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Journal of Education for Business

ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20

Contexts for Communication: Teaching Expertise
Through Case-Based In-Basket Exercises
James M. Stearns , Kate Ronald , Timothy B. Greenlee & Charles T. Crespy
To cite this article: James M. Stearns , Kate Ronald , Timothy B. Greenlee & Charles T. Crespy
(2003) Contexts for Communication: Teaching Expertise Through Case-Based In-Basket
Exercises, Journal of Education for Business, 78:4, 213-219, DOI: 10.1080/08832320309598603
To link to this article: http://dx.doi.org/10.1080/08832320309598603

Published online: 31 Mar 2010.

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Contexts for Communication:
Teaching Expertise Through CaseBased In-Basket Exercises
JAMES M. STEARNS
KATE RONALD
TIMOTHY B. GREENLEE
Miami University
Oxford, Ohio

C

ommunication contexts and technologies have become so sophisticated and pervasive that effective written communication is essential to

success for managerial personnel at all
levels of the organization. Because of
the increased importance of written
communication, calls for a managerial
workforce that writes well have come
from a variety of academic and practitioner stakeholders. Higher education
accrediting agencies have mandated the
integration of communication skills,
both oral and written, in curricula. Surveys of academics, practitioners, and
recent graduates have all identified written communication as both a high priority and the area that needs the most
improvement.
Scholars have responded to such criticism with a new emphasis on writing
across the curriculum and many skill
development initiatives. What is striking
about all of these efforts is the unanimity of concern and the cooperation
among disciplines and institutions, both
within and outside of academe. In this
article, we discuss one powerful tool for
improving student writing. Case-based
in-basket exercises (CIBEs) challenge

students to write for a variety of purposes and to a range of audiences in business contexts. These exercises not only
offer students the opportunity to practice the kinds of writing that profession-

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CHARLES T. CRESPY
University of Texas, El Paso
El Paso, Texas

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ABSTRACT. Stakeholders from both
business and academe are challenging
educators to integrate meaningful
writing into the business curriculum.
In this article, the authors describe the
use of case-based in-basket exercises
(CIBEs) as a particularly effective
way to elicit such writing. CIBEs
require students not only to master
course concepts but also to learn how

to communicate what they know to a
variety of professional audiences
beyond the classroom. CIBEs require
students to combine specialized functional area knowledge with analysis of
communication contexts; thus they
lead students to expertise, or the ability to adapt disciplinary content to varied audiences and purposes.

als use every day but also show students
how to translate their disciplinary learning into meaningful action that requires
sophisticated analysis of context, audience, purpose, and knowledge. In other
words, CIBEs help students manage the
contexts in which their developing disciplinary knowledge will be needed.

Forces Behind Efforts to Improve
Written Communication
The Association to Advance Collegiate Schools of Business-International
(AACSBI) and its predecessor the
American Assembly of Collegiate
Schools of Business (AACSB) have
been powerful forces in the drive to

improve written communication in business curricula. The AACSB re-emphasized written communication as a key
element of undergraduate education in
1994. Other stakeholders have corroborated this concern and supported this
initiative. Lee and Blaszczynski (1 999)
reported that Fortune 500 executives
perceive an increase in the relative
importance of communication skills as
compared with functional area expertise. Moody, Brent, and Bolt-Lee (2002)
provided evidence that corporate
recruiters consistently place written
communication at the top of their criteria in selecting job candidates (pp.
23-24). Recruiters strongly advise business faculty to “prepare [students] more
to work and communicate with others
rather than strictly with books” and
“bring in as much ‘real life’ business
experience to the class as possible.
Teach to communicate well, reason
well” (p. 29).
Organizational action also corroborates the concern of academics and practitioners. Many firms, such as Ford and

Procter and Gamble, use written communication exercises as part of the interviewing process. These exercises are
designed to determine individuals’ ability to function in the corporate culture by
measuring their capacity to communicate effectively with different levels of
the organization (Barclay & York, 1999).

