Jamba Juice

Early morning on a bright day in mid-January 2009, James D. White, CEO of Jamba Juice, was driving down highway 580 headed to Jamba Juice’s Emeryville, California, headquarters. Unfortunately, today, White could not enjoy the scenic route of rolling hills which were green this time of year and palm trees swaying in the background. His mind was preoccupied with the upcoming meeting with the board of directors in which he would present his vision for the future. Although he was excited about Jamba Juice’s growth potential as the leader in the smoothie and fresh juice bar industry (Exhibit 1), his plan would require that the company embark into uncharted territory. White was hired during a time of extreme crisis for the company. Starting in 2007, Jamba Juice lost $23.9M in operating income on $317.2M in revenue (Exhibit 2). Operating performance in 2008 was even worse as weakening of the overall economy coupled with the rapid expansion of company stores translated to a net income loss of $149.2M on revenues of $342.9M. When the former CEO Paul Clayton and CFO Donald Breen left the company in 2008, three boards of directors moved in to run the day-to-day operations. Chairman of the Board, Steven Berrard took over as interim CEO and controller Karen Luey became interim CFO. In September 2008, Jamba Juice was entering its slow season, running out of cash, and suffering from operating losses. Fortuitously, one business day before Lehmann Brothers collapsed, Berrard secured a $25.0M two year bridge loan. The timing was perfect. The Lehmann Brothers’ bankruptcy sent shockwaves throughout the global economy precipitating a freeze in credit markets and closing the availability of debt to small companies like Jamba Juice for the next few years. Barely averting a near collapse of the business, the board of directors initiated an executive search to find a new CEO for Jamba Juice who possessed the ability to turnaround the failing business. James White was chosen to lead the effort and believed the company had a bright future. White listened to and observed the internal challenges at Jamba Juice and developed a list of strategic choices that would need to be approved and sequenced. As he approached Jamba Juice headquarters, he wondered which strategic options were most viable given the strong culture of the company and its current operating capabilities. Would the board approve the new measures? How should he handle resistance within the company to the new ideas? What to Do? As White parked his car, he reflected on his first day on the job a few months ago. Emotions were high and the uncertainty for employees dampened morale. He remembered standing up, sharing his leadership values and level-setting expectations. After his speech, he received a warm reception from employees, but their requests were that White save the company, preserve the values, and protect the mission. As James walked into the board meeting with a proposal in hand, he hoped to honor his commitment to them. The changes he proposed would require the company to develop new competencies and shift priorities in the wake of strong macroeconomic headwinds. If the plan worked well, he would undoubtedly keep his promise. This was not his first meeting with the board, but it was the most paramount up until this point. White needed to decide on a cohesive and achievable plan. Given the changes he would propose, he knew he needed help from the board? What should he ask for? How would they respond?
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