Les Miz Shoes Case

Topics: Management, Management consulting, Strategic management Pages: 6 (1373 words) Published: October 24, 2012
| Les Miz shoes|

Les Miz Shoes
A Case Analysis


* A family enterprise established in 1984 by Don Bienvenido Ducot * Engaged in manufacturing and marketing of high-fashion ladies footwear. * In 1990, Mrs. Eulah Beulah de Espadaña took over when Mr. Ducot died. * Mrs. Espadana wasn’t much interested in managing the business * Mr. Ducot’s vision was to become the leading Filipino exporter of high quality footwear to Europe. * Have an exclusive merchandising agreement with Rustom’s * Created downmarket private labels for Rustom’s

* Saddled with low sales, debt burden, marketing and operational problem * Planned Php 12-million cash settlement

Time Context:December 1992
Viewpoint: Business consultant
Statement of the Problem
A turnaround strategy that the business consultant can suggest to the owner, Mrs. Espadaña, in order to recuperate from the crisis the business is experiencing and enhance the business performance.

Statement of the objective
This study aims to present the ideal turnaround strategy to enhance Les Miz Shoes’ business performanc and recover from the crisis the business is experiencing.

Areas of Consideration
Internal Situation
* Company Vision as seen by Mr. Ducot
* Un-experienced leadership of Mrs. Espadaña
* Efficiency of production and operations
* High product quality
* Workers craftsmanship
* Negative financial status
* Pricing dictated by Rustom’s
* No marketing effort except from the place of distribution * Acquired high-tech production machineries and equipments * Local market sales is up

Task External
* (Customer) Local affluent female market
* (Supplier) Imported raw materials
* (Channel of Distribution) Rustom’s has a lot of subcontractors. * Rustom’s imposed its own SRP.
* (Competitor) Imported Italian, French for the Les Miz designer shoes * Good quality imported dress shoes, other Rustom’s franchise prestige brand, local brands, mass market shoes, and low budget shoes for the low priced shoes

General Situation
* (Technological) Available mass production machineries and equipment * (Economic) Dollar fluctuations, leading to unstable importation costs * (Socio-cultural) The Filipinos mentality that anything that is imported is better than locally produced (Colonial mentality). * (Political-legal) Higher interest rate brought about by the political environment * (International) Strong barriers to enter the European market Alternative Courses of Action

Basically, this will focus on the different generic turnaround strategies that the management consultant suggests to Mrs. Espadaña. The strategies are arranged according to the degree of changes it brings to the company (from least to most changes).

Course of Action
Financial turnaround
* This refers to financial restructuring with a view to strengthen the balance sheet and/or provide funding. Applying this strategy to the case, the company will only resort to cash settlement to spin the financial status to back to normal. This will also lead the company to sell other assets to increase liquidity. Advantages

* This releases Les Miz from long-term debt and place the assets back as equity. * This does not entail additional cost other that the cash settlement. Disadvantages
* This could lead to selling the company in the long run. * This does not improve the business per se rather it only makes the business afloat for a short period of time. Operational turnaround

* This means increasing its demand generation capability and its demand fulfilment capability. * It is often a choice between revenue enhancement, cost reduction, and asset reduction. In this specific case, Les Miz will opt to focus on producing the lower-priced footwear which are generating income for the company, thus forgoing the designer shoes production. This will also...
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