Chipotle,

Management Principles
Name
Institutional Affiliation

Management Principles
Management refers to the directing and controlling various stakeholders of the business or the organization to achieve a common objective. Regarding the theory of the Directorate, requires a careful structuring of the principle and practices to provide an efficient guide for the performance of the business. It includes a range of approaches stretching through appropriate management of finances, operations, labor, investments, times management, and governance. About the concept of the directorate, it entails the careful laying down of procedural steps taken by the managerial authority and employees towards attaining a set objective. Thus, this paper addresses management and leadership through the case study of Chipotle Mexican Grill (CMG).
Industry and Competitive conditions of CMG
CMG is a chain of restaurants distributed in the United States, UK, and Canada trading on the New York Stock Exchange. Founded in 1993 by Steve Ells, the company is constantly on a slow-down of stock sales. According to a report in 2012, the stock price declined to $285.93 a significant reduction from the previous value of $442.40. Comparatively, its foundation saw a great success and being at the top of the Wall Street attracting both the investors and the customers. Factors contributing to the success include the fast growth rate and sizeable profit margins. Additionally, the coming up with the mission of “Food with Integrity” highlights the use of naturally-grown ingredients including meat, dairy and organic produce, which attracted customers.

The opening up of the Initial Public Offering (IPO) in 2006 saw a drastic increase in stock placing it second-best IPO for a restaurant after Boston Market. The company faces competition from the Yum Brands Taco Bell, and Cantina Bell Menu focusing on customers’ satisfaction. Fast food restaurant also faces competition from other food stores outside their segment including supermarkets. Significant among these within CMG segment include Qdoba featuring Mission style burritos.
Although economic depression favored quick service and fast casual restaurant against those offering full services, consumers still preferred to curtail their spending on eating to handle the financial strains at the time. Additionally, CMG faced stiff competition from the brand Taco Bell having 5670 restaurants in the US. The launch of the Cantina Bell Menu with aggressive and large-scale advertising threatened the expansion of CMG alongside the economic challenges. Imperative is the influence of the financial strains resulting to a predicted increase in food prices and thus CMG growth in margins and usage of sustainable inputs.
Organizational resources and Financial Performance
The company’s establishment initially started with a loan of $ 85000. Profits accumulated from the sale of burritos saw the opening up of the second store in 1995. Consequently, an investment of $ 1.5 million influenced the opening up of subsequent stores. The importance of leadership in the success of business saw Ells creating a board of directors and the structuring of a plan of activities and thus raising enough funds to promote the expansion of the firm. The members of the team serve on various fields including audit, compensation, and corporate governance. Additionally, the company invests on field teams who work in close collaboration with the different restaurants. Strategic placement of the store in public areas increased the output an example includes the store in Minnesota located in proximity to the University of Minnesota.
The investment into the company by McDonald’s significant contributed to CMG expansion from 16 restaurants in 1998 to 500 in 2005. Consequently, in 2006 the company doubles the price of its shares due to the high pre-IPO demand following the opening up of its first IPO. Profits from the stock and shares enable the company to fund new stores in different cities. It is imperative to note that McDonald’s made a total investment of $ 360 million and took out a sum of $ 1.5 billion when diverting from CMG. As part of its strategic investment, the restaurant hired top chef Nate Appleman to lead in the development of new cuisines and increase the customers turn out. All of the CMG stores are company-owned rather than franchised. The strategy allows a team building approach including the division of labor where the field team hires and trains the general manager in the process of opening up a new location, while the corporate officers take care of identifying the location and funding.
Financial performance indicates an increase in sales from 5.6% in 2013 to 16.8% in 2014. Overall sales increased from $ 1.84 million in 2010 to $ 4.57 million by September 2015 amounting to 20% average annual growth rate. Regarding the operations margins, a steady increase of 18.54 % occurred despite the challenges and competition. A cost management by the managers ensures the appropriate expansion of the stores without destroying the capital and thus the significant returns. In light of the resources, including the leadership and the financial performance, the company is indeed in a position to compete favorably.
Business strategy
The plan of activities focuses on resources including raising finances, decision making on how to allocate the resources, scope of the activities, and competition. CMG practices the use of sustainable practices as its mission. The differentiation point from other competitors provides it with an upper hand especially among younger generations who are more knowledgeable about healthy living and practices. About growth, the company is on a steady increase of its stores influenced by the growing revenue and profits as indicated in the financial reports. Internationally, the company expands its stores into other countries such as the UK and Germany to compete with the local restaurants and other international food chains. Additionally, CMG focuses on a limited menu enabling it to perfect in these products and thus increase customers’ satisfaction.
Regarding its competitive advantage, the company raises the prices of its products owing to the economic challenges, and also the rise in demand for their non-genetically modifies food resources. Although the prices of its foods are relatively higher compared to the competitors, it has managed to maintain a rich customer base owing to its management and quality of its products. Thus, CMG sustainable practices provide the appropriate differentiation from other producers especially in light of the health benefits of non-genetically modified products.
Conclusion
Despite the success of the company, it is imperative to consider and implement strategies to mitigate current, and possible challenges including that of competition increased pricing and food handling. The outbreak of E. coli cases, salmonella, norovirus, and Campylobacter jejuni threaten the operation restraints, and thus, it is important to enhance hygiene standards including routine inspections to ensure clean environments and good food handlers. Additionally, the management should identify ways of meeting the resources without increasing the price to the consumers. Investing in the customers appeal through incorporating other cuisines is an effective strategy within the company without losing their differentiate value.