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Chipotle

In: Business and Management

Submitted By sharkers
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| Business Research Case | Chipotle Mexican Grill | | Sarah AliMinas DimasKiran DosaniNada JazehLauren PeriRen Stoecklin | 6/7/2011 |

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Table of Contents Introduction ……………...……………………………………………...3 Launch to Now: A Detailed Timeline ……………...………………...…3 Leaders and Leadership …………………….…………...……….……..4
Planning: Company Strategy, Mission, and Vision …...……………..…5 Evidence of PLOC4E2 …………………………………………..…...…6
Strategic Human Resource Management Policies and Philosophies ...…8
Types of Innovation and Evidence of Entrepreneurship …………...….10
Team Management and Dynamics ………………………………...…..12
Operations Management ………………………………………...…….13
Communication and Information Tech Management …………………14
Globalization Presence and Effects ……………………………...……16
Corporate Social Responsibility and Consciousness ……………...…..17
Conclusion ……………………………………………………………19
Figures …………………………………………………………...……20

Introduction Since its inception, Chipotle Mexican Grill has set itself apart from the rest of the fast food industry. Not only does Chipotle prepare food right in front of the customer, but the food put into the product is filled with “integrity”. Chipotle has established “Food with Integrity’ which is their commitment to finding the very best ingredients, raised with respect for animals, the environment and the farmers (chipotle.com). This mantra is what drives every action of Chipotle from planning for obtaining sustainable products with a growing company to organizing their employee structure in order to keep employees around for a long time. With this mission and vision, Chipotle Mexican Grill is able to differentiate them and rise above the fast food industry and evolve into a “fast-casual” restaurant on the move. Launch to Now: A Detailed Timeline
Chipotle Mexican Grill was originally created as a stepping stone for Chipotle’s founder, Steve Ells. Ells, an inspired chef, created Chipotle with the intention of funding a larger restaurant. Denver, Colorado was the home of the first Chipotle in 1993. The chain of “fast-casual” food specializing in burritos and tacos started expanding after 1995 to different locations. It wasn’t until five years after the first Chipotle opened that outside investors started getting interested in this up and coming small chain. Chipotle’s biggest investor came from McDonalds. Through their investment, McDonalds was able to help Chipotle do a majority of its expansion. McDonald’s continued investing until 2006 when Chipotle went public on the New York Stock Exchange.
While Chipotle Mexican Grill was always known for their great tasting food and assembly line that makes it happen, they became a leader in serving “Food with Integrity”. “Food with Integrity” is Chipotle’s “commitment to finding the very best ingredients raised with respect for the animals, the environment and the farmers” (Chipotle). In 2000, Chipotle began serving naturally raised pork- antibiotic free with a vegetarian diet. Chipotle furthered their food with integrity to naturally raised chicken two years later following with naturally raised beef in 2007. Chipotle realize that by incorporating natural products into their food, it would not only be better for the environment and bodies of its consumers, it would also just taste better overall. Not only did Chipotle highlight the significance of changing their meats but they later followed this concept to their other ingredients from their assembly line.
Chipotle’s pledge to their customers and local farmers is what keeps them on top. Ells, is said to be more interested in the well being of the animals, farmers and consumers than making profit in itself. The new golden foil resembles the celebration of the past 18 years of progress for the company in creating food with the finest and most sustainable ingredients they can find. Leaders and Leadership
Steve Ells’ heart was always passionately involved with food. He still is an inspired chef and it is known for rarely wearing a suit (see Figure-1). Instead, his energetic and modest approach can be seen around helping as much as he can. Ells’ utilitarian approach, ethical decisions that should produce the greatest good for the greatest number of people (Jones 90), is shown through his large commitment through “Food with Integrity”. While some may not agree with his individual ethics, personal values and attitudes that govern how individuals interact with other people (Jones 95), Ells stands strong with his commitment to small farmers with naturally raised animals instead of focusing on the business aspects of his creation. Ell’s can also be considered a servant leader. He has a strong desire to serve and work for the benefit of others (Jones 330). Ell’s desire to strive towards 100% sustainability and hormone free products reminds his employees and customers that he cares about each and every one of them.
Chipotle’s newly redefined management structure called the “Restaurateur Program” has been aimed at “the best managers in the stores where they can continue to positively impact the food and the customer experience” (MacNealy). Chipotle created a new staffing structure which enabled the promotion of eligible hourly workers into management positions. This reward power, the ability of a manager to give or withhold tangible and intangible rewards (Jones 333) gives born leaders working hourly pay a clear path into a management position. The company’s advantage is now saving time, money, and resources instead of allocating new members to the team. Not only has this helped maximize profit for the company, but it has also reduced turnover. This reduced turnover also creates expert power which is power that is based on the special knowledge, skills and expertise that a leader possesses (Jones 333).Regardless of what position an employee holds at Chipotle, the fact that they have been working there longer than the average fast food employee means that they have expert knowledge of their business. With these better management and service teams, Chipotle has improved its service to its customers. “An independent research firm found that 84% of Chipotle customers are now spending ‘less than five minutes in line, whereas only 70% got through that fast a year ago.’ ‘We’re now using our crews better’” [Explained President and COO, Monty Moran].Chipotle’s constant restructuring and new ideas is what is keeping the rising Mexican grill ahead. The dedication of the Presidents, CEOs, and management team redefined the entire idea of casual- fast food.