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Technical Writing Expertise and
Content Knowledge Are Not
Enough

Scholars have described a myriad of
methods for placing more emphasis on
communication through the integration
of writing into the functional business
disciplines (Carnes, Jennings, Vice, &
Wiedmaier, 2001; Hansen & Hansen,
1995; Holter & Kopka, 2001; Peterson,
1997; Plutsky &Wilson, 2001; Riordan,
Riordan, & Sullivan, 2000). These

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~

2001). Zorn (2002) argued that business
students should “work toward expertise
in a topic, not just a discipline” (p. 44,
emphasis added).
Academic writing researchers have
translated this pressure from constituent

groups into major research projects.
Worlds Apart: Acting and Writing in
Academic and Workplace Contexts
(Dias, Freedman, Medway, & Pare,
1999) documented the chasm that even
successful student writers have to cross
to write well in professional settings.

~

~~~

Research on writing and writing instruction has
shown for decades that skills taught in isolation,
through exercises, or out of context do not last
and do not transfer to other writing situations.

efforts, however, have addressed only
partially the issues of (a) how one
defines and measures the relevant

dimensions of effective written communication and (b) what framework underpins the integration process.
After entering the workforce, managers soon find that technical writing
expertise and content knowledge of a
functional discipline, although necessary, are not sufficient for effective
communication in complex organizations. This realization is manifest in
observations about academic writing
and job-related writing. For example,
Rubin (1996) argued that communication is “much more than expressing the
content o f . . . business disciplines” and
“is integral to the process of problem
solving in the team-oriented workplace”
(p. 7). Catanach and Golen (1996)
maintained that previous research and
recommendations by accounting educators regarding the development of writing skills are of limited use because of
the narrow focus. Catanach and Golen
asserted that users of accounting information often are not accountants and
that audience, or a “user-orientation,’’
should be an important component in
the evaluation of the writing skills of
accountants (see also Borzi & Mills,

214

The authors concluded their survey and
case study research with the statement
that “the writing abilities of students
graduating from universities are
increasingly in question when they
move into the workplace” (p. 5). Dias et
al. attributed this mismatch to the differences between writing as an educational activity and writing as a rhetorical
action in professional settings. In other
words, in the educational setting, students write largely to say something or
to report their knowledge; in the workplace, professionals write in order to do
something, to persuade with their
knowledge. Worlds Apart suggested that
educators could help students “experience the practitioner’s rhetorical life” by
devising writing activities that more
closely resemble the purposeful action
of workplace communication (p. 226).
Research on writing and writing
instruction has shown for decades that

skills taught in isolation, through exercises, or out of context of meaningful
discourse (with an audience, purpose,
and a style and form suitable to that
audience and purpose) do not last and do
not transfer to other writing situations.
Although business academics have been
slow to react, experts in business writing
have long called for attention to context

in writing. Tebeaux (1985) argued that
the most important factor in acquiring
the skills of business writing is an
“emphasis on adapting communication
to various audiences” and the development of assignments that “require students to place their writing in an organizational context and to make deliberate
choices about strategy, style, and tone
when they address an audience for a particular purpose” (pp. 423-424). Such
choices depend on particular contexts,
such as organizational hierarchy, the
audience’s functional expertise and perspectives, and the writer’s intended message, which may exist on several levels
at once. Zachry (2000a) suggested that
the communicative action be viewed as a
“set of practices embedded in a larger
sociohistorical network of activities”
(pp. 97-98). We believe that, to be successful, managers must be able to recognize and manage the communication
context-the audience, purpose, form,
style, and tone.
Yet conventional advice about business writing tends to rely on standard
examples and maxims without taking
shifting and multilayered contexts into
account. Brady (1993) described conventional advice about writing in business as “templates for situations that
will never be replicated” and that discourage students from looking beyond
the textbook toward “seeing subtle ways
