Expert answer:Rasmussen Blackrocks Consultant in Organizational

  

Solved by verified expert:GRADING RUBRIC THIS IS THE QUESTION TO WORK ON1. Introduction provides an overview of the analysis, provided strong examples from the case study along with outside supportive research.2. Provides an overview of cultural communication differences within the organization’s customer base and staff, provided strong examples from the case study and outside supportive research.3. Correctly evaluates the communication channels that can contribute to employee conflict using specific examples from the case study and additional research.4. Examines the legal implications of effective communication in the organization using specific examples from the case study and additional research.5. Interprets the current business landscape and how communication facilitates everything, using specific examples from the case study and additional research.6. The Conclusion includes a Communication Plan that includes various communication factors and implications of effective communication and relates it to the case study and additional research to support findings.THE QUESTION JUST TO GET AN IDEA TO ANSWER THE QUESTION ABOVE.Case StudyRead the above case study and prepare the necessary documents as explained below.You have recently been hired at Blackrocks as a consultant in Organizational Effectiveness. Your role as the consultant is to create a Communication Plan that incorporates various communication factors and implications of effective communication within the organization. Analyze communication differences related to culture within the organization and customer base. Examine the roles that the organization’s communication channels play along with the various communications factors that contribute to employee conflict. Consider the legal implications of effective communication in the organization. Lastly, interpret the current business landscape and discuss how communication facilitates everything. Your Communication Plan will include the following:Introduction to your findings.Detail communication differences related to culture within the organization’s customer base and the staff.Evaluate the communication channels that can contribute to employee conflict.Examine the legal implications of effective communication in the organization.Interpret the current business landscape and discuss how communication facilitates everythingConclusion of your plan.
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Journal of Business Case Studies – Second Quarter 2014
Volume 10, Number 2
Blackrocks: Craft Brewing – From Hobby
To Business: Applying Strategic
Management To The Small Firm
Brian Gnauck, Northern Michigan University, USA
Claudia Hart, Northern Michigan University, USA
Larry Pagel, Northern Michigan University, USA
ABSTRACT
Blackrocks, a craft beer start-up company, first opened in Marquette, Michigan, a town of 20,000
residents, in 2010. The business evolved around a friendship and a mutual interest in craft beer
and is located in Marquette’s “Village,” an area close to the local university consisting of several
full-service restaurants, sandwich shops, bars, and retail shops. The Village considers itself an
independent retail section of Marquette.
The ambience of Blackrocks is “fun and good times.” People of all ages are attracted to the bar to
enjoy craft beer with their family and friends. The physical setting is rustic with a current capacity
of 50 customers (soon to expand to 100 customers). Customers can bring in their own food or call
a local eatery for pizza or sandwich delivery.
Blackrocks has a very loose organizational structure which has worked well in the past. This case
will allow students to identify the problems faced by Blackrocks in today’s economy; to describe
the internal and external environment of Blackrocks; to identify their core competencies; to
identify Blackrocks’ strengths, weaknesses, opportunities, and threats; and to develop
management strategies which could further enhance the business and help them attain their
mission and goals.
Keywords: Craft Beer; Organizational Strategies; Organizational Structure; External Environment; Internal
Environment; Core Competencies; Management Strategy
INTRODUCTION
L
et’s meet the employees of Blackrocks. The owners, the Ambassador of Fermentology and Brewsician –
Andy Langlois and David Manson were two, but there were also characters like the Wizard of Ales, the
Monk of LaMash, the Gangster of the Great White North, and the Friend of Woodland Creatures
Everywhere (the longest name of any employee in the business).
Blackrocks, the company, liked to enjoy life, have fun, and at the same time make money. The general
attitude the business presented was pure Adam Smith “laissez faire,” anything goes. Formal titles were few, but fun
titles abound. At the same time, it was a real business with concern about sales, cost controls, growth, and serving
customer needs.
Andy and David expressed concerns about the future demand for craft beer and beer in general. Craft beer
in the U.S. represented 7.5 percent of beer by volume and 9.1 percent by revenue. Would the demand for craft beer
crash or begin to fall off? (Remember, the demand for pop in the U.S. declined in the last 10 years.) Would the
overall interest in craft beer begin to wane? These were unknowns. They also expressed concern whether the
demand for onsite beer would decline. Should they develop bottled beer for resale through wholesalers to retail
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Journal of Business Case Studies – Second Quarter 2014
Volume 10, Number 2
outlets? The policy of Blackrocks had been to stress variety. Each week new and different flavors of beer were
created. Since opening in December 2010, they brewed over 150 different beers. Some beer rotated on a semiregular basis, but the majority was new every week. They had not established a “brand” that represented the brewer,
“Blackrocks.”
