1.

0 Introduction New Directions (plc) is one of the high street fashion chain which was initiated in late 1950s. Early twenty years of the company recorded a relatively slow growth compared to the rapid development of fashion industry in the post second world war era. This almost flat growing rate was suddenly interrupted by the appointment of the new managing director Thomas Oakley in 1978. Company recorded an extraordinary growth within the next decade ending up with 400 stores and becoming a major player in the young adolescent market. With the leadership of new managing director, the company has refreshed itself to replace its much older workforce with young and dynamic group whom have given considerably higher freedom and salaries to balance out the above industry level performance demanded by the company. Due to the future wealth potential of this rapid growing company, it was acquired by a large and cash rich conglomerate in 1987. This new ownerships approach to management was significantly different from the practice the firm used to have. New ownership and the groups main board was highly finance oriented while been risk aversive strategy towards new opportunities. Soon after the acquisition the senior management group in New Directions has identified that with this new arrangement there was a hand above them that controls them in many ways. They realized that the flexibility and freedom that they once had was no longer there and the ability they had to pursuit short term opportunities with instinct reactions were almost completely freeze due to rigid hierarchical structure and routine reporting structure. As a result of failure of continuous struggle to change the situation, Thomas Oakley resigned after two years of acquisition in 1989. Thomas Oakley suggested many things like diversify the business demographically and geographically which were ignored. Being a finance expert, Thomas Oakleys replacement focused on cost driven approach which helped by the recession in early 1990s caused the company to lose its revenue as well as its position significantly. The company was no longer a considerable player in fashion industry merely after two years from the resign of their once great leader Thomas Oakley.
1|Page

2.0 Underlining Theories 2.1 SWOT Analysis According to Gerry Johnson, Kevan Scholes and Richard Whittington in their book Exploring Corporate Strategy (Page 09), Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competencies with the aim of fulfilling stakeholders expectations. Hence strategy is the process of matching organizational strengths (capabilities) to opportunities in the environment while considering the influence of potential weaknesses and threats from the environment to weaken the outcomes. Hence SWOT analysis was introduced by Albert Humphrey to identify Strengths, Weaknesses, Opportunities and Threats related to a specific organization.

2.1.1

Strengths Any resource or a competency which can either be unique or rare can be considered as strength of an organization. Any resource or competency which is inimitable, non-substitutable and valuable can be considered as unique or rare. Another way of identifying strengths is to check the quality and adoptability of resources or competencies to achieve goals compared to the competitors.

2.1.2

Weaknesses Any resource or competency which is either common or hindering the achievement of organizational goals can be considered as a weakness. On the other hand any resource or competency which is lacking in our organization and essential to the success is also a weakness if our competitors have mastered it.
2|Page

2.1.3

Opportunities Any external environmental change or development which can be used to achieve the organizational objectives will be an opportunity.

2.1.4

Treats Any external environmental change or development which can be a hindering factor or a barricade to achieve organizational objectives can be considered as a treat.

2.2 Critical success factors in becoming a giant in fashion industry

There are numerous articles written on fashion industry and its criteria for success. Various cases brought various aspects in to light as criteria for success. Few of such factors are have few middle men, buying in larger volumes, having a broad, in-depth knowledge of design, fashion and textile, buying the right product from the right market, being cost conscious in every stage, having efficient distribution, be responsive and organic to response quickly. Anyhow by and large the critical success factors can be identified and categorized as follows.

a. How strong the marketing mix compared to the competitors b. How strong the brand
c. How strong and appropriate the management, mission, money, human resource

and machines
d. Appropriateness or the suitability of business development towards the strategy

3|Page

3.0 Analysis 3.1 SWOT Analysis for the period before acquisition

3.1.1

Strengths 3.1.1.1 Strong Brand name It is evident in the case that the brand name of New Directions was known for its presence in the fashion market from age fifteen to twenty five.

3.1.1.2 Positive reputation from the market They are known for an organization consists with ambitious, design oriented and motivated employees lead by a charismatic leader. 3.1.1.3 Skilled and Motivated workforce Work force was young and highly motivated with above industry level remuneration packages and freedom to achieve above industry level individual and organizational achievements. 3.1.1.4 Strong visionary leadership They had a leader who was strong willed and visionary to bind the organization to one unit and guide towards success. 3.1.1.5 Timely business development practice

4|Page

Continuous and a rapid growth over a decade show that they were able to match the product life cycles precisely to the market changes. 3.1.1.6 Growth supporting, responsive Management structure According to the case it is very common and regular practice to capitalize upon short term opportunities successfully, which they cant do unless they are highly responsive to market changes.

