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Objectives of the Organisation
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A strategic management plan should be pegged on the vision, mission and the objectives of any organisation. Rea & Kerzner (1998), notes that strategies of a company can be classified into two. The first one is the business level where the strategy simply determines the strategy to be employed and communicates these strategies to the rest of the employees for implementation. The second category is that of large corporations that make their strategies at the corporate level (Bradford, Duncan & Tarcy 2000). Hill & Jones (2009) notes that this level deals with the process to determine which units of the larger firm should be worked on and the manner in which the operations would be carried out. Some if the specific issues that are addressed by the strategies at the corporate level include the unit expansions, which business unit to grow, allocation of resources on the different units, whether to merge or acquire more in the various units, how to maximise on the synergies among the units during mergers and acquisitions among others (Rea & Kerzner 1998). If a corporation does not make the necessary steps to address the strategies and in good time, the company is likely to encounter problems like Laura Ashley did in the 1990s (Luffman 2000).
Laura Ashley case falls under the second corporation-level category, where the board was expected to come up with strategies of the aforesaid nature. In 1990-1991, the company ran for 13 months without a Chief executive. This was despite the financial difficulties the company was going through at this period having registered a loss of over 11 million pounds in the previous year.
A successful strategic management plan has to consider both the internal and external factors that would affect the business for a particular period of time (Bradford, Duncan & Tarcy 2000). External factors are further divided onto macro-environmental factors, which affect all industries and firms, and micro-environmental factors that affected a particular industry alone (Hitt, Ireland & Hoskinsson 2011). Internal factors on the other hand affect the main operations of a given firm and consequently the performance.
The problems in Laura Ashley in this period arose as a result of both the internal and external factors. The company was not exempted by the general economic situation among the British companies struck the companies in the late 1980s due to the economic recession. However, the approach that the company used to mitigate the effects of this recession was questionable. After making a huge loss in 1989 the company lost its chief executive and surprisingly, the post remained vacant for the 13 months that followed. This was the first failure. For a strategic plan to be effective there has to be centralised source of power that is well managed and seen through by a chief executive. This is what the company lacked and resulted into poorer situations. The hiring of Jim Maxmin in 1991 was late but oriented to the right direction that the company had lost. Under his management, the company realised their first profit in the year 1992-1993 since 1989 (Nolan, Croson & Marshall 1994). To achieve this, Maxmin focused on improving the company culture and image. With the knowledge that the company was appealing to the customers, he made cutbacks and made general reorganisation of the personnel. He also tried to major in the company’s strength of popular designs rather than being a major international retailer. He also streamlined the distribution chains by hiring Federal express to ensure timely delivery of merchandise.
The biggest managerial mistake that the company board made was firing Maxmin. He followed strategic guidelines and had started to reap fruits for the company barely 2years after his take-over. After his departure in 1994, the company made a loss of 31million pounds in 1995. The board introduced Ann Iversion as the chief executive who continued to cut jobs and centralising on the finance and marketing headquarters. Further, Iversion made the production unit the stand alone business. She later closed down 40 outlets in the US and opened ten larger stores selling new designs and home furnishings. This was later discovered as a major mistake since the management had overestimated the new brand strength and little if the new products were sold. The management had overlooked the brand strength as well the financial resources to advertise the brand and make it to hit the market. Laura Ashley did not have enough resources to mobilise the new products, which had been overlooked by the management. Further, the re-known company culture was severely swayed by these new introductions and this added to the woes of the company (Jerome 1999). All these put together were major errors in the strategic management planning of the company and brought dire consequences (Thompson & Martin 2010).
The company suffered more when some key staff members resigned their posts and during the same time, Iverson’s managerial style was questioned in a general meeting. Management of the key staff members is pivotal in determining the success of the strategies devised by the management team. The loss of the company’s key managers was devastating to the company and it was concluded that the managerial styles of Iversion had poor recruitment, overaggressive expansion and bad merchandising. This led to her dismissal and replacement by David Hoare in 1998 and named Michael Appel as the new chief executive for the North American operations, who had posted losses of 25.5million pounds. Hoare stopped the expansion and planned to sell factories in Wales and Netherlands. Ashley Japan was sold and the proceedings bailed the company out of the inability to repay their loans.
In 1998, the 40% of the company was sold to Malayan United Industries who immediately introduced their chief executive, Victoria Egan. She quickly restructured the company by forming three main headquarters and closed 10 stores in America. She was later replaced by Ng Kwan Cheong in January 1999 (Jerome 1999).
It was notable that the chief executives who headed the company did not put in mind the company image that its founder Laura Ashley had left. Her designs were unique and represented the British rural setting but the chief executives did not strain much on keeping the image of the company (Srinivasan 2006). Apart from Maxmin, all the others concentrated on expansion, Company culture and image, organisational structure and a little financial management and notably skipping the qualities that made the company among the greats of Europe. They disregarded the quality and traditional design that looked to imitate the rural English background.