"CASE 1-Chapter 5 Pizza Inc., a pizza take-out and delivery chain, is experiencing decreasing revenues and steadily losing market share despite favorable market testing of its products/recipes. The company's strategy has traditionally been defined as gaining increased market share through customer satisfaction. Management has asked your internal audit function to help them understand the reasons for declining sales at the Uptown location and how the decline might be related to internal operations. Your prior internal audit experience and direct observation of work performed at the troubled location identified the following information In 20XX, Pizza Inc.'s corporate office screened this site location prior to construction to ensure that neighborhood demographics supported the ideal business environment. This resulted in locating the chain near a suburb where typical residents were in the mid- to upper-middle class income range and who owned homes with three to four bedrooms. Despite the favorable location, the site you are reviewing continues to have gross and operating margins lower than their local competitors. On-the-job training is the primary method used by managers to communicate company policy and procedures. However, documented policies and detailed procedures do exist for each key process and are "available by request from the shift manager. Employees are typically male (comprising 65 percent of total staff), 17 to 23 years old, with little or no prior work experience at the time of hire. Unscheduled absenteeism is high and part-time shift assignments are rotated frequently to reward those individuals who regularly work as scheduled. The internal audit team noted in last year's review that management has documented an average annual turnover rate of 18 percent. The shift manager is responsible for ensuring that all pizza orders are completed within the advertised time deadlines, a long-held competitive advantage. Drivers are required to record on a delivery ticket the time of their arrival at the delivery location. This time is compared with the time recorded on the order ticket to calculate total elapsed minutes. Review of the last six month's delivery tickets indicates that the company benchmark delivery cycle time of 25 minutes from "placing the order to when we're on the doorbell" has slipped to an average of 43.8 minutes. For months there have been persistent rumors about bets placed on one driver's notorious reputation for beating the delivery deadline every time." "Delivery promptness is also dependent on the volume of completed pizzas at any given time and the neighborhood "traffic pattern. Drivers are initially screened at hire for outstanding traffic violations or other infractions (such as driving while intoxicated). The original site manager posted a large map on the wall so drivers can identify their routes. Mileage is reimbursed as part of the compensation for using their own vehicles so each driver turns in a mileage log at the end of the shift to indicate both starting and ending mileage. The manager randomly checks the recorded starting or ending mileage against the cars' odometers