Samuel Adams, for example, had created “Samuel Adams Boston Lager,” which supported a variety of
other beer. Could Blackrocks create a brand that would sell over the counter? Did they need a beer that represented
the brewer, “Blackrocks”? Was their business model sound? What issues should Andy and David focus on?
Answers to these and other questions were constantly on their minds.
THE ORIGIN
Blackrocks started in December 2010 in Marquette, Michigan, a town of 20,000 residents, which expanded
by 50 percent when the students of Northern Michigan University arrived each fall. The business was the brain child
of Langlois and Manson.
Both men were in their 40’s and faced the typical challenges of family life. Andy was married with two
kids. He was a Northern Michigan University graduate. His previous work included Director of Sales for a surgical
parts company and a drug representative. David was a Michigan State University graduate and worked for a
Midwest food distribution company and also as a pharmaceutical sales representative for 16 years. Their wives
worked – one was a school teacher and the other was a government manager.
The business evolved around a friendship and a mutual interest (avocation) of craft beer. This hobby grew
into the idea of a business, and in 2010 they opened to the public in an old, private residence (zoned business by
2010) at 424 N. Third Street in Marquette, Michigan (see Figure 1). They were able to buy the building, giving up a
small interest in their business.
Figure 1: Blackrocks, 424 N. Third Street
Photo by M. Vroman, 2013
Third Street in Marquette, Michigan, was called “The Village” and consisted of a number of full-service
restaurants, sandwich shops, bars, and unrelated retail outlets. The Village promoted itself as an independent retail
section of town. It was a natural corridor of 13 blocks leading south from the university to the “Main” Street of the
town.
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Volume 10, Number 2
Given that Marquette was a university town, it was common for students to start a night celebrating by
moving from bar to bar along Third Street. In this context, Blackrocks was a flow-through site as the customers
moved north or south along this street. In simple terms, it was a great location for a craft beer business.
The ambience of Blackrocks was “fun and good times.” Its physical setting was rustic. The hardwood oak
floors creaked, as did the stairs to the second floor. The bar was an old, aged-oak structure that had seen extensive
use by customers and lots of spilled beer (see Figure 2). In the spring of 2013, Andy and David planned to renovate
the second floor to accommodate an additional 50 people. When finished, the legal capacity was 100 people (1,200
sq. ft.). There was a porch around the building which served as overflow when temperatures reached over 40 degrees
(outdoor heat lamps were prevalent) and in the summer and fall periods. Seating capacity was limited to about 15 so
the rest of the patrons stood.
Figure 2: Blackrocks Bar
Photo by M. Vroman, 2013
The fun-loving, informal atmosphere was even more evident by patrons carrying in their own food or
calling local eateries for pizza or sandwich delivery. Crowded tables and benches were often filled with crock pots
full of soup, appetizers, or other favorite accompaniments. Blackrocks did not have a kitchen so food regulation was
not an issue. A night at Blackrocks was characterized by a high decibel rating and lots of conversation and laughter.
Local musicians frequently entertained and open mic nights were common.
TARGET MARKET
Blackrocks targeted patrons of all ages. Lots of 21st birthday parties occurred, but the brewery attracted
people in their 30’s, 40’s, 50’s, and 60’s, as well as an occasional 90 year-old. It was not uncommon to see a 21
year-old sitting next to a surgeon with a university professor as part of a conversation.
THE MUGS
Shortly after opening, a friend and an art teacher at NMU suggested Blackrocks try to promote interest in
German ceramic beer mugs. These mugs were all unique and fit the fun, rustic ambience of Blackrocks (see Figure
3). The mugs cost the customer $40, but they brought the customer to the business. They hung on the walls, ceiling,
and just about everywhere at the bar. Customers came in the door, grabbed their mug and had it filled at the bar. The
mugs were truly works of art. In the course of 2½ years, they sold 986 mugs. A side benefit to Blackrocks was that
the company did not have to invest in as many glass mugs because the customers supplied their own. The mugs also
accommodated the rustic nature of the building and enhanced the “fun and good times” ambience.
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Volume 10, Number 2
Figure 3: The Mugs of Blackrocks
Photos by M. Vroman, 2013
THE MISSION
Even though the environment was one of fun and laughter, there was a serious side to the business. Andy
and David established their “mission” as an integral part of what their business stood for when they created it in
2010 (see Figure 4).
Blackrocks is committed to fun, our community and diverse craft beer. We started as a nano brewery and will
operate as such always. Our goal is steady growth brewing with quality ingredients and keeping a little crazy in our
culture. We encourage our members, employees, and customers to give input in our operations and demand they
know the brewing process and encourage mistakes.
