Introduction to Management - Assignment 2

Lecturer: David Emanuel Andersson

Derek Le Toralba – s3748423

PIZZA2GO CASE ANALYSIS

1. Introduction

Pizza2Go is a Vietnamese pizza chain launched in 2005. The company shares have grown more than
2500 per cent in just ten years, which makes it become one of the best performers on the fast-food
market. Now, Pizza2Go owns a franchises network with over 50 retail stores nationwide. It is reported
that in 2016 the firm had achieved nearly 203 billion VND of total revenue.

Pizza2Go is well-known for its variety of menu selections, which is considered to be the largest menu in
the world with over 2000 options, which raise the firm sales to more than 1 million pizzas regularly with
an assurance to deliver pizza between 25 to 30 minutes.

The company cautiously selects franchisees that believe Pizza2Go is a profitable business. However, it
is said that “the reality of life inside Pizza2Go is not what is portrayed to the general public”. In this
report, we will take a closer look at the case and spot several problems in the working environment of
Pizza2Go staffs. Some solutions and recommendations will also be suggested on how Pizza2Go can be
better at treating employees and build a strong company culture.
2. Case Analysis

Reading the case, we can see that the first problem for Pizza2Go is wages underpayment. Workers often
experienced salary underpayment and not always received full entitlements from the stores and, they
could not earn overtime payments for extra hours of work. All the controversies are considered to be
illegal and unethical, which relates to the Ethical Dilemma theory. The issues can also somehow
connected with Human Relations Movement, or Hawthorne Studies, which present a positive link
between management style and productivity.

The second problem Pizza2Go has to deal with is poor working environment for its employee. Not only
workers of Pizza2Go have to suffer from exploitation by high-level managers; they knew that the central
office only cares about the welfare of people at the corporate position. This makes the problem worse
because employees could not feel their value and earn respect from managers. One theory that reinforces
the situation is the power distance between workers and managers in Hofstede’s five cultural dimensions
theory. Organizational culture concept is also included, weak company culture concept particularly
because Pizza2Go employees do not comprehend the ideas of the company since they are poorly treated.

3. Application

Underpayment of salaries to employees is the first problem of Pizza2Go. The issue consists of several
actions such as not paying full entitlements, force staffs to work extra hours and deny them overtime
payments; which was found to be common manner in many stores. Ethical Dilemma theory is the first to
support the reason why this is a problem. According to The New Social Worker magazines, for a
situation to be considered as an ethical dilemma, three circumstances must be presented (Allen 2012).
The first condition is when a person must make a decision about which action is best between some
ideas. The second is that there must be multiple choices of action to go for. Finally, some moral
principle is compromised, regardless of what decision is chosen in an ethical dilemma situation.
Pizza2Go problem seems to lie in the third conditions. The reason why franchises are dealing with an
ethical dilemma is that they understood that the business they invested in is not feasible due to many
issues such as labour costs and poor welfare policies. Therefore in order to create enough profit, they
have to cut costs, including underpays their staffs, which is also wrong.

The second problem of Pizza2Go is terrible working conditions. This reflects the issue that the head
office only cares about the welfare of corporate-level people and staff exploitation from stores
managers. Mr Long, who was a front-line manager at a Pizza2Go store, was a victim of worker’s
exploitation. He said to have been working for long hours without breaks in a suffocating atmosphere,
near a 200-degree oven, without air conditioning. Furthermore, Mr Long had to work between 50 to 60
hours per week but his pay slips only showed 40 hours as anything above 43 hours would consider being
illegal. From here, it is clear that the store was trying to force employees to work overtime while
avoiding penalties from the government. Not only Mr Long could not earn overtime payments that he
deserved; he occasionally received threatens from Mr Thap – a member of Pizza2Go influential
Franchisee Advisory Committee. It took 3 years for Mr Long to bravely report his boss to the head
office, who was also one of the company's most potent franchisees.

