Question

Carter Cleaning Centers

Jennifer Carter graduated from State University in June 2005, and, after considering several job offers, decided to do what she always planned to do go into business with her father, Jack Carter. Jack Carter opened his first Laundromat in 1995 and his second in 1998. The main attraction of these coin laundry businesses for him was that they were capital- rather than labor-intensive. Thus, once the investment in machinery was made, the stores could be run with just one unskilled attendant and none of the labor problems one normally expects from being in the retail service business. The attractiveness of operating with virtually no skilled labor notwithstanding, Jack had decided by 1999 to expand the services in each of his stores to include the dry cleaning and pressing of clothes. He embarked, in other words, on a strategy of related diversification by adding new services that were related to and consistent with his existing coin laundry activities. He added these for several reasons. He wanted to better utilize the unused space in the rather large stores he currently had under the lease. Furthermore, he was, as he put it, tired of sending out the dry cleaning and pressing work that came in from our coin laundry clients to a dry cleaner 5 miles away, who then took most of what should have been our profits. To reflect the new, expanded line of services, he renamed each of his two stores Carter Cleaning Centers, and was sufficiently satisfied with their performance to open four more of the same type of stores over the next 5 years. Each store had its own on-site manager and, on average, about seven employees and annual revenues of about $500,000. It was this six-store chain that Jennifer joined after graduating. Her understanding with her father was that she would serve as a troubleshooter/consultant to the elder Carter with the aim of both learning the business and bringing to it modern management concepts and techniques for solving the business problems and facilitating its growth.

Questions:

1. In line with your course, define the significance of the case?

2. The case narrated that the owner was capital oriented rather than labor-intensive. As an HRM student, what do you think about the philosophy of the owner? Which suggestions you will recommend to utilize labour oriented philosophy in the organization?

3. What suggestions you will provide to Jennifer to link HRM policies and practices with the differentiation strategy of the organization? Justify your answer.

Answer 1

1) The case is about how a family business functions its daily operations at a laundry store and how various tasks are performed. The case discussed how the business runs on low labour and high capital model. Few new adaptation and investments are made so that business grows and new avenues open up.
2)The owner Jack believes that the best way to earn profits in this business is to invest in its machine/washing machines rather than labour. He has around six stores, and He has reinvested the profits in starting up new stores with the same idea of high capital expenditure and low labour cost. The suggestion to jack in this situation could be that he should try and spend a little more time and also invest some money in labour. His stores today have washing machines, dryers and pressing machines, such new additions are very crucial to sustain in the market, but it is also important to provide customer satisfaction by providing good service too. Some elements that are important for good customer satisfaction are employee behaviour (human aspect) and new product/ services(in this case, addition of dryers and presses). Both are equally important for a business to run well. If unskilled labour is given some training, then the same labour can be more useful for the business.
3) Jennifer, who is a graduate from state university, should use the knowledge that she gained in the university and apply a few concepts that can help the business grow to new heights. Mr. Jack is still of the thought that the investment made in the capital expenditure is better than investing or spending on labour costs. Jennifer should try to do something in the ^th store that will be different from the first five stores.
A few skilled employees should be hired; a complete package should be designed to give clients an experience that they have next experienced before. E.g. A new scheme should be launched where the delivery boys will pick up the clothes from the residence of the customer, bring it to the store, get it washed, dry cleaned then pressed then packed well and finally deliver it to back to client's residence. This will change the experience altogether. For this service, they can definitely charge a little extra. This will attract more customers to use their services as it is a time-saving idea for the clients. And the concentration of the business from the capital will shift towards labor. With such new packages/services, the clients will fell good, and this will also set them apart from their competitors. A business always has a threat for competition, to avoid this, constant improvement is required. Machines can be bought, infrastructure can be improved in any business place but the differentiating factor then becomes the workforce. SO the idea to train employees and to transform them from unskilled to skilled labour will bring more value to their job roles and once an employee feels responsible for a job and feels that he is in a good position, then the efforts taken to perform efficiently will also improve.