Planning: Company Strategy, Mission, and Vision Chipotle Mexican Grill opened its doors in 1993. Their vision, or short, succinct and inspiring statement of what the organization intends to become and the goals it is seeking to achieve (Jones 10), to serve high quality and delicious food, a product of classic cooking techniques and sophisticated recipes that is in line with full-service restaurants coupled with speed and convenience of a fast food restaurant. The goal is to provide a phenomenal dining atmosphere that not only exceeds but redefines the fast food experience which everyone can enjoy at an affordable price. Their vision has extended to include “Food with Integrity” which has become part of their mission statement, a broad declaration of an organizations purpose that identifies the organizations products and customers and distinguishes the organization from its competitors (Jones 189). High quality food does not only mean being fresh but goes beyond that. They want to keep in mind the source of the food to make sure it is organic and has a positive impact on the environment and society. The strategy or decisions made about what goals to pursue and how the use resource to achieve those goals (Jones 9) is simple. Chipotle looks to serve sustainably raised food by supporting farmers who respect the environment and livestock. Chipotle strives to use meat and dairy from animals that are fed vegetarian diets and grown without the added use of hormones, antibiotics, and chemicals and use organic and local produce whenever practical (See Figure 2). This can be conceived as a conceptual skill, or the ability to analyze and diagnose a situation and to distinguish between cause and effect (Jones 14). The manages at Chipotle Mexican grill look at the big picture of what they want Chipotle to look like in the long run versus what situations will only benefit in the short run (i.e.: buying the cheapest product possible). Chipotle started the process of creating new or improved goods and services or developing better ways to produce or provide them (Jones 21) in 1999 with “Food with Integrity” and have come a long way since. Chipotle has innovated by having 100% of their pork, 85% of their beef, and 100% of their chicken is naturally raised and meets the above guidelines. 35% of their dairy comes from pasture raised cows and Chipotle is also working towards getting the meet from pasture raised animals. Currently, 40% of their beans are certified organic and Chipotle is working to increase that number (See Figure-2). Chipotle has gone through a great struggle in convincing ranchers to obey the above guidelines in order to supply them.

Evidence of PLOC4E2
Planning
Chipotle has done a great job at planning right from the start by choosing appropriate goals and courses of actions to best achieve those goals (Jones 8). From the start, Steve Ells’s goal was to revolutionize the way Americans eat by providing a healthier option that wound not break one’s wallet. He has accomplished this through doing business with local family farms in order to provide the freshest and most natural ingredients. This has served as an efficient goal because people are more and more concerned about their health and Chipotle’s well intended mission has helped the company earn a good reputation. One of the things that Chipotle strives for is to support local family farms. However, because Chipotle has grown so big over the past few years, it has becoming harder and harder to execute that. Recently, Chipotle has centralized where they get their supplies by doing business with bigger farms out of convenience and in order to remain efficient. For example, in 2008, the executives and Chipotle Mexican Grill decided to purchase their pork from largest pork farmer in America, Polyface Farm, to supply the town of Charlottesville (Debaise 2).This shows that Chipotle has effectively planned for the growing demand of their company and have taken the correct course of action.

