How would Rita know if she'd had a good year?

Rita’s hiring! With her business really starting to take off, Rita realised she could no longer do everything herself and had recently hired a social media and sales analyst (Peggy), a pastry chef (Florence) and a sous chef (Marco), as well as a bookkeeper (Glenn).  It wasn’t long before Rita realised that managing staff wasn’t as easy as she thought it was going to be. Peggy was concerned that her performance goals were very vague and that the goalposts seemed to be continuously moving, making it almost impossible for her to track her progress. Her main job was to manage Rita’s Muffins' social media accounts (mainly Instagram and Facebook) and to drive sales.  There was some dispute about whether her target should be measured by “followed” links to Rita’s Muffins landing page or actual sales generated from a “followed” link. So the precise calculation hadn’t been locked down. Also, every time the business beat target, the targets would be increased, which Peggy didn’t think was very fair. They also seemed ridiculously ambitious, or in her words, “totally unachievable.” Glenn’s previous role was with a large corporate where the financial cycles were, by and large, automated. It was quite a shock coming to such a manual operation as Rita’s Muffins. He passed his bookkeeping exams in the 1980s, so he could remember very little about how to set up payroll from scratch. The result was that Peggy didn’t get paid, Florence got paid twice in the same cycle, and Marco was taxed at twice the normal rate. All three said they were going to quit if it wasn’t sorted by the next pay period.Despite these issues, Rita’s muffin baking business appears to be doing increasingly well. Every week, she’s baking at least 10% more muffins than the previous week. Therefore, she was somewhat shocked when her bookkeeper Glenn told her that if things didn’t improve quickly, they might not be able to make payroll next month. When she asked what was causing the cashflow squeeze, all Glenn was able to say was that the forecast gross profit margin was 67%, but they were only hitting 58%. He then shrugged his shoulders and said: “I’m not sure why, we costed the muffins accurately enough and then priced for a 67% gross profit margin.”Rita started by asking Florence and Marco what they thought the problem was. Florence reminded Rita that their policy was to only sell muffins baked within the last 24 hours and give any leftovers to the shelter. She also mentioned that they always seemed to send a lot of muffins to the local homeless shelter on Sundays and Mondays. Rita checked the production records, and they seemed to be baking the right amount on Sundays and Mondays. Further, the problem only seemed to have started when they changed from a “bake-to-order” system to a “bake-to-forecast” system.One other thing Rita noticed while checking the production records was that while the number of muffins baked on Sundays and Mondays matched the forecast, on Wednesdays and Thursdays, they seemed to be baking 20% more muffins than forecast. However, they were only donating a handful of muffins to the shelter.

Rita was lying awake at night. The words of one of her friends, who’d been at Rita’s apartment for afternoon tea, were ringing in her ears: “These muffins are so good. You should think about selling them!”  The following morning, Rita posted an ad on her local Facebook group and waited for the orders to come in. By the end of the week, words were getting around. Friends would message her on all Rita’s different socials with orders, some would stop her in the street, and even people she’d never met would overhear her talking on the bus and ask her to take an order. Unfortunately, she was losing track of what to deliver to who. She’d been baking almost non-stop, and when she wasn’t baking, she was at the supermarket buying ingredients. The problem was that she had no idea whether she was making any money.

What are the key processes referred to in Rita’s story? Identify at least one.

How could Rita have potentially avoided the staff threatening to quit?

Rita is an entrepreneur who started her own line of beauty products. She has many things to think about when making, selling and marketing the product. What is she doing when she is considering all of these important questions about her product line?A.Making more productsB.Managing quality in a value chainC.Technology improvementsD.Lean management