CASE STUDY EXERCISE
From Barnes, David (2008) Operations Management: An International Perspective, Cengage Learning http://cws.cengage.co.uk/barnes/students/sample_ch/ch2.pdf
Company background From small beginnings in Hong Kong in 1981, Giordano International Limited expanded throughout the Asia Pacific region to become one of its most well-known and established apparel retailers. By 2005, it employed over 11,000 staff in over 1,700 shops operating in 30 territories in Greater China, Japan, Korea, South East Asia, Australia, India and the Middle East. Giordano specializes in casual clothing for both men and women, and operates under the brand names ‘Giordano’, ‘Giordano Ladies’, ‘Giordano Junior’ and ‘Bluestar Exchange’. In 2005, sales of HK$4,413 million (up from HK$4,003m in 2004), delivered after tax profits of HK$431m (HK$418m in 2004). As early as the 1980s, Giordano realized that it was difficult to achieve substantial growth and economies of scale if it operated solely in Hong Kong. The key was to expand, both in the region and beyond. Moreover, after surviving the Asian economic crisis of 1997–1999, Giordano has also been endeavoring to move up-market to avoid the fierce price competition prevalent in the discount sector. However, as it moved into new segments and territories, Giordano had to consider how to adapt its marketing and operations strategies to suit these different markets. Giordano was originally founded as a wholesaler for Hong Kong-based manufactured clothing going to the USA. However, in 1983 it scaled back its wholesale operation and set up its own retail shops in Hong Kong. It soon expanded into Taiwan through a joint venture and in 1985 opened its first retail outlet in Singapore. Until 1987, Giordano sold exclusively men’s casual apparel. When it realized that an increasing number of women customers were attracted to its stores, Giordano started selling unisex casual apparel. It began to re-position itself as a retailer of discounted casual unisex apparel with great success; its sales more than quadrupled from HK$712 million in 1989 to HK$3,479 million in 2001. A willingness to try new ways of doing things and learning from past errors was an integral part of management at Giordano. The occasional failure represented a current limitation and indirectly pointed to the right decision for the future.
Operations Besides the willingness to accept mistakes, Giordano’s success is also firmly grounded on its dedicated, well-trained and ever smiling sales force. Its front-line customer service workers are its heroes. Stringent selection procedures ensure that only candidates matching its strict requirement are employed. Training workshops further test the service orientation and character of new employees before they make it into the shops. Giordano has extended its philosophy of quality service to its overseas outlets. It’s Singapore operations, for example, have achieved ISO 9002 certification. This obsession with providing excellent customer service is exemplified by an insistence that even office employees work in a store for at least one week as part of their training. For Giordano, investment in service meant investment in people. The company also offers one of the most attractive salary packages in the industry, which helps to ensure low staff turnover and an eager-to-please sales force. Managing its human resources has become an even greater challenge to Giordano as it expands into global markets. For example, its recruitment, selection and training practices may require modifications in countries with different cultures, education and labor regulations. Also, policies for expatriate staff helping to run Giordano outside of their home country need to be considered. Giordano believes that its flat organizational structure and relaxed management style help it to react speedily to market changes on a day-to-day basis. There are no separate offices for higher and top management in...
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