that texts are inflected with many voices” (p. 454). This reliance on textbook
examples and conventional advice has
its roots in the division between academic and real-world conceptions of the
relationship between writing and learning. Academic advice about learning to
write has traditionally relied on imitation of standard forms and examples in
which the “content” or information in
the writing simply exists to fill up the
form that students practice.
In Worlds Apart, Dias et al. (1999)
argued that “learning to manage the
relationships” within organizations and
disciplines remains the crucial task for
novice professionals. At the same time,
academic writing has been confined too
often to exercises, such as essay exam
answers or research reports, that
address the teacher as the sole audience
and whose primary purpose is the
demonstration of knowledge, not com-

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Journal of Education for Business

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munication. Traditionally, writing is
modeled in academic settings as the
container or package for the content or
knowledge that students acquire in their
courses. Information is put into writing
according to prescribed formulae and
rules learned through imitation. In the
last decade, however, researchers in
composition and professional writing
have begun to suggest another model
for academic writing: immersion in
contexts that approximate real writing
situations.

A Tool for Integrating Business
Writing and Business
Knowledge:The Case-Based
In-Basket Exercise

A useful vehicle for helping students
gain experience in communicating their
knowledge to diverse audiences in varied contexts is the case-based in-basket
exercise (CIBE). CIBEs differ from traditional in-basket exercises (Barclay &
York, 1999; Castlebeny, 1990) in the
richness and level of information provided to the student. CIBEs include a
case-study-like “front end” that places
the student in a mid- or upper level management role for a particular company,
at a specific point in time, and presents
him or her with a series of memos from
superiors, subordinates, and peers. The
exercise places the student in a scenario
that provides significant information
about the formal and informal organization. The student knows specifics
regarding the corporation’s culture, its
business threats and opportunities, its
idiosyncrasies, competition within the
industry, the functions of the jobs performed by co-workers to whom the student is to respond, the strengths and
weaknesses of the individuals to whom
he or she is required to respond, and significant details about the role that he or
she is being asked to assume.
Acting as experts, students must put
what they have learned into action in
different contexts in which different
people require different interpretations
and answers from them. Students must
make decisions, answer questions, and
recommend alternatives; therefore, they
need to know more than simply how to
perform an accounting, finance, management, or marketing function. For

example, rather than merely performing
a statistical test, students must know
how to communicate results, recognize
subtleties, teach subordinates, and use
results rhetorically.
Circle K Stores (see Appendix) is an
example of a CIBE designed for a marketing research or marketing analysis
course. This exercise requires the student to respond to various audiences,
with varying purposes and in different
contexts, by using functional disciplinebased knowledge. Simply knowing how

the form of communication almost
always involves presentation.
The type of CIBE illustrated by Circle
K Stores is very effective in responding
to some of the major criticisms of business education and business writing.
Requiring that students contextualize
their analytical skills by writing solutions, suggestions, and directives to
“real” audiences in memo form (electronic or hard copy) helps students see
writing as a real-world skill with consequences that affect their success as man-

~~

Requiring that students contextualize their
analytical skills by writing solutions, suggestions,
and directives to “real” audiences in memo form
(electronic or hard copy) helps students see
writing as a real-world skill with consequences
that affect their success as managers.

to write correctly, in conventional
forms, will not be enough to deal with
the mClange of requests and information
in Circle K Stores. (We include a sample memo in the Appendix. Many different memos from several different
organizational members are available in
the typical CIBE. Please contact the
authors for details.)
For the purpose of accomplishing the
kinds of objectives set out by Dias et al.
(1999), Moody et al. (2002), Rubin
( 1996), Catanach and Golen (1996),
Forman and Rymer (1999), Zachry
(2000b), and Zorn (2002), CIBEs are
superior to simple in-basket exercises