Figure 4: Blackrocks Mission
Source: Company Records, 2013
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Volume 10, Number 2
This mission tied the product to the customer and helped define what Blackrocks was all about – a happy,
fun place to be and a mutual interest (proprietor – customer) in craft beer.
ORGANIZATIONAL STRUCTURE
The easiest way to explain Blackrocks’ structure was to say there was none. Andy and David were the
owners (the former building owner had a small interest). There were four full-time employees of the company.
Besides the owners, the following is a description of the two other full-time employees, Andrew Reeves and Chris
Hutte.
Andrew Reeves: Andrew was the head brewer. He was a 27 year-old having grown up in Holland,
Michigan, and then worked for AmeriCorps in Colorado where he was exposed to the craft beer business. He then
attended Northern Michigan University majoring in history.
Chris Hutte: Chris earned a Computer Information Systems degree from Northern Michigan University.
He had been a part-time worker at a local party store that sold home hobby craft beer supplies and equipment.
There were seven part-time employees of the business. These people were brewers, bartenders, servers, keg
cleaners and took on marketing responsibilities.
The organizational structure was flat with two levels of management. Andy and David were co-owners, and
the rest reported to them in somewhat of an undefined, unknown manner. Things seemed to get done, however. To a
degree, beer was brewed on schedule to make sure sufficient supplies were available when the business was open,
supplies were ordered (barley, hops, wheat, rye, oats, nutella, lavender, honey, and peppers), and hours were
assigned for work shifts.
THE 2013 ECONOMY
The Wall Street Journal reported that the 4th quarter gross domestic product of the U.S. in 2012 was revised
upward from a -.1 percent growth to a +.1 percent growth in January 2013. At the federal level, the U.S. House of
Representatives was in an ongoing stalemate with the U.S. Senate and the President regarding spending cuts and tax
increases. Unemployment stood at 7.7 percent, and interest rates were at historic lows. The federal funds rate was 0
to .25 percent, while the home mortgage rate for top-line borrowers was 3.25 percent for a 30-year mortgage.
The State of Michigan had recovered from its depressed state with a balanced budget and 8.8 percent level
of unemployment (“Department of Numbers,” 2013). The Upper Peninsula of Michigan was somewhat depressed
with an unemployment rate of 10.3 percent (Walton, 2013). However, the City of Marquette, the largest city in the
Upper Peninsula of Michigan, was rather robust. This was because of Marquette General Hospital’s 2,000
employees and 200 physicians (a for-profit hospital, part of the Duke Lifepoint System), Northern Michigan
University’s 1,000 employees (student body of 9,500 students), gambling in the Upper Peninsula which employed
about 1,500 in the Central Upper Peninsula, and Cliffs Natural Resources’ 1,800 employees (an iron ore mining
complex located 40 miles west of Marquette).
THE BEER BREWING PROCESS
Brewing the beer began with the raw grain, which was most commonly malted barley for most beer styles.
Other raw materials were wheat, rye, and oats, which could be added at different proportions for various beer styles.
The malted barley was first crushed to break open the hulls. This was then mixed with hot water (roughly
145-158 degrees) to create the “mash.” During the mash, two enzymes (alpha and beta) worked to break down
complex carbohydrate chains into simple sugars within the grain. This was important because yeast needed simple
sugars to convert to alcohol later in the fermentation process.
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Volume 10, Number 2
Mashing usually lasted for 60-90 minutes, then the liquid (called the “wort”) was transferred to the boil
kettle, and the spent grain was disposed of. The wort was then boiled for 60-90 minutes. During the boil, hops were
added to balance the beer and provide bitterness and hop flavor/aroma. Hops added during the beginning of the boil
were called “bittering” additions since the longer hops were boiled, the more bitterness they provided to the beer.
Hops added at the end of the boil were called “aroma” additions because these provided hop flavor and aroma
without as much bitterness.
Once the boil was completed, the wort was cooled and transferred to a fermentation tank. This was
essentially the end of the first step.
Step 2 was the fermentation process. Once yeast was added to the cooled wort, sugars were metabolized
into alcohol and carbon dioxide, and the product can be called beer for the first time. This process usually took 1-2
weeks. The style of beer and strain of beer affected how long fermentation took. This was an incredibly interesting
process and had a lot of factors that affected the end beer product. It essentially came down to yeast converting sugar
to alcohol, thus creating beer.
Once fermentation was finished, beer was transferred into what was called a “brite” tank. This was where
the beer became carbonated. CO2 was applied to the beer until a desirable level of carbonation was achieved. The
carbonation process took about 12 hours on average in a brite tank. Then the beer was transferred into kegs, cooled,
and made ready to be served.
