Span of Control at Sunrise Foods
Sunrise Foods runs a chain of 24 quick-service outlets across three cities. Each outlet has a manager, two shift supervisors and eight to twelve crew. Above the outlets, the company has three city managers, each supervising eight outlet managers, and a head office with marketing, supply chain, finance and HR, each headed by a manager reporting directly to the founder-CEO. The CEO personally approves all purchases above ₹25,000, all new hires and all menu changes. Outlet managers complain they wait up to nine days for approval; crew turnover is 48% a year; two city managers resigned last quarter citing workload. Monthly sales are flat at ₹1.9 crore while competitor outlets nearby have grown 12%. The board has asked for a structural review before the next funding round.
1. Diagnose the structural problems at Sunrise Foods using principles of organisation, and propose a revised structure.
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Diagnosis. The CEO's span is too wide in substance, not in headcount: four functional heads plus three city managers report to him, and he also retains operational approvals. This is centralisation carried to the point of delay. A nine-day approval cycle for ₹25,000 purchases is a bottleneck that outlet managers cannot work around, so responsiveness suffers while sales stay flat against competitors growing 12%.
Span of control. Three city managers each supervise eight outlets, which is workable, but they also carry escalation duty for approvals, which explains their resignations. Crew turnover of 48% suggests supervisors are overloaded with administrative chasing rather than people management.
Revised structure. (1) Delegate purchase approval to outlet managers up to ₹1 lakh and city managers up to ₹5 lakh, with monthly audit. (2) Delegate routine hiring of crew to outlet managers against a standardised HR checklist. (3) Introduce a Chief Operating Officer between the CEO and the city managers, reducing the CEO's direct reports to functional heads plus COO. (4) Create a menu-development committee with marketing, supply chain and two outlet managers, meeting monthly. (5) Give each city manager an operations assistant. This applies unity of command, scalar chain and delegation with accountability, while retaining central control over policy and capital spend.
2. The CEO argues that delegation will cause loss of control and cost overruns. Evaluate this objection and recommend safeguards.
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The objection confuses delegation with abdication. Delegation transfers authority for decisions while accountability for results remains with the delegator, so control is preserved through design rather than through personal sign-off.
Evaluation of the objection. The current system already produces a form of loss of control: flat sales, high turnover and resignations are symptoms of decisions made too slowly and too far from the customer. A ₹25,000 threshold is trivially low relative to monthly sales of ₹1.9 crore, so the CEO's time is spent on transactions rather than strategy. Refusing to delegate therefore has real costs, not just avoided risks.
Safeguards. (1) Written delegation-of-authority matrix with clear limits. (2) Exception reporting: outlet managers report only variances above a set percentage. (3) Monthly internal audit of a sample of purchases. (4) Budget caps per outlet with rollover rules. (5) Key performance indicators for city managers covering cost per outlet, turnover and sales growth. (6) A quarterly review to adjust limits. These controls give the CEO oversight of outcomes rather than inputs, which is the correct level of control for a growing chain preparing for a funding round.