and written case analyses for several
reasons. CIBEs provide more organizational and individual information than
do simple in-basket exercises, which
tend to focus on prioritizing and delegating. In-basket exercises force students to consider the audience for their
writing but are limited in context and
ability to “involve” students in rhetorical situations in which they take on a
stakeholder’s role. Written case analyses provide great detail about context,
but the “audience” for case write-ups is
usually artificial and limited only to the
course instructor. When live cases or
practitioners are used in case analyses,

agers. Combining analytical skill with
contextual problem solving, in writing,
translates into expertise, which we
describe as the combination of rhetorical
and content knowledge.

ClBEs and the Nature
of Expertise

In her comprehensive study Academic Literacy and the Nature of Expertise,
Geisler (1994) suggested that CIBE
activity in a discipline distinguishes an
expert from a novice. Geisler defined
an expert as someone able to abstract
from what she calls “domain content
representation.” In other words, expertise involves understanding the principles underlying and overarching any
particular discipline. But the ability to
abstract is not enough to produce an
expert; novices, too, learn abstract principles, such as statistical formulae or
the concept of statistical significance
used in Circle K Stores. An expert,
Geisler posited, also possesses the ability to “adapt abstractions to case specific data” (p. 85). Together, these two
abilities-abstraction
and application-lead to expertise. However, there
is yet another connecting factorrhetoric.

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Expertise is divided into two areas:
domain content and rhetorical awareness. In other words, it is not enough to
know one’s subject or be able to relate
abstractions to specific cases; one must
also know how, when, where, and why
to communicate that knowledge and to
whom one is communicating. (As
should be clear by now, a simple way to
describe the concept would be to say that
context is always part of the acquisition
of knowledge.) Most students develop
“domain content” expertise-the ability
to work with an increasing number of
abstract representations of the “problem
space” of disciplines-during their undergraduate years. But they are not yet
experts because during this time the
“rhetorical problem space remains basically naive” and “knowledge still has no
rhetorical dimension” (Geisler, 1994, p.
87). For example, a student may comprehend the concept of cost-benefit
analysis or Bayesian value of information (expected value), but he or she may
still be unable to use these concepts
effectively to convince a higher-level
person in the organization that a research
study should or should not be done.
Geisler blamed academics’ tendency
to present (and view) texts (and textbooks-the primary source of knowledge in formal education) as autonomous, existing without context and
impervious to critique, as containers of
information with no agenda of their
own. Students tend to view their professors, lectures, and classes in much the
same way-as autonomous sources of
knowledge. However, usually sometime
after undergraduate school-either on
the job or in graduate studies-students
begin to see texts and sources differently, as documents in context, with claims
that can be argued and refuted and
styles that tell much about hierarchical
relationships. As Geisler stated,

closed during late night hours to determine if the store closings reduce robberies. Second, the student must assess
Dale’s claim that the closing of the
urban stores during late night hours
would be financially insignificant.
Thus, the student is required to (a) analyze the sample evidence for statistical
and managerial significance through
hypothesis testing and probability values and (b) assess the financial impact
of the potential store closings.
Third, after completing the analysis,
the student decision maker must communicate his or her information to Dale
in a manner that not only addresses
Dale’s concerns and level of understanding but also provides a possible
solution to the current situation. In this
situation, the decision maker must recognize that Dale is caught between two
levels of the organization. Moreover,
some of Dale’s store managers harbor
resentment and strong emotions. The
socially responsible alternative may not
be the one that maximizes profit in this
situation, and the student must consider
Dale’s dual roles as an advocate for
store managers and as a representative
of the “home office.” We provide a sample response memo at the end of the
Appendix.
The response given in the sample
memo at the end of the Appendix does
an excellent job: It demonstrates use of
analytic and inferential statistical tools,
study of the financial implications in the
situation, and addressing of the concerns of the store managers and Dale
