone, Jeff Jenssen, Lynn Alley, âKimpton Takes Philly,â WineSpectator, July 31, 2010; http://www.winespectator.com; âKimpton Hotels Aim for 100Percent Green Seal Certification,â GreenerBuildings, March 31, 2010,http://www.greenbiz.com.Copyright © 2011 John Wiley & Sons, Inc. All rights reservedCASE 10.3 Kimpton Hotels Puts Green Initiatives to WorkIt’s one thing for a company to talk about green initiatives; it’s quite another for the firm to putthose initiatives into practice. Kimpton Hotels & Restaurants began putting green initiatives towork in its hotels and restaurants nearly thirty years ago, long before these practices becamepopular. Of course, it’s the operations function of the business that implements this type ofplan; it’s the hotel manager, the dishwasher in the restaurant, the housekeeping staff, the frontdesk clerk. âHow we do what we do defines us,â observes NikiLeondakis, COO of KimptonHotels & Restaurants, which runs 50 boutique‐styleluxury hotels and restaurants across theU.S.Although Kimpton began its green practices long ago, in 2005 the company launched acompany‐wide program called EarthCare in order to standardize these practices across all ofits hotels and restaurants. Frank Kawecki, director of operations for KimptonRestaurants in theNortheast, recalls that Kimpton’s green efforts started first in the restaurants with the chefs,then spread. When the EarthCare program began, the company asked for volunteers from eachproperty who were devoted to the green effort because they were already committed to theidea and could communicate best between management and staff. Volunteers ranged frombartenders to general managers who were willing to meet once a month. One of the firstinitiativesâwhich came from restaurant serversâwas to eliminate imported bottled water,shifting instead to locally bottled water and the use of recycled water bottles.As EarthCare has expanded throughout the company, standard guidelines have been set fornearly every facet of the firm’s operation. Home office materials and procedures includeshifting to online publication of many documents; using post‐consumer recycled paper andeco‐friendly inks for those documents that are printed; making hotel key‐cards from recycledplastic; offering continuous education in green initiatives for staff, and more. At the hotelsthemselves, all hotel in‐room materials and bills are printed on recycled paper; phone booksare offered by request only; all plumbing is water‐efficient; lighting is LED or CFL, andsubject to motion sensors; rooms are stocked with green‐certified linens and towels; guestroom soaps are made of natural ingredients, and carpet cleaning is done with nontoxicproducts. If the list seems endless, it nearly isâand the complexity of the operationsmanagement required to implement standards such as these is daunting.Waste management is a category unto itself, with hotel and restaurant‐wide recycling andreuse of everything from cardboard and paper to batteries and computers. Restaurants inparticular present a huge challenge. âThere’s an enormous amount of waste from a lot ofrestaurants,â observes Frank Kawecki. âA lot of it can be composted, recycled, or reused.There can be a 40‐percent savings in waste removal. Waste removal was traditionally a fixedexpense that we have manipulated,â through EarthCare. In addition to reducing waste andenergy use, Kimpton restaurants purchase and serve as many certified organic products aspossible, ranging from local produce and seafood to coffee, tea, and wine.Saving the planet can be expensive. Running a business incurs costs as well. One of thechallenges of implementing the EarthCare program is monitoring costs. âGreen efforts can’tcompromise the experience for our guests and it can’t cost our shareholders more money. If wego out of business, saving the planet as hoteliers goes away,â notes NikiLeondakis. âSo thatpremise was very good in helping us decide what we would tackle firstâwater savings,energy savings.â Whatever is good for the planet has to be good for the bottom line. One waythat Kimpton Hotels meets this goal is by looking at ways for certain costs to off‐set eachother. If purchasing recycled paper costs more, there might be a way to find savings in anotherarea. âWe put measurements on all of our efforts to see what impact they have on the bottomline,â says Leondakis. âWe’ve still been able to say that it saves us money.