New Directions Plc.
The case is based on the growth and decline of a high street fashion chain founded in the late 1950's having a extensive distribution network (490stores) within Britain. It refers to the developments & changes taken place during a period of 13years where the company has gone through an acquisition and change of Management after 9years of explosive growth within the industry. Whereas it is understandable that the Company should normally follow the Product Life Cycle and be at a stage of decline by the 1990's it is left to the competence of the Management to ensure the Product stands its ground during times of recession experienced in the early 1990's.
The main goal of the Management is to erase the negative perceptions created in the mind of the public after the takeover, create strong 'Store loyalty', build the confidence and project a clear and strong image to the public as well as keep the employees happy. The Management to begin with should have a clear vision on where they need to position the Company.
SWOT Before take over:
• Major standing in the young (15-25, C1/C2), male & female fashion sector having an excellent reputation and image amongst the public and employees.
• Developed product had a good reputation of having 'a strong fashion element at popular prices' even though they had compromised on quality. This could imply that the Company followed Cost Leadership policy since even though the quality was a missing element the Company had shown explosive growth.
• An unconventional and aggressive management style with considerable operating freedom.
• None of considerable importance is mentioned before the takeover.
• The Fashion Industry itself is an opportunity. Constant changes take place which allows the company to exploit these changes and put forward creative and new products to the market.
• Overseas Markets.
• Emerging competition & increase in consumer demands.
SWOT at the end of the case.
• Acquisition by 'large and cash rich conglomerate' implies strong Financial position to face the future recession of the 1990's.
• Previous Brand image of having 'a strong fashion element at popular prices' is appropriate for the present economic changes in the macro environment.
• Strong Market Intelligence. (Oakleys development plan suggests he has done considerable market research on demographic changes, customer expectations, Competition, and overseas markets)
• Good systems and control and risk averseness.
• Bureaucratic and unimaginative management style which paid little attention to the satisfying their existing staff and customers. The new Management showed no consideration towards the Staff or the ideas put forward by them. Zero motivation levels.
• Lack of expert Leadership.
• No clear goals or image they needed top project to the public. Image of the chain was confused.
• Restrictions placed on capitalizing short-term opportunities. Fashion Industry is all about capitalising short term opportunities.
• Trends in fashion: ' In the 1990's it was no longer the done thing to follow fashion slavishly. Fashion in the 90's united around a new standard minimalism. Styling of the product, its promotion in the media became crucial to its success and image'. Ideal opportunity to offer a product which has a strong fashion element yet low in price. Minimalism reduces cost of the product.
• Economic Developments: Consumers are more cost conscious. Already New Directions have a product of popular price.
• Developing Overseas Markets
• Increase in Competition and Competitors are on strong footing having employed experienced and trained staff of New Directions.
• Recession – In this case we can exploit this...