Duville. Also, the response gives Dale a
specific task (“investigate better security”), is empathic (“close the stores in
those markets”), and allows for more
discussion of the issue (“Let’s talk more
at the staff meeting”).
Students’ responses to this exam also
demonstrate that they are learning
expertise. Although the CIBE exam has
taken on almost legendary status among
the students as one of the most difficult
assignments of their academic careers,
they understand that it teaches them to
integrate functional and rhetorical
knowledge. The following is a small list
of responses given by students when
asked by writing experts, not course
instructors, what they learned from
completing the CIBE:

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The emergence of an expert representation of the rhetorical problem space is the
final stage in the acquisition of expertise.
For it is only when both the domain content and the rhetorical processes of a field
are represented in abstract terms that they
can, together, engage in the dynamic
interplay that produces expertise. . . .
Expertise, then, becomes a knowing that
linked to a knowing how” (pp. 87, underscore added).

It is not enough, then, to learn the ab216

stract concepts and tools of a discipline
(knowing that); one must be able to use,
apply, and communicate that knowledge
in particular contexts (knowing how,
why, when, and for whom).
CIBEs are a valuable tool for developing expertise in students by having
them practice the application of not only
content but also judgment regarding
how best to communicate. Andrews
(1999) argued that faculty members can
help students understand their roles as
writers in organizations by “asking
them to play that role in class’’ and giving them “experience in crafting documents within settings” (pp. 7-8). The
CIBE in the Appendix, Circle K Stores,
is one of several examples that we have
used successfully as a practice exercise
and as a testing instrument in a marketing analysis course. Circle K Stores
places the student in the role of a marketing vice president who must respond
to a series of memos involving typical
scenarios that a decision maker in such
a position could expect to encounter.
Scenarios are varied and include the
interpretation of statistical analysis (see
the example memo at the end of Appendix), the design of an appropriate
research study, financial analysis and
interpretation of parameters, and the
construction of an agenda for a staff
meeting. These memos originate from
various levels within the organization
and from co-workers with varying
degrees of understanding of research
and analysis. In their responses, students are expected to recognize the subtleties of the context and the relevant
discipline principles-in other words,
how, when, why, and for whom.
As an example of the level of expertise expected of students completing a
CIBE, we can consider the “Urban
Store Operating Hours” memo included
in the Circle K Stores CIBE. The memo,
sent by the subordinate employee Dale,
places the student decision maker in the
position of addressing the safety concerns of employees with respect to robberies at urban stores. The student is
presented with three distinct issues in
the memo, two related to analysis
(knowing what) and one related to communication (knowing how). First, the
student must interpret the statistical evidence from a sample of urban stores

Journal of Education for Business

This exam really helped me to understand the importance of audience in writing. Tell your audience what they need to
know. Make sure you are clear about
your decision and, obviously, support it.
The exam gives you the impression
that you have some sort of power. Putting myself in a position of authority
and writing from that position really
helped me apply course concepts in
order to make decisions.
I really feel that I’m going to be
doing something like this, and I need to
know how to make decisions in writing
and back them up. This exam is more
relevant to the real world than most
other tests would be.
I had to think about my sentence
structure when writing these memos. I
had to make sure that my writing was
concise and that I said just what needed
to be said.
Writing from a VP’s perspective and
responding to different people in different departments of a company really
helped me understand how everything is
so integrated in the business world.
In my profession I will always be
writing memos. I learned from this
exam how important it is to know to
whom you are talking and to get right to
the point.
If you want to do well on this exam,
you have to get into your head that you
are a marketing executive.

allows a student to use all of his or her
resources-subject knowledge, audience knowledge, context knowledge,
rhetorical knowledge, and basic writing
skill-to deal with complex managerial
decision making situations.
Although the costs of introducing