âRecently Kimpton Hotels announced its plan to seek third‐party Green Seal certification on all50 of its properties; ten properties have already been certified. Green Seal certificationinvolves an application process and evaluation similar to LEED certification, which thecompany is also seeking for its new or renovated properties. âIt will be an ongoing work inprogress forever,â predicts Leondakis. But Kimpton Hotels has a head start.Questions for Critical Thinking1Location is certainly a production factor for Kimpton Hotels & Restaurants, which are. located in cities such as New York, Los Angeles, Boston, Chicago, and Seattle. Whatlocation factors might Kimpton managers consider when thinking about whether to acquireor build a new Kimpton hotel and restaurant?2.According to the EarthCare program, what factors might a Kimpton restaurant chef ormanager consider when selecting suppliers?3A daily staff meeting at a Kimpton hotel can be considered part of production control,. contributing to the smooth running of the hotel. Who might attend such a meeting? Whatkinds of topics might they discuss?4Quality is top priority at Kimpton Hotels & Restaurants. What steps can a Kimpton hotel. manager take to balance quality and the initiatives of the EarthCare program?Sources: Kimpton Hotels Web site, http://www.kimptonhotels.com, accessed August 22, 2010;Matt Courtland, âEnvironmental Mission Statements: A List of Hotel Sustainability Policies,âEnvironmental Leader, March 18, 2010, http://www.environmentalleader.com; âKimptonHotels Aim for 100 Percent Green Seal Certification,â GreenerBuildings, March 31, 2010,http://www.greenbiz.com.Copyright © 2011 John Wiley & Sons, Inc. AllCASE 10.2 Zappos: How Not to Get Zapped by Customer ServiceIf you like shoes, you’ve heard of Zappos. Perhaps you’ve ordered a pair (or two or three) fromthe popular Web site, taking advantage of the free shipping and free returns. Tony Hsieh, CEOof Zappos, wants you to be happy. He wants to you be happy with your shoes, and if you’renot, he wants to make returns easy for you. This is because he wants you to come back andorder more shoesâwhich you probably will. Hsieh believes that the best way to attract andkeep customers is to âwowâ them with customer service. It’s a formula that worksâZapposreports that nearly 75 percent of its business comes from repeat customers.Although Zappos is now owned by Amazon, and has also grown to offer apparel, accessories,and other products, the company’s commitment to customer service has not changed.Delivering top service, which includes fulfilling and shipping orders as quickly as possible, isa significant part of Zapposâ production function. While Internet and other computertechnology helps speed delivery and turnaround time, it also sets the bar higher than everbefore. One survey recently revealed that consumers would be willing to pay nearly 11 percentmore for superior customer service at online shopping sites. âDue to the seemingly distant andremote nature of online shopping, it makes sense that consumers would pay a higher premiumto have the comfort and peace of mind that they will be taken care of in the case of a seriousquestion, concern or problem,â concluded the survey.Customer service is also an investment in quality. Zappos currently has a Customer Loyaltydepartment staffed by 380 employees whose job it is to communicate among the differentdepartments of the company and with customers. The customer loyalty team interfaces withthe resource desk, order verification (anti‐fraud team), quality assurance, kaizen (continuoustraining), and e‐mail/live chat, along with other departments as necessary. Customer loyaltyteam members have the authority to send individual customers personal notes or requestflowers for a wedding or anniversary celebration. They don’t need to ask permission to issuerefunds or coupons or to give out their contact information. At Zappos, the outlook is thateveryone is a customer and should be treated with respect.Constant improvement is also part of the company culture. âLet’s take our learnings andimprove, constantly,â says marketing chief Aaron Magness. âIf we rest, we’ll be passed by thenext more hungry business.â Tony Hsieh agrees, adding that it is necessary to embrace change,recognizing opportunities in the industry and the marketplace. The formula must workâZappos rakes in more than $1 billion each year selling shoes online to customers who haven’teven tried them on to see if they can wiggle their toes.Questions for Critical Thinking1Explain how customer service fulfills a significant portion of Zapposâ production function..2.What kind of firm might Zappos use for benchmarking? Why?Sources: Sean Smith, âWhat Can Zappos CEO Tony Hsieh Teach You About Online BusinessSuccess?