BREWING AT BLACKROCKS
Blackrocks had about a 600-barrel beer capacity per year. Their major competition, the Vierling and Ore
Dock, had approximately 350- and 1200-barrel capacity, respectively. In the spring of 2013, Blackrocks bought an
old Coca-Cola bottling plant on Washington Street, about a mile from the Blackrocks retail outlet, with the prospect
of producing a bottled craft beer.
COMPETITION
From a broad perspective, craft beer was in competition with all beer; but in reality, craft beer like that
made at Blackrocks was in competition with two other craft brewers in the city – the Vierling and the Ore Dock. In
the general area, Jasper Ridge Brewery in Ishpeming, Michigan, a city about 15 miles west of Marquette,
represented nearby competition. Also, KBC in Houghton (90 miles north) was, to a degree, a competitor. They sold
craft bottled beer that was distributed in the area. Indirectly, Blackrocks also competed with the largest craft beer
company in the nation, Samuel Adams. According to Jim Kock in an interview with Eng (2013), there were about
2,400 microbrewers in the United States as of January 2013. Rolling Rock, Ambersteam, Killian’s Red, and Honey
Brown were some of the products produced. Literally, tens of thousands of other national, regional, and local
specialty beer were a form of competition. The interesting thing about these beers was that they had established
followers and were known brands of their respective brewers.
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Volume 10, Number 2
FINANCIALS
Blackrocks Income Statement and Balance Sheet for 2012 appear in Figures 5 and 6.
Blackrocks Brewery Income Statement
January 1, 2012 – December 31, 2012
Percent of Net Sales
Sales (net)
Cost of Goods Sold
Gross Profit
$ 328,906.26
$ 85,491.55
$ 243,414.71
Total Expense
Net Ordinary Income
Net Other Income
Net Income
$ 195,037.99
$ 48,376.72
$
529.77
$ 48,906.49
100%
26%
74%
Figure 5: Blackrocks Brewery Income Statement
Source: Company Records, 2012
Blackrocks Brewery Balance Sheet
31 December 2012
Assets
Current Assets
Fixed Assets
Total Assets
$
6,790.58
$ 253,422.05
$ 260,212.63
Liabilities
Current Liabilities
Long-term Liabilities
Total Liabilities
$ 17,594.05
$ 92,654.11
$ 110,248.16
Equity
Total Liabilities & Equity
$ 149,964.47
$ 260,212.63
Figure 6: Blackrocks Brewery Balance Sheet
Source: Company Records, 2012
GENERAL INFORMATION
Blackrocks did not advertise except for one ad in Brewers Guild when they first started business. They did,
however, get lots of word of mouth, Facebook, and Twitter activity. General labor was relatively inexpensive in the
$10 to $12 per hour range. Their brewers were all self-taught. They did not hold any certifications; but together, the
brewers had 20-25 years of home brewing experience. David believed that some formal schooling would add
knowledge to their brewing activity and should be considered in the future.
From a regulatory point of view, Blackrocks had to purchase a $50 license from the State of Michigan and
a Brewer’s Notice (bond) of $1,000 from the Feds. They also faced access, parking, and sanitary requirements of the
county and city.
Entry into this type of business was not significant. For $100, one could get into the hobby of beer making
and for about $170,000, get capacity up to 600 barrels per year, the volume Blackrocks produced as of February
2013.
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Hops were purchased through a contract with a farmer in the Rock, Michigan, area. All other ingredient
prices were set by commodity markets (many items had world prices). David expressed some concern about this
since many grains were at all-time high prices.
The primary substitutes for beer were hard liquor, wine, and wine coolers. However, these markets were
somewhat separated. There were overlaps, but many consumers of wine, for example, did not consume beer (to any
extent) and visa-versa. But alcohol and its effects on the human body were present in all, and all were in demand and
replaced each other in a given setting.
Fun and good times were a significant part of what Blackrocks stood for. The pumpkin carving event was
typical of the environment Blackrocks tried to promote. One of the part-time employees had a few pumpkins
brought in during Halloween, and in no time everyone in the bar was drinking beer and carving pumpkins. The
competition was fierce and the camaraderie was significant. The Blackrocks’ atmosphere truly represented how
Andy and David described their business, “art mixed with science – it is creative, like jazz mixed with symphony.”
Andy and David were excited about their upcoming remodeling and the doubling of their business capacity.
However, they had to make some important decisions to secure the future of their business. They knew what they
had to do was their responsibility.
This case was prepared by Brian Gnauck, Claudia Hart and Larry Pagel of Northern Michigan University and is
intended to be used as a basis for class discussion rather than t …
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