CIBEs in any business course are significant, faculty members must consider
the challenges that our constituents have
put before us. The AACSBI is demanding a better job of integrating written
communication into the business curriculum. Industry uses CIBE-like instruments to evaluate and hire our students.
Twenty-first century organizations demand managers with sophisticated and
adaptive skills. For these reasons, we
must look to the sound theoretical bases
provided by learning and writing scholars. Much of effective management
requires persuading and/or inspiring others. Today, knowing how to achieve such
ends beyond simple communication of
ideas is essential for advancement in
organizations. CIBEs compel students to
develop and use true expertise.

ing writing across the curriculum into an introductory marketing course. Journal of Markering Education, 17(1),3-12.
Holter, N. C., & Kopka, D. J. (2001). Developing
a workplace skills course: Lessons leamed.
Journal of Education f o r Business, 76(3),
138-141.
Lee, D. W., & Blaszczynski, C. (1999). Perspectives of “Fortune 500” executives on the competency requirements for accounting graduates.
Journal of Education f o r Business,
74(2),104-107.
Moody, J., Brent, S., & Bolt-Lee, C. (2002).
Showcasing the skilled business graduate:
Expanding the tool kit. Business Communication Quarterly, 65(1), 21-36.
Peterson, M. S. (1997). Personnel interviewers’
perceptions of the importance and adequacy of
applicant’s communication skills. Communication Education, 46, 287-29 1.
Plutsky, S. (1996). Faculty perceptions of students’ business communication needs. Business
Communications Quarterly, 59(4), 69-76.
Plutsky, S., & Wilson, B. (2001). Writing across
the curriculum in a college of business and economics. Business Communication Quarterly,
64(4), 26-41.
Riordan, D., Riordan, M., & Sullivan, M. (2000).
Writing across the accounting curriculum: An
experiment. Business Communication Quarrerly, 63(3), 4 9 4 9 .
Rubin, J. R. (1996). New corporate practice, new
classroom pedagogy: Toward a redefinition of
management communication. Business Communication Quarterly, 59(2), 7-19.
Tebeaux, E. (1985). Redesigning professional
writing courses to meet the communication
needs of writers in business and industry. College Composition and Communication, 36,
419-428.
Zachry, M. (2000a). Conceptualizingcommunicative practices in organizations: Genre-based
research in professional communication. Business Communication Quarterly, 63(4), 95-101.
Zachry, M. (2000b). Communicative practices and
the workplace: A historical examination of
genre development. Journal of Technical Writing & Communication, 30, 57-79.
Zorn, T. (2002). Converging within divergence:
Overcoming the disciplinary fragmentation in
business communication, organizational communication and public relations. Business Communication Quarterly, 65(2), 44-53.

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Conclusion
Educators no longer can ignore the
need to integrate meaningful writing
into business curricula. This need is
well documented by the experiences of
a variety of stakeholders. The objective
of this integration should be more than a
series of writing-across-the-curriculum
programs and exercises that merely
have students write more or technically
better. We should strive to develop managers with expertise. Thus, we must
develop exercises that vary the audience
for and the context surrounding students’ business writing and that force
them to recognize and deal with these
two elements. Essay exams, written
case analyses, simple memo writing and
in-basket exercises, research reports,
and projects are not enough. The CIBE

REFERENCES

Andrews, D. (1999). No right answer. Business
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Borzi, M. G.,& Mills, T. H. (2001). Communication apprehension in upper level accounting
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Carnes, L. W., Jennings, M. S., Vice, J. P., & Weidmaier, C. (2001). The role of the business educator in a writing-across-the-curriculum program. Journal of Education for Business, 76(4),
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APPENDIX
Authors’ note. This CIBE is partially based on
“Circle K Pushes for a New Look at Convenience
Stores,” Wall Street Journal, November 6, 1995, p.
B4.

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Circle K Stores
6454 Convenience Way
Phoenix, Arizona 84206

The Competitive Environment

The convenience store industry has
been a roller coaster ride in the last
decade. In the early 1990s, three of the
largest competitors were operating under
bankruptcy protection after posting staggering loses. Things have stabilized in

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the last 5 years, but only after thousands
of store closings, tens of thousands of
layoffs, and major debt restructuring.
The current convenience store market