Some theories and concepts can be adopted from the issue. First is the Coercive power concept, which
explains the power is based on the use of punishment and threats. The use of coercive power is
considered ineffective and can cause resistance from people. In this case, Mr Thap abuses the power to
threat and force employees to work overtime, which created resistance from Mr Long, who eventually
informed him to the main office. Second is the weak organizational concept, means that the members of
a company have little identification with the company's culture. They do not feel connected or related to
the company, so their job performances are not good enough. The theory linked to the situation is from
Hofstede’s five cultural dimensions theories, specifically the power distance (Erdman 2018). She wrote
that employees with high power distance “accepts wide power differences, great respect for those in
authority”. This explains why employees were hesitating to speak out, and why Mr. Long cannot report
his boss immediately.
The reason for all the problems above seems to be caused by the wrong management approach by the
company. Particularly, Pizza2Go refuse to apply Human Relations management approach. Human
relations management theory developed in the early 1920's, when professor Elton Mayo started the
Hawthorne Studies, to present a connect between management style and productivity (Perry 2017). The
Hawthorne studies stated that relationships are the main factors influenced productivity. The researchers
understood that being part of an auxiliary group where each worker are treated with support and respect
would have a positive effect on the team output, which increases productivity (Perry 2017). Therefore,
Pizza2Go needs to change their way of treating employees, find another approach to the management
system and create a favorable environment for staffs.

4. Recommendations

Strategy 1: Treat employees with responsibility and care.

Pizza2Go can eliminate the problem by approaching its worker with a different attitude. The company
needs to pay attention to the staffs' welfare policies and rights. Stores are required to pay workers full
salary with correct hourly rate and entitlements, and not allow them to work overtime. The company
should take action in the modification of kitchens, including the installation of air conditioning, creating
an extensive workspace for staffs. Furthermore, power distance between managers and employees needs
to be shortened, so that employees can freely give feedbacks while managers can understand employees
more. According to Hawthorne studies (Perry 2017), treating employees with respect and value can
increase their productivity and quality to assist the organizational team.

Strategy 2: Create a positive environment for employees.

Pizza2Go needs to start building a strong company culture by altering workplaces and regularly holding
recreation activities, where everyone can happily work and build close relationships through team-
bonding exercises. When working and playing as a team, people learn how to communicate with their
each other; they can identify others’ strength and weaknesses and develop themselves better. Boatman’s
blog post had demonstrated a connection between working environments to employee’s output
(Boatman 2016). The blog post stated that the University of Warwick was conducting a study that
measured the impact of a positive environment on employee productivity. The result was a 12%
growth in productivity among happy workers and a 10% drop among unhappy workers. This means that
employees’ productivity will increase if they are working in a pleasant environment.

5. Conclusion

Issues of Pizza2Go can be removed entirely. Nevertheless, the company needs time and patience to look
for suitable ways to settle its problems. Franchisees have to negotiate with the main office and find
reasonable solutions for both of them to gain profit without affecting the workers. Pizza2Go needs to
pay staffs their wages on time, treat employees correctly, create an appropriate working environment for
them to do their work properly and, organize events or outdoor activities annually to bond staffs, make
them feel like they are a part of the company. If Pizza2Go can apply these ideas, then the company can
even be more successful in the future.

6. References

Allen, K 2012, ‘What is an Ethical Dilemma?’, The New Social Worker, viewed 19 August 2018,
<http://www.socialworker.com/feature-articles/ethics-articles/What_Is_an_Ethical_Dilemma%3F/>

Boatman, T 2016, ‘How fun at work can increase productivity and employee engagement’, Engagement
and Productivity Blog, blog post, 4 May, viewed 19 August 2018, <https://www.qnnect.com/blog/how-
fun-at-work-can-increase-productivity-and-employee-engagement>
Erdman, K 2018, Culture's Consequences: Comparing Values, Behaviors, Institutes and Organizations
Across Nations’, Macat International Limited, viewed 21 August 2018, Ebookcentral.proquest.com
database.

Garry, L.P 2017, ‘Human Relations Management Theory Basics’, Business.com, Purch, viewed 19
August 2018, <https://www.business.com/articles/human-relations-management-theory-basics/>