Leading
Chipotle discovered an effective plan to leading its employees in 2006. Employees understand the vision of the managers and are able to energize members into playing their role (Jones 10) because hourly employees have the chance to take on managerial roles which is not standard for the fast food industry. Chipotle believes that this idea of promotion from within will keep its employees motivated and strive towards achieving organizational goals at all levels. This gives meaning to their job and helps attract dedicated workers that are willing to stick around and low employee turnover means better performance and higher revenue per employee. This also provides Chipotle with a line of steady capable managers which allow for creativity and innovation. Chipotle not only focuses on leading bottom level managers but also top level managers, or the managers who establish organizational goals and decide how departments should interact (Jones 12) by providing them with different form of incentives that drive them to make decisions which promote longer-term operating income growth and stock price appreciation. Some forms include annual cash bonuses and stock-based payments.
Organizing
The main success of Chipotle may be because of the authority the founder and CEO of Chipotle, Steve Ells, possesses. He is still fairly young and likely to stay with the company for a long time and is the largest inside owner of the company. Instead of being a franchised based company Chipotle remains company owned which might be the key to its organizational success. It would be nearly impossible to pursue their centralized mission without structuring working relationships so organizational members can work together (Jones 9). Speaking of organizing, Chipotle has many former McDonald’s directors on board like Jack Hartung who has great experience in making a company successful.
Controlling
As far as controlling (evaluating how well an organization is achieving its goals and taking action to maintain or improve performance (Jones 10)) goes Chipotle has done an astonishing job in targeting “fast casual” dining which has been growing 25% a year as compared to the fast food restaurants with only 2 to 3% growth (Debaise 2). Chipotle is able to effectively evaluate how well they are achieving their goals and are taking action to maintain or improve their performance by measuring the change in percent of natural ingredients they are able to acquire and use. Another way is by observing how the company is expanding. In 2010, Chipotle opened 62 new restaurants and this year they want to get that number up to 140 new restaurants (Debaise 3). Last but not least they keep a close eye on their market share and profits to make sure they are stable. “For the full year 2010, net income rose to $178.98 million or $5.64 a share, compared to $126.84 million or $3.95 a share, on revenue of $1.836 billion, up from $1.518 billion in 2009 (Debaise 3).” They have also implemented lower calorie meals such as the salads and burrito bowls to their menu to appeal to growing health conscious consumers in addition to their “Food with Integrity” program. (See Figure-3)

Strategic Human Resource Management Policies and Philosophies
Chipotle has a unique food culture of providing the best ingredients within the fast food competitive market. Not only has Chipotle been successful in maintaining this level of standard within the restaurant service, but it has also incorporated this sense of uniqueness into their management system. Steve Ells and Monty Moran (Chipotle Mexican Grill, CEO) have gradually increased their resources by investing in their employees. As a result, Chipotle has seen standards increase as well. Equal employment opportunity, the equal right of all citizens to the opportunity to obtain employment regardless of their gender, age, race, country of origin, religion, or disabilities (Jones 393), and Chipotles employees are made up of people from all over the world. The diversity within the organization can seem to create issues from within. However, Ells and Moran have come up with a strategic human resource management model (see Figure-4) that has help Chipotle grow from within. This is the process by which managers design the components of an HRM system to be consistent with each other with other elements of organizational architecture, and with the organizations strategy and goals (Jones 391). The company provides any employee, upon request, an “English Language Education” training program. This is Chipotles own type of human capital (see Figure-5) and this helps Chipotles team members bridge any cultural and linguistic gaps between employees. By educating their members, Chipotle is able to train them to become effective employees. Through employment empowerment, the expansion of employee knowledge, tasks, and decision making responsibilities (Jones 334), crew members are given the responsibility to be able to make choices that will better service Chipotles customers.
Empowering and educating employees causes them to have cultural sensitivity, and enhance their communication skills. By increasing human capital (Jones 139) and having these characteristics (training, cultural, sensitivity, linguistics, empowerment, and communication skills), the employees become a high valued resource of Chipotles success. By having outstanding performances, Chipotle has quality products, gains of higher customer satisfactions, and higher profit.
Recently, Chipotle reported its 2011 first quarter performance, and the highlights show that they have increased their revenue by 24.3% or $509.4 million dollars as compared to other fast food restaurants, which was only 12.4% (Yahoo Finance) (see Figure 6). Strategic HRM detailed Chipotle by analyzing and designing their type of work to the relationships of their employees (see Figure 3.6) in order to maintain their company’s performance. Being as active as they are with HRM, people are satisfied, and Chipotle is always going to stay innovative.
Since Monty Moran, become CEO of Chipotle Mexican Grill in January of 2009, he has helped Steve Ells develop a new way to acquire stronger leaders within the company by human resource planning, which is all activities managers engage in to forcast their current and future human resource needs (Jones 395). One way they do this is through motivation. Their psychological forces within them determine the directions of a person’s behavior (Jones 297) within Chipotle’s organization. The development of their “Restaurateur Program” has made motivation become a normal trait. Restaurateurs are Chipotle managers who are constantly building “great efficiencies” (Investors Relations; Monty Moran, CEO). These positions are reserved only for its most elite and are handpicked by Ells and Moran themselves. The position of being a restaurateur is a person that holds powerful leadership skills with astounding restaurant experience, and creates a sense of empowerment amongst their employees to achieve the organizations’ goals. By empowering their employees, restaurateurs are able to hone in on crew members that are capable of attaining leadership roles and growing in the company. An example of a resturanture is a person with a lot of similar qualities of a HRM professional. They hold human relational skills, decision making skills, leadership skills, and well as technical skills (Figure-7). Having the “Restaurateur Program” has had a great impact on the business and in turn has impacted how Chipotle runs.