can be characterized as mature and stagnant. Industry sales total $132 billion.
Management Horizons, the consulting
arm of Price Waterhouse, estimates
growth to be less than 1% per annum
through the year 2005. The “big three”
include the Dallas-based Southland
Corp., which operates 5,500 7-Eleven
stores; Circle K Corp. of Phoenix, with
slightly less than 2,500 stores; and
National Convenience of Houston, with
about 1,000 stores in the south. The
industry faces threats from gas stations,
drugstores, and even discount stores, all
of which now offer services similar to
those of convenience stores. For example, Walgreens and Wal-Mart are selling
more food and are showing signs of
competing more directly for convenience store patrons.

based on your expertise in data evaluation, data interpretation, and marketing
research. Mr. Antioco relies almost
completely on you in these matters, as
most of his time is spent dealing with
financial problems, public relations, and
looking for acquisition opportunities.
One of the first changes that you
introduced after coming over from
Southland was the remodeling of stores
away from the full, drab convenience
store look. In the last 2 years, all Circle
K stores have been spruced up with new
paneling and miniature departments.
Stores are now divided into areas
labeled “Snack World,” “Grocery Express,’’ “Dairy Land,” and other catchy
phrases. At the much-visited coffee
area, metal dispensers have given way
to glass pots, a move that has helped
increase monthly coffee sales from
$500 per store 4 years ago to an estimated $1,600 last year. Also, per-store
customer counts estimated to be 800 a
day, up from 450 a few years ago.

Store Information

Typical stores cover 2,400 square feet
and 85% of them sell gasoline, which
represents half of total corporate sales
but only one quarter of operating profit.
An experiment that has not proven to be
successful was the introduction of a
store brand name for gasoline. In the
last 3 years, Circle K has tried “2-2000”
and “Performazene” without much success. Currently, Bob Farrell handles all
aspects of gasoline logistics. This had
become such a challenging task that
Bob’s position has been elevated to that
of corporate vice president. Bob works
independently of much of the staff. He
keeps close ties with major gasoline
wholesalers and is working jointly with
you on the new Unocal project.
Unfortunately, more of your time in
the last 2 weeks has been spent advising
Mr. Antioco in a failed attempt to
acquire United Convenience Stores of
Grand Rapids, Michigan. Mr. Antioco
was particularly disappointed because
this acquisition would have strengthened
Circle K’s position in one of its weaker
regional markets, the upper Midwest.
Upon returning to Phoenix, you find
several important memos from Circle
K’s marketing directors in the corporate
offices (see Figure 1 for the organization
chart). Mr. Antioco wants to have a marketing department staff meeting before
Passover-preferably Tuesday, April 8
-so you need to respond to the memos
and establish an agenda for the meeting
to secure his final approval on any
action. Mr. Antioco was quite upset and
has seemed a little testy since the acquisition failed, so you are concerned that
his time not be wasted in the meeting.

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Circle K Corporation

Circle K was in bankruptcy when it
hired John Antioco from Southland
Corp. as President and CEO in 1995.
With the company bloated from a rapid
and expensive expansion binge, Mr.
Antioco was faced with eliminating
2,000 stores and finding a way to rejuvenate a slumbering Circle K. After
streamlining operations, Mr. Antioco
managed to raise $400 million from the
Bahrain-based Investcorp SA. With this
infusion of fresh capital, Circle K experienced a dramatic turnaround in the late
1990s. Sales starting in fiscal 2000 rose
to $3.9 billion, from $3.6 billion in
1999. Net income also was in the black;
in 1999 it was $23.6 million, and in
2000, $27.5 million. Gross margins are
roughly 20%, whereas net return on
sales is slightly less than 1%. The final
data are not in yet for 2001, but analysts
speculate that results should be slightly
better than those for 2000.
You were with Mr. Antioco at Southland as Director of Marketing. One of
the first things Mr. Antioco did was lure
you to Circle K to be the National Vice
President of Marketing (see Organization Chart). He has great confidence in
your ability to read situations and clearly identify marketing problems and
opportunities. This confidence is largely

218

Major Initiatives

Circle K is looking at three major
changes in the immediate future: (a) the
introduction of Unocal 76 brand gasoline in 400 of its stores, (b) the opening
of several free-standing Emily’s Meals
& More stores, considered to be a highrisk proposal, and (c) the restricting of
hours in urban markets.
Emily’s Meals & More is a take-out
