Fancy Footwear was founded 50 years ago by Franco and Giovanni Verdi in West Toronto to address the needs of people with hard to fit feet and those requiring special shoes to meet medical requirements. The company expanded its line of products to include orthotics and subsequently expanded again to include a retail shop catering to the fine custom made shoes business. Most craftspeople are European trained and enjoy the family oriented environment and the opportunity to deal directly with customers in the store.

The business has recently been sold and the new owner, Peter Sanrocco, announced that a new retail store would be opened in the gay village area to capture the urban market. New managers were hired for the manufacturing and retail and customer relations functions. New apprentices were also hired. The long service employees balked at working in the new store even though it had excellent facilities and two quit. At a company party, Franco and Giovanni were taken aside by the workers and heard a litany of complaints. Giovanni advised Peter who asked for their help and advice.

1. What OB issues are evident in this case?

2. In your analysis of the issues, what short- and long-term strategies/action could Peter take to ensure Fancy Footwear thrives and the employees are satisfied?