Types of Innovation and Evidence of Entrepreneurship
Chipotle is known for being a fast paced, innovative company that focuses on great customer satisfaction. Chipotle is a “fast-casual” restaurant that provides the freshest ingredients to produce the highest quality product for its customers. Steve Ells, the founder of Chipotle saw the opportunity to take advantage of the fast food business by adding his own flavor to the traditional Mexican food. Mr. Ells shows characteristics of a social entrepreneur, an individual who pursues initiatives and opportunities and mobilizes resources to address social problems and needs in order to improve society and well being through creative solutions (Jones 176). Through Chipotle’s “Food with Integrity” initiative, Ells’ exemplifies the characteristics of a socially conscious entrepreneur because he is providing 100% sustainable products that are hormone free in a fast food restaurant. Zuber enumerates, “Ells, who trained at the Culinary Institute of America, is passionate about the food he serves in his restaurants. One of his ongoing projects involves ‘making sure the raw ingredients are as good as they can be” (Zuber 58). That explains why Mr. Ells is an entrepreneur; he was influenced by a mom and pop burrito joint. He realized that if he changed a few things, so that the ingredients, like the meats and vegetables were organic and fresh, his business would flourish in the fast food industry. Steve Ells goes to far lengths to obtain the best ingredients in his food. By researching how ingredients are used, for example, Ells found out that the reason why the taste of Chipotle’s black beans were off was because the chefs were not cutting the oregano in the right sizes (Figure-8); or by switching the meat from hogs raised in pens compared to those raised in the open, he found that the animals put on more fat living out in the open, which made the meat more flavorful (Markels 2-3). Ells dedicates himself to finding the best ingredients to use in his business because, at the end, it results in better tasting food.
Another unique concept Chipotle implements is serving their food fast and with an open kitchen. By doing this, customers can interact with the employees and see their order being made (See Figure-9). This is a good example of creativity, because other fast food restaurants do not have such an innovative food preparation system. Creativity is a decision maker’s ability to discover original and novel ideas that lead feasible alternative courses of action (Jones 173). Other fast food restaurants offer deep fried automated processed food. However, Chipotle delivers fresh organic ingredients that you can see. Chipotle also stays innovative which is the implementation of creative ideas in an organization (Jones 173) by offering an online ordering experience that cuts down on the time that customers wait in line which creates a speedy delivery on all the orders (“Line-Busting Internet ” 37-38) (See Figure-10).
Chipotle does not stop there; they also offer great incentives to their employees as well. For example, Chipotle offers an English language instruction coarse to all of its employees. This creates a low turnover rate and great customer service (Alsever 1-2). Organizational learning is the process through which managers seek to improve employees’ desire and ability to understand and manage the organization and its task environment (Jones 172). Offering this course not only teaches Chipotle’s employees how to speak English well, but it also teaches them how to interact with customers individually. Another incentive program that results in organizational learning is Chipotle’s “Restaurateur Program”. This program pays managers $10,000 if they train an hourly worker into a manager. This helps create a loyalty amongst the managers resulting in a low turnover rate (Berta 18). Managers at Chipotle find it rewarding when they can pass on the skills that they have acquired throughout their time in the organization to others. This creates a team environment and a rich working environment. Chipotle’s creativity and innovation is what gives them their competitive advantage.
Chipotle’s fast paced, high energy atmosphere has brought them into the green era. Chipotle has placed solar panels on the top of the roofs where there is extreme sunlight which allows them to become more efficient by reducing their CO2 emissions, making them more eco friendly. As well as adding solar panels, they have added wind power turbine in a few of their locations, one of them is located in Gurnee, IL. “Chipotle’s Gurnee, IL, unit was the first restaurant to receive platinum-level LEED certification from the Green Building Council (See Figure-11). It features an on-site wind turbine and an underground cistern that captures rainwater for irrigation. There’s another LEED unit in Long Island, NY, and one in Minneapolis that hopes to get certified soon,”(“Going Green” 20). This is a perfect example of an organizational change, which is the movement of an organization away from its present state and toward some desired future state to increase its efficiency and effectiveness (Jones 282). Efficiency is a measure of how productively resources are used to achieve a goal (Jones 5). Effectiveness is a measure of the appropriateness of the goals an organization is pursuing and of the degree to which the organization achieves those goals (Jones 6). These concepts relate to Chipotle because they have found eco-friendly ways to improve the organization by using alternative sources of energy. Having installed sun panels and wind turbines in some of their restaurants they have become more efficient and effective at working to reach their goals.