restaurant that includes hot entrees and
desserts. The Emily’s idea has been
championed by Katherine Alles, the
Director of Store Merchandising.
The notion of restricting hours in
urban markets is a response to high levels of crime in these stores between
midnight and 6:OO a.m. Circle K has had
hundreds of robberies in urban stores,
and, tragically, two store clerks were
murdered during these hours in the last
12 months. There are 814 stores located
in urban markets; the remaining stores
are classified as being either suburban
or rural. Store managers believe that
closing certain stores from midnight to
6:OO a.m. would reduce the probabilities
of robberies and physical harm to
employees. Historically, Circle Ks have
remained open 24 hours a day, 364 days
a year (closing only on Christmas Day).

Circle K Stores
6454 Convenience Way
Phoenix, Arizona 84206
April 1,2002
To: You
From: Dale Duville, Director of
Store Managers
Re: Urban store operating hours

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Journal of Education for Business

I really need some help with the store
managers concerning the operating
hours of our urban stores. Many of the
managers have personally been in-

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Downloaded by [Universitas Maritim Raja Ali Haji] at 23:50 12 January 2016

Leslie Giro
V. P. Finance

V, P. Marketing

Logistics/Gasoline

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:
Dale Duville

Clay Walker

Joel Richards

George Winters

Director Store
Manager

Administrative
Assistant

Director Marketing Research

Director In-Store
Layout & Design

FIGURE 1. Organization chart: Circle K Stores, inc.

volved in robberies. Several of them are
frightened. The managers are convinced
that the “home office” (you and Mr.
Antioco) are concerned only about sales
per square foot, turnover, margins, and
the company bottom line. I am not sure
whether their fears are justified, but
their feelings seem genuine. They want
themselves and their employees safe,
and I can’t really argue with that. This
issue has the potential to undermine
everything I am trying to do.
Historically, 32% of our urban stores
have been robbed at least once a year.
As you know, we randomly selected 38
urban stores last year and closed them
between midnight and 6:OO a.m. to see
if robberies would decline. We have
now run this test for a year and the proportion of stores that were robbed was
only 24%. Because this is only a sample, could this finding be a fluke? Can
you help me with the interpretation of
these findings? If we have good evidence that there are fewer robberies, we
may want to initiate this policy (closing
stores between midnight and 6:OO a.m.)
in all of our urban stores. We only do
about 7% of daily sales between midnight and 6:OO a.m., so the financial
impact really would not be that great.

Sample Memo From Student
Decision Maker

To: Dale Duville, Director of Store
Managers
From: Student Decision Maker
Re: Urban Store Operating Hours
Thanks for reporting the results of
our test investigating the percentage of
stores that were robbed. Mr. Antioco
and I are very concerned about the
safety of our store clerks and managers. We would never place revenues
or profit above their safety and security. I trust you will communicate that to
them.
The results provided by your sample
could be a “fluke,” but it is not likely.
Given the sample size (38 stores) and
the sample percentage of stores robbed
(24%),the likelihood is relatively small
that the percentage of stores whose
hours have been reduced and that are
being robbed will still be 32%(. 14 prob.
value). Thus, the percentage of stores
being robbed would probably be less
than 32% when the stores are closed
between midnight and 6:OO a.m. We

have some evidence that our strategy of
closing stores during those hours is
working.
What I do not agree with is that “the
financial impact is really not that
great.” If each of our urban stores does
7% of its sales between midnight and
6:OO a.m., that means that those sales
are slightly more than $300 per night.
That generates approximately $88.8
million in sales per year and approximately $17.7 million in margin. Thus,
this decision carries a very large
financial impact. We are assuming
that urban stores do “average” sales
during those hours. Those stores may
in fact do more given the nature of
those markets.
We would never compromise the
safety of our employees, but we would
need to consider such a drastic decision
carefully. We need to try to find a way to
stay open and make all of our employees safe and secure. Perhaps you could
investigate better security for the urban
stores. That way, we could solve the
problem with capital investment rather
than with lost sales. If we can’t do that,
we should probably close the stores in
those markets. Let’s talk more at the
staff meeting.

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MarcWApril2003

219