Case Studies
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?- Created by: georgia
- Created on: 28-05-13 10:08
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Poundland (US business) - economy & globalisation & management vision
Background
- in 2007, the financial crisis began
- economy slipped into recession in late 2008 following the collapse of the Lehman Brothers; which provided Poundland with several opportunities
- there was a high demand for cheap products (unemployment, lower confidence, sustained inflation)
- cheaper to expand; high street vacancy rates rose to 15%, cheaper to buy new shops
- cheaper stock; liquidation at othe rhigh street stores ment cheap available stock
- company increasse no. of stores from 150-400 between 2007 - 2012
Analysis
- downturn in the economy increased demand for Poundland products
- however company had to maintain a single pricing point of £1 to sustain this demand
- extreme focus on COST MINIMISATION:
- 30-40% of products sourced from Far East, where goods are cheaper
- increasing buyer power as sales have doubled allows 5-10% bulk buying discounts
- reducing the size of products to combat inflation- e.g. 800g Muesli vs 1kg standard
- as a result sales revenue went up from £300mil 2007 to £800mil in 2012
- gross profit margin maintained at 35% despite prices being held at £1
- net profit margin maintained at 4-5%
- ROCE at 30%
- gearing kept low at 10% as all new expansion was funded through retained profits
- as there is a fixed price, there is a high percentage of impulse purchases; in 2009, reported that 40% of purchases were impulse buys
- the more uppermarket shopper became attracted to Poundland during the recession; new markets
Summary
- used the recession as an opportunity
- required management commitment and vision
Korean Air- cultural values & organisational failure
Background
- had more plane crashes than almost any other ailine in the world for a period at the end of 1990's
- what they were struggling with was a cultural legacy, that Korean culture is hierachical
- you are obliged to be deferntial towards your elders and superiors
- factors influencing the culture:
- hierachy, age, social position within society, history, autonomy (single leader), respect
- impact on organisational culture:
- breakdown of communication, crash record very bad, poor reputation
- reasons for change:
- out of business, crashes
- ways of change:
- outside help and consultants, new training programmes
HBOS- economy & leadership & culture
Background
- in 2001, Halifax and Bank of Scotlant entered into a 'merger of equals' and became the 5th largest bank in UK
- Bank of Scotland = rapid growth corporate leader
- Halifax = fairly sleepy mortgage lenderr
- as part of a business with huge distribution, was able to expnd rapidly
Analysis
- culture in the division was flawed- huge derision towards risk
- those that spoke out against risks were irgnored or fired
- Paul Moore, previously head of risk was sacked in 2005, he described it as a 'them and us' culture and a 'threatening culture'
- with a 'dysfunctional' reporting structure where risk function reported to the division rather than the non-executives on…
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