3.1.2

Weaknesses 3.1.2.1 No evidence of second level leadership There was no enough evidence to prove that they had solid second level leadership, otherwise the replacement may have been an internal candidate who knows the business well than an outsider. 3.1.2.2 Management and leadership practices were bound to a person, not to the structure Any characteristic or specialty showed by the organization was not due to the effectiveness and efficiency of the organization as a whole or a system but due to the personnel capability of a singular person, Thomas Oakley.

3.1.3

Opportunities 3.1.3.1 Demographic shift of age distribution According to the case trend analysis of the age distribution of the society, the relative percentage of older population in the society

5|Page

grows rapidly helped by 12% population growth in people who are aged between 30 to 40 years. 3.1.3.2 Diversifying demographically There was an opportunity to diversify the business in to other age groups as well as new geographical locations. 3.1.3.3 Shift in customer preference towards quality Customers of highly fashionable clothes are becoming more sensitive to the quality and have the opportunity of deriving the advantage of being the first to reach that market requirement. 3.1.3.4 Development of overseas markets There was a potential opportunity of expanding business to the European market, especially to Spain. opportunities geographically and

3.1.4

Treats 3.1.4.1 Emergence of strong competition There was evidence of the development of strong competition in every aspect of the business which was not there in the early stages. 3.1.4.2 Possibility of becoming the follower in to retail shopping concept Some competitors already initiated the movement towards newest concepts like retail shopping to attract new customers, which was not considered by the New Directions.

6|Page

3.2 SWOT Analysis for the period after the acquisition

3.2.1

Strengths 3.2.1.1 Backing of a group of companies which has a solid financial strength The group of companies acquired the New Directions is financially a strong company which can tolerate and fund the company to run even under a loss for few years until it start earning substantial profits without shutting it down.

3.2.1.2 Owns a well placed and established retail shops chain Owns 400 odd well established retail chain to strengthen the distribution channels.

3.2.2

Weaknesses 3.2.2.1 Lack of visionary, appropriate and strong leadership The leadership which replaced Thomas Oakley do not display the same sense of urgency and understanding of the content and the context of the fashion industry. 3.2.2.2 Lack of expertise in technical aspects of fashion industry and managing fashion market Financial expertise of the new leader tends to take decisions giving more priority to financial aspects than what demands by the fashion industry.
7|Page

3.2.2.3 Non availability of skilled, experienced and well motivated workforce Most of the experienced and well trained employees left the organization after the replacement and to make the things worst joint the competitors of New Directions. 3.2.2.4 Lack of responsiveness Rigid and time consuming policies and constraints from the groups senior management board on approval procedures of new strategies reduce the responsive speed considerably. 3.2.2.5 Weaken Brand image According to the newest market research, the brand image of the company among its core market segments were weaken significantly to drop from strong loyalty to confusing.

3.2.3

Opportunities The analysis of the given case indicates that the opportunities presented at this stage are quite the same as two years before. But with the economic recession the strength of those opportunities may have reduce slightly and immerged new opportunities like the emergence of cost conscious markets and / or cost and quality conscious markets.

3.2.4

Treats 3.2.4.1 No longer the market leader, hence huge competition from the competitors

8|Page

The position of market leader, the company once enjoyed was no longer there. It allowed the other companies to capitalize on it and develop strong market attractiveness which is quite difficult to penetrate thus pose a huge threat. 3.2.4.2 Economic recession Fashion clothes being a luxury item, economic recession place a major role in diminishing the demand. 3.2.4.3 Competitors armed with left employees whom knows the company inside out Most important market and inside intelligence of the company was passed out to its competitors through the employees whom have left this organization to join the competitors.

4.0 Conclusion Analysis of the case clearly shows that the time has changed the context the company has to perform in a significant manner. Sources of once much strength become the key source of both weaknesses and treats. Major shift in Socio-cultural, technological and economical environments are creating the major opportunities where the main opportunity lies with the production of highly innovative, high quality but low cost garments for diverse groups in quick sessions.

5.0 Recommendations for Marketing Plan

It is evident that diversity of requirements in different age groups with respect to fashion do not allows the company to develop same type of products to the whole market. But all groups
9|Page

prefer high quality, low cost and quickly renewing range of garments. Hence developing different market mixes for different sub groups may be the better way forward. Expectations of pleasant shopping experience leads the company to think about refurbishing the appearance of the retail shops to have a new looking and attractive supply chain.

6.0 References
a. Exploring Corporate Strategy, Gerry Johnson, Kevan Scholes and Richard Whittington,

7th Edition
b. http://en.wikipedia.org/wiki/SWOT_analysis; viewed on 10 / 02 / 2010 at 10pm c. www.exampleessays.com/essay_search/key_success_factors.html; viewed on 10 / 02 /

2010 at 10pm
d. www.fibtex.lodz.pl/63_07_13.pdf; viewed on 10 / 02 / 2010 at 10pm

10 | P a g e