CASE #2: MING HUA: Case application on Management Functions

In a village in Ancient China, there was a young rice merchant, Ming Hua. He was one of six rice merchants in that village. He was sitting in his store waiting for customers, but business was not good.

One day, Ming Hua realized that he had to think more about the villagers and their needs and desires, and not just distribute rice to those who came into his store. He understood that he had to provide the villagers with more value and something different from what other merchants offered them. He decided to develop a record of his customers eating habits and ordering periods and to start delivering rice to them. To begin with, Ming Hua walked around the village and knocked on the doors of his customers house asking:

1. How many members were there in the household;
2. How many bowls of rice do they cook on any given day; and
3. The size of the rice jar in the household.

Then, he offered every customer:

1. Free home delivery and
2. A service to replenish the households rice jar automatically at regular intervals.

For example, in one household with four persons, every person would consume on average two bowls of rice a day and therefore, the household would need eight bowls of rice every day for their meals. From his records, Ming Hua could see that the rice jar of that particular household contained rice for 60 bowls or approximately one bag of rice and that a full jar would last for 15 days. Consequently, he offered to deliver a bag of rice every 15 days to this house.

By establishing these records and developing these new services, Ming Hua managed to create more extensive and deeper relationships with the villagers. First, with the old customers, then with other villagers. Eventually, the size of the business increased and he had to employ more people; one person to keep records of customers, one to take care of bookkeeping, one to sell over the counter in the store, and two to take care of deliveries. Ming Hua spent his time visiting villagers and handling contracts with his supplier, a limited number of rice farmers whom he knew well. Meanwhile, his business prospered.

REQUIRED: Enumerate and explain the management theories that were used by Ming Hua that contributed to the success of his business?