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  • Essay / Chipotle Analysis - 729

    Under corporate governance, the board of directors has majority power. Once shareholders elect the board of directors, it selects the CEO responsible for running the company. The main problem with Chipotle's central, formal governance is that its strategy does not encourage innovation or employee morale. Instead, the board decides what it believes Chipotle franchisees should implement and asks managers to relay their decisions to store employees. Therefore, company representatives strive to improve in-store quality through strict supervision of each franchisee. They make decisions regarding all processes, from product preparation, customer service and marketing strategies, which are applied at each location. This system is slow and reduces efficiency. Since store employees are kept away from the immediate circle, it is difficult for them to have trust in Chipotle's operations, leading to low employee accountability. Two solutions to consider are closing gaps between hierarchical levels and making the company more decentralized. Chipotle can implement a few liaisons (brokers and structural holes) to ensure that all professional networks within the company and stores communicate effectively and function as a