Team Management and Dynamics
Something that is unique about Chipotle Mexican Grill is the staffing structure they implemented in 2006. Instead of hiring part time employees or college students who would result in a quick turn over rate, Chipotle hires full-time employees. They are able to attract people to these positions because of the clear path into managerial roles. Chipotle Chief Operating Officer, Monty Moran, “recently put in a new, multitier store management system in place that provides a path for line workers to move up” (Markels 3). This in turn results in employees who have advanced experience with the system, which produces more revenue per employee, and this success breeds more success. This multitier system results in group cohesiveness within each restaurant. Group cohesiveness is the degree to which members are attracted to or loyal to their group (Jones 374). This unique structure directly impacts how Chipotle team experiences the Five Stages of Group Development, steps that pinpoint where a group is and what to expect from its members (Jones 370) (See Figure-12). The fact that Chipotle is able to develop their team over time result in bypassing the forming and storming stages of the five stages of group development (see figure 11.3) and instead, they concentrate on norming and performing. Because Chipotle concentrates on keeping its employees and maintaining a low turn-over rate, they have very few times when their teams practice the adjourning stage.
Social loafing, or tendency of individuals to put forth less effort when they work in groups than when they work alone (Jones 379) happens less because each restaurant team has individual jobs that can be measured. Chipotle has made it easy to identify individual contributions to the team and keeps the number of employees working at a time low to better manage social loafing (see Figure-13). The employees of Chipotle Mexican Grill find the group very appealing, and have a strong desire to remain a part of the group. The members of the management team have put time and effort into the company and because of that, feel a strong desire to stay within the Chipotle family. Something else that is unique about Chipotle’s team management is how the top management team is composed. This group, composed of the CEO, the president, and the heads of the most important departments (Jones 363), has unusual backgrounds that affect how they make decisions. A B.A. in art history, a former trial lawyer, and a former ranch owner are all present in the history of the top management team. This creates different group roles for the members. The unique backgrounds each member posse’s affects how they are expected to perform, regardless of their position in the group (Jones 369) is important with Chipotle’s top management team because their unique backgrounds bring unique attributes to the decision making process.

Operations Management
Chipotle is one of the fastest growing global companies and has increased its revenue by $509.4 million in the last year. Chipotle is a company-owned restaurant rather than franchised which allows for greater synergy across the company as a whole. Synergy is performance gains that result when individuals and departments coordinate their actions (Jones 209). According to the statistical data as of April 2011, chipotle has about 1096 restaurants located in major areas of the world including the United States, Canada, Ontario, London, Paris, France, Munich, and many more. Through the implementation of a company owned structure, the operations of a Chipotle, regardless of its location around the world is the same.
According to chipotle.com, the management committee deals with operations management that reviews the financial sectors with management and the independent auditors. Some of the major financial operations that are focused on are: * Significant deficiencies and material weaknesses in the design or operation of the company's internal control over financial reporting. * Any fraud (regardless of materiality) involving management or other employees having a significant role in internal control over financial reporting * Changes in the Chipotle’s internal control over financial reporting during the most recent fiscal quarter that have materially affect
Through SWOT Analysis (see Figure-14), a planning exercise in which managers indentify organizational strengths, weaknesses, opportunities and threats, Chipotle is able to look at its financial operations and see what is working (strength) and what needs improvement (weakness).
These financial operations follow operating budgets that states how managers intend to use organizational resources to achieve organizational goals (Jones 271). According to additional data collected from chipotle.com, “The Committee shall also discuss the results of the independent auditors' review of the Company's quarterly financial information conducted in accordance with applicable standards of the PCAOB (United States).” The top management team uses the decision making process where they respond to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action (Jones 159). Such decisions are performed as nonprogrammed decision making where non routine decision making is the key to unusual, unpredictable opportunities and threats (Jones 162).
One of the vital procedures of Chipotle Mexican Grill is their establishment of "Whistle blowing" Procedures. These procedures deal with complaints received by the company about the internal controls and auditing matters. These complaints are anonymously filed by the concerned employees of the company. This allows the managers to review the ambiguous information, or information that can be interpreted in multiple and often conflicting ways (Jones 165), which can otherwise be overlooked and in turn helps them to increase efficiency and effectiveness of procedures. This also helps them learn from feedback so management can take corrective action if necessary (Jones 264). “Whistle blowing” is an effective source to company’s compliance and ethics program to review appropriate members of management. This also allows the company to overlook legal and material affairs.

