Essay about Store 24

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Case 2
Store 24

Maastricht University, School of Business and Economics

Course: Management Control EBC 4154

Most of the executives of Store24, a New England based convenience store, were gathered for an important meeting to discuss a way to increase store level employees retention. Some of the suggestions were to increase wages and bonuses, training enhancements or career development programs. However, top management lacked sufficient information available that would explained the relationship between manager and crew tenure on store level financial performance. Hence, the purpose of this paper is to shed light on the “employee tenure-store level performance” relationship as well as to discover how managerial skill,
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Based on the scatterplots on CTenure, Comp and Res, convenience stores 5, 8, 40, 42, 44 and 75 are dropped from the model as these stores seemed to be too much of an outlier. Moreover, Res is not used further as it is now constant for all other stores (i.e. Res = 1). As already mentioned in the case, it appears that after checking for the three regression assumptions (i.e. the zero mean, constant variance and normality assumption; independence is not an issue here as it is not time-series data), the relationship between employee tenure and store level performance is not linear. From Appendix B, the residual plots on MTenure as well as CTenure show a more parabolic than a linear relationship. Hence, as is suggested by Bowerman, O’Connell and Murphree (2009, p. 635) a quadratic regression model is used to solve for this non-linearity, by adding the two variables MTenure_Squared and CTenure_Squared. From the summary output in Appendix C it can be seen that CTenure and CTenure_Squared turn out to be insignificant, whereas Visibility is only marginally significant at the 10%-level. Therefore, it can be concluded that only manager tenure has a significant positive influence on store level performance. More specifically, the final model looks as follows:
Profit= 42360,739 + 1703,305 MTenure -4,57 MTenureSquared+ 3780,703 CTenure - 60,526 CTenureSquared + 3,997 Pop - 26561,276 Comp + 18091,05 Visibility + 36639,014 PedCount+ 58429,513
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