â Power of More, April 19, 2010, http://powerofmore.net; âZapposâ Customer ServiceDraws Raves in a New Report,â Internet Retailer, March 22, 2010,http://www.internetretailer.com; Brandon Gutman, âZapposâ Marketing Chief: CustomerService is the New Marketing!â Fast Company, March 15, 2010,http://www.fastcompany.com; Eric Friedman, âZappos and the Continued Power of CustomerService,â Marketing, March 12, 2010, http://www.marketing.fm; Graham Charlton, âQ&A:Zapposâ Jane Judd on Customer Loyalty,â Ecoconsultancy, November 4, 2009,http://ecoconsultancy.com.Copyright © 2011 John Wiley & Sons, Inc. All rights reserved.CASE 11.3 Zipcar and UNH: Customer‐Driven MarketingWhen you’re a college student, getting around campus (or off‐campus) can sometimes be achallenge. You can walk. You can ride your bike or your skateboard. But when rain ispummeling your backpack or when you have to carry that heavy box of marketing flyersacross campus, you wish you had a carânot to mention if you want to head off‐campus for aweekend road trip. So you decide to bring a car to campus, but discover that you’re forkingover several hundred dollars for a parking permit and you can’t find a place to park anyway.Then there’s the expense of gas and insurance, and the nattering of friends who want a ride orwho want to borrow your carâjust for an hour or an evening. Depending on where you go toschool, Zipcar has got you covered. If you happen to attend the University of New Hampshire,you’re in luck.Zipcar is a car‐sharing network based in Cambridge, Massachusetts that operates inmetropolitan areas and on university campuses around the U.S., Canada, and the UnitedKingdom. Car‐sharing was already popular in Europe ten years ago when Zipcar foundersdecided to see if the idea would fly in the U.S. Shortly after its introduction to urban dwellersand U.S. students, Zipcar’s message had wheels.At the University of New Hampshire (UNH), students and faculty already had severaltransportation options, including an Amtrak station nearby and several bus services. But BrettPasinella, who works for the University Office of Sustainability, wanted to find a way to linkthe different transportation options and expand them in a sustainable fashion. His research toldhim that Zipcar fit UNH’s existing options. âWe went through a bidding process to get theright company,â Pasinella says. The firm had to meet UNH’s requirement that membershipinclude insurance and fuel. âZipcar really stood out because of their technology andunderstanding of the services and what we were looking for,â explainsPasinella. But UNH stillhad to sell the idea to budget‐conscious students in order to make it work.The Zipcar system is simple: for a $35 annual fee, UNH students or faculty get round‐the‐clock access to Zipcars that are parked in designated parking spots around campus. When theyjoin, members receive their own Zipcard (like a key card) that unlocks any Zipcar. Membersreserve a car online, then use their Zipcard to access it. Gas and insurance are included withmembership, as well as an average of 180 miles per day.To sell the concept to UNH students, Brett Pasinella engaged a senior class of marketingstudents to develop a marketing plan for all the transportation systems available on campus.The class split into teams, one of which chose the Zipcar project. The marketing studentscreated presentations designed to answer questions and help classmates overcome the hurdleof a $35 fee. Once they realized that an annual parking permit at UNH is $400âand that gasand insurance are included with Zipcar membershipâthey began to recognize the benefits. Inaddition, they saw Zipcars parked around the campus so they became familiar with the brand.Brett Pasinella notes that UNH is also a sustainable campus, and that most of his job isfocused on finding ways to reduce waste and energy useâincluding throughout theuniversity’s transportation system. Zipcar’s entire fleet is EPA Smart Way certified andincludes hybrids as well as other zero‐emission vehicles. But Pasinella and UNH marketingstudent Erin Badger point out the realities of college life. âA lot of students will focus on thefact that Zipcar is easier for them and saves them money,â concedes Erin Badger. âWe have topromote Zipcar toward what students are looking for, and those are the two biggest factors.âAfter the first year in operation at UNH, Zipcar membership is growing. Pasinella plans tomarket the service proactively in coming yearsâsending Zipcar information to incomingstudents and faculty before they arrive on campus with their own vehicles. UNH conducted asurvey of members and discovered that users like the convenience and visibility of the
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