Communication and Information Tech Management
Communication is necessary in accomplishing the goals that Chipotle intends to achieve. In order to be successful, Chipotle must stay true to their motto “Food with Integrity”. Information technology is the means by which information is acquired, organized, stored, manipulated and transmitted (Jones 427). By using information technology wisely, they can better share and distribute information to their stakeholders. Stakeholders are the people and groups that supply a company with its productive resources and so have a claim on and stake in the company (Jones 83). In 2005, Chipotle chose Altametrics to run their information technology system known as e*Restaurant Back Office Suite. “The e*Restaurant Back Office Suite is a powerful web-based application that contains several solution modules aimed at helping restaurant managers operate their business. In particular, the Food Management module is a key component of the application that will be used to streamline and manage Chipotle’s food costs, supply chain and store operations. The Food Management module tracks physical inventory levels and provides tools to accurately procure, receive, and analyze food purchases and usage,”(“Chipotle Restaurants Goes”). This web based system allows Chipotle to obtain high quality ingredients at a low cost because it shares valuable information between the Chipotle restaurants and their suppliers.
Information technology is helpful when dealing with a vast amount of data. As of 2011, Chipotle is using a Radiant POS system (See Figure-15) in their restaurants to keep track of sales and traffic data. “We have a Radiant POS system in the restaurants that reports all sales and traffic data back to the Regions and Corporate,” said Kristen Helgeland, the Corporate Marketing Program Manager. This is an operation information system—a management information system that gathers, organizes, and summarizes comprehensive data in a form that managers can use in their non-routine coordinating, controlling, and decision-making tasks (Jones 444). It performs tasks such as, “us[ing] data to help identify markets that may need added marketing or advertising support, track[ing] how much a restaurant is giving away, their comps and promo dollars and see[ing] if it’s working to build sales, driv[ing] more traffic based on their marketing plan, and look[ing] at sales year over year to see if they are building or losing ground” (Helgeland). These are just a few examples of how Chipotle uses their Radiant POS system to become more effective and efficient in achieving their goals.
In addition to the use of Radiant POS, Chipotle has an internal report manager site that allows the organization to communicate through networking (Helgeland). Communication is the sharing of information between two or more individuals or groups to reach a common understanding (Jones 429). The networking used by Chipotle is the exchange of information through a group or network of interlinked computers (Jones 441). The internal report manager shows timely information to members within the company that have access to them. This makes it easier and safer to share vital information (data that is organized in a meaningful fashion) throughout the organization (Jones 424). One way Chipotle communicates with its customers is through offering randomly selected loyal customers free meals. By doing this, Chipotle is able to put their name out in the community through using the reward system. In turn, they hope that the customers will communicate to their family and friends about what an excellent choice Chipotle is for dining out. “Chipotle encourages its managers to reward loyal customers with a free meal from time to time,” (Zuber 59). This can also be seen on Halloween when Chipotle offers anyone a free burrito if they come into the store dressed like their signature product (See Figure-16). This supports Chipotle’s word of mouth marketing. However, word of mouth can only reach so far. Therefore, Chipotle relies on their website in order to teach customers more about Chipotle and allow them the convenience of ordering for pick up online. “Chipotle hired Xylem Interactive to come up with what the chain calls its ‘DSL’ (Don’t Stand in Line) online ordering system,” (“Line-Busting, Internet” 37). This innovative information system allows for more efficient customer service, which makes for a smoother and quicker transition to the register (See Figure-17).

Globalization Presence and Effects
Chipotle is a Global organization that operates and competes in more than one country (Jones 122). Its branches are spread all over the globe including London, Paris, France and the United States. The fact that Chipotle is growing and expanding also creates economies of scale where there is cost advantages associated with large operations (Jones 131). This helps Chipotle be successful because without having economies of scale it would be difficult for Chipotle to generate a profit since it does spend more money on its raw materials since they are sustainable products. Chipotle is a transnational corporation that is led by investors who can move freely and effortlessly around the world to maximize their profits. Large regions of the world attract the capital expenditure because of different cultural, economic and political advancement. It is also the ability of Chipotle Mexican Grill to outperform other organizations because it produces desired goods or services more efficiently and effectively due to its Competitive advantage (Jones 20) (See Figure-18).

Macroeconomics deals with the performance, structure, behavior, and decision-making of the entire economy including national, regional, or global economy. When McDonald’s corporations owned most of Chipotle’s interest, Chipotle experienced rapid globalization in the United States fast food industry which was expanding worldwide in its business practices. Therefore, Chipotle can be called the symbol of globalization because of the competitive global environment it now resides in. A competitive global environment is when a company enters the international market and is confronted with using a global strategy or a multi-domestic strategy (Jones 211). The challenges when deciding include increasing efficiency, quality, speed, flexibility, innovation and customer responsiveness. Chipotle follows a great Global strategy by selling the same standardized product and using the same basic marketing approach in each national market around the globe (Jones 211) (See Figure-19). Therefore its image of quality and taste is standardized.
How Chipotle affects the macro environment of United States was seen recently when Chipotle dismissed hundreds of workers at Minnesota outlets when immigration authorities sent a letter asking to verify work eligibility of the employees that were suspected illegal immigrants. 1,100 Chipotle restaurants operating in United States were targeted which caused immense pressure on the workers because of the immigration and custom enforcement. Chipotle was working how the public would react to this immigration scandal and Chipotle didn’t want their brand loyalty to come under any stake. Brand loyalty is a customer’s preference for the products of organizations currently existing in the task environment (Jones 131) (see Figure-20). It is still unclear how this public relations scandal will affect Chipotle in the long run. However, Chipotle has taken steps that will hopefully maintain their brand loyalty.

Corporate Social Responsibility and Consciousness “Food with Integrity” is posted in almost every corner of Chipotles restaurants, websites, as well as throughout the media whenever they are mentioned. It has become their trademark, and their standard. Chipotle believes in having sustainable products, and Steve Ells, the CEO of Chipotle is devoted to achieve 100% purely sustainable products. Chipotle is the leading example of attaining as well as maintaining a competitive advantage, or the ability of one organization to outperform other organizations because it produces desired goods or services more efficiently and effectively then they do (Jones 20), in the fast food market. Chipotle is one of the few fast food restaurants that provides food for vegetarians as well as vegans and is also allergy free. Usually fast food is cheap and highly processed. However, Chipotle’s value system, the terminal and instrumental values that are guiding principles (Jones 54) (See Figure-21), lets the organization provide the opposite; fresher and natural produce in the largest quantity possible. According to Chipotle’s website, “Food With Integrity” means ingredients’ bought from local family farmers in the months that its available, and serving a more “naturally raised” meat than any other company in the country. By being able to provide high quality products, Chipotle has serves, according to their website, over 700,000 people per day and have seen more than 1 billion dollars in sales from 2009. This has caused a brand loyalty since their customers would prefer to eat products from Chipotle that caters to their environment as well are their tastes. Brand loyalty is a customer’s preference for the products of organizations currently existing in the task environment (Jones 131).
Steve Ells discussed the organizational commitment and how the collection of feelings, and beliefs managers have about their organization as a whole. He and Chipotle’s employees feel and believe in the company as whole. He discussed this over a recent interview with Oprah Winfrey, and mentioned that sustainable food means luxury, and by “finding the best ingredients raised with the respect for the animals, the environment, and the farmers” means their food is unprocessed, only seasonal, family-farmed, sustainable, nutritious, naturally raised, no hormones, organic, and arsenic free (Cooper; The Ecolectual). Having the goal to constantly provide above standard produce, and supporting family farmers who not only respect their own land but also respect their animals makes the local business market grow as a result. Farmers who raise their pigs, and chickens in recent social business within chipotle, has discarded any uses of antibiotics as well as hormones to boost growth or stop diseases. The organizational culture, or shared set of beliefs, expectations, values, norms, and work routines that influence the ways in which individuals, groups and teams interact with one another (Jones 62), that Steve has taught farmers working with Chipotle has set expectations and norms for raising animals through letting them grow naturally (See Figure-22). As a result, Chipotle is the only fast food chain that serves 100% naturally raised pork and chicken. On the other hand, beef has been a current issue, and has not hit the 100% just yet. To Steve, this creates and issue amongst the ethics that Chipotle has set for them. Their inner moral principles, values and beliefs (Jones 81) is to provide 100% naturally raised meat, and since they have not attained this just yet, Chipotle is still working with its distributors who sell their goods to them to set that standard, or else they will not work with them at all.

Conclusion In conclusion, it can be seen that Chipotle’s “Food with Integrity” program is what drives their entire operation. This case study reveals that the proper implementation of PLOC4E2 determines how successful a company is. Chipotle emphasizes that their socially responsible attitude be a part of every action they take. This in turn results in a brand loyalty for customers that are conscious of what they put into their body and what human actions do to the earth. This shows managers that by having a company that is strong in its beliefs, they can find that taking the extra steps like buying more expensive products that are healthier results in more profits overall.

Figure-1 (Source: chipotle.com)

Figure-2 (Source: fool.com)

Figure-3 (Source: Jones)

Planning: revolutionize the way Americans eat by providing a healthier option that won’t break one’s wallet.
Controlling: monitoring how close they are to meeting their goals and keeping track of their expansion and profit.
Organizing: corporate owned instead of franchise based.
Leading: opportunity for hourly employees to take on managerial roles and bonuses for top management.

Figure-4

Type of Human Capital
Training
Cultural Sensitivity
Linguistics
Empowerment
Communicational Skills

CEOS
Resturanteurs
Empowerment
Effort
Motivation

Performance
Profit
Competitive Advantage
Consumer Satisfaction

Figure-5 (Source: Jones)

Figure-6 (Source: Yahoo Finance)

Figure-7 (Source: Jones)

Figure-8 (Source: chipotle.com)

Figure-9 (Source: mlive.com)

Figure-10 (Source: flickr.com)

Figure-11 (Source: Chipotle.com)

Figure-12 (Source: Jones)

Forming

Norming

Adjourning

Performing

Storming

Figure-13 (Source: Jones)

Making individual contributions to a group identifiable when possible | Emphasizing the valuable contributions of individual members | Keeping group size at an appropriate level |
Reduce
Social
Loafing

Figure-14

STRENGTH
“Food With Integrity”

WEAKNESS
Cost of Sustainable Goods

OPPORTUNITY
Sustainable Lifestyle- vegan/vegetarian fast food options
Hormone free food
THREAT
Using “Whistle Blowing” in a efficient and effective matter

Figure-15 (Source: merchantcircle.com)

Figure-16 (Source: brandfreak.com)

Figure-17 (Source: gizmodo.com)

Figure-18 (Source: Jones)

Efficiency

Innovation

Competitive Advantage

Responsiveness to Customers

Quality

Figure-19 (Source: chipotle.com)

Figure-20 (Source: Jones)

Economies of Scales
Brand Loyalty
Create Barriers to Entry
That Deter Potential Competitors
Government Regulations

Figure-21 (Source: Chipotle.com)

Figure-23 (Source: Chipotle.com)

References
Articles, By Jeremy MacNealy | More. "Fool on Call: Chipotle's Leadership Leads the Way (CMG)." Fool.com: Stock Investing Advice | Stock Research. Web. 06 June 2011. <http://www.fool.com/investing/small-cap/2006/11/06/fool-on-call-chipotles-leadership-leads-the-way.aspx?source=isesitlnk0000001>.
Berta, Dina. “Chipotle incentive program aims to keep, promote GMs.” Nation’s Restaurant News 41.44 (2007): 18. Business Source Complete. EBSCO. Web. 2 June 2011.
Brandau, Mark. "The Fastest-growing Restaurant Brands." Nation's Restaurant News. Web. 06 June 2011. <http://www.nrn.com/article/fastest-growing-restaurant-brands>.
Business Finance, Stock Market, Quotes, News. Bussiness Wire, 20 Apr. 2011. Web. 24 May 2011. <http://finance.yahoo.com/news/Chipotle-Mexican-Grill-Inc-bw-3582506521.html?x=0>. Chipotle: Food With Integrity." Chipotle Mexican Grill: Gourmet Burritos and Tacos. Web. 25 May 2011. <http://www.chipotle.com/en-US/fwi/animals/animals.aspx>. Chipotle: Gourmet Burritos and Tacos. Web. 06 June 2011. <http://chipotle.com>.
Chipotle. Investor Relations. Chipotle Investor Relations. Chipotle Investor Relations
Press Release.Chipotle Mexican Grill, Apr.-May 2011. Web. 23 May 2011.<http://ir.chipotle.com/phoenix.zhtml?c=194775&p=irolnewsArticle&ID=1550462&highlight=>.
"Chipotle Mexican Grill, Inc. Announces First Quarter 2011 Results - Yahoo! Finance." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Web. 06 June 2011. <http://finance.yahoo.com/news/Chipotle-Mexican-Grill-Inc-bw-3582506521.html?x=0>.
“Chipotle Restaurants Goes High Tech.” Altametrics.com. Altametrics Inc, 2010. Web. 1 June 2011. http://bit.ly/jTcjZm.
“Going Green: Will Customers Notice?.” Restaurant Hospitality 94.1 (2010): 20. Business Source Complete. EBSCO. Web. 2 June 2011.
"How I Got Started: Steve Ells of Chipotle - Oct. 7, 2010." Business, Financial, Personal Finance News - CNNMoney. 06 Oct. 2010. Web. 06 June 2011. <http://money.cnn.com/2010/10/06/smallbusiness/chipotle_started.fortune/index.htm>.
Jones, Gareth R., and Jennifer M. George. "Chapter 11." Essentials of Contemporary Management. Boston: McGraw-Hill/Irwin, 2011. Print.
Helgeland, Kirsten. “RE: HOT/FW: Minas Dimas MGT 300 T/TH 3:10-4:40pm.” Message to Minas Dimas. 31 May 2011. E-mail.
“Line-Busting, Internet Style.” Restaurant Hospitality 90.2 (2006): 1. Business Source Complete. EBSCO. Web. 2 June 2011.
Markels, Alex. “Chipote’s Secret Salsa.” U.S. News & World Report 144.2 (2008): 41-44. Business Source Complete. EBSCO. Web. 11 May 2011.
"Unique Corporate Culture Drives Results." Management CV. 28 Oct. 2009. Web. 18 May 2011. <http://www.managementcv.com/>…...

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