IC Companys - Creative Genius and Commercial Attitudes - Case Study Example

IC Companys: Creative genius and commercial attitudes Contents Introduction 4 Answer 4 Evaluation of core competencies of IC Companys after merger 4 Company’s competitive situation after the merger 5 Composition of Company’s product portfolio in relation to future earnings 5 Answer 2 7 Two major issues concerning the brand focused and decentralized organization 7 Reason for frustration among country managers 8 Ways of sharing experiences and best practices 8 Answer 3 10 Multi-brand strategy 10 Reason for comparing Theilbjorn’s role with a football coach 10 Transition of management from gut feeling to fact-based orientation 11 Answer 4 12 Plug and Play 12 Pros and cons of keeping recruiting process internal 12 Reason for dedicating managerial and financial attention to HR 13 Balancing employee mix between commercial and creative skill sets 13 Conclusion 14 References 15 Introduction IC Companys was formed as a result of the merger between InWear Group A/S and Carli Gry International. The merger was viewed to be an organizational blunder and synergies across the organizational structure were required to be built. After the merger, the company faced increasing complexities due to the presence of various brand units and the revenues of the company underwent a decline from 2000/01 to 2006/07. In order to address the managerial and economic challenges, the new roles and responsibilities were required to be divided in the company and a synergy of business units was required to be established. Answer 1 The core competencies of IC Companys after the merger have been evaluated and explained as follows. Evaluation of core competencies of IC Companys after merger After the merger, the annual revenues of IC Companys started to decline and about 400 positions in the company became redundant followed by the resignation put forward by the key people in the international retail brand of clothing business. In order to unleash the potential of the company in its future business, the CEO and the top management focussed on developing core competencies of IC Companys after the merger. The core competencies that were developed include the incorporation of multiple branding strategy of the organization (Foss, Pedersen, Pyndt and Schultz, 2012, p.185). There were multiple brands developed by IC Companys and all the these brands enjoyed the power of decision making in terms of sales and marketing, advertising and promotion of the products, etc. This strategy measure was taken to build the core competency of emerging into a brand driven organization. The brands offered products to the mid and high price segment of market that has led to the boost in revenue generation. This was supported by the core competency in back office activities achieved through the measures of standardization. The standardization of the back office activities in the areas of logistics, sourcing and distribution of products, finance, administration, Information Technology and human resource functions were keys to achieve efficiency in generation of revenue from the international markets. Company’s competitive situation after the merger The competitive situation after the merger of the company reveals that the company had to undergo continuous decline in revenue decline from 2001 to 2005 when several oppositions in the company became redundant and the key people left the organization and joined their competitors. The company suffered for a considerable period after the merger due to both economic as well as managerial challenges. The managerial challenges emerged due to the autonomous functioning of the brands of IC Companys formed due to the merger. Due to the lack of differentiation strategy after the point of merger, the acceptance of the brand among the mid and high end price segments of the market suffered. IC Companys started to loose its position in the competitive market from 2001 to 2005 until the multiple branding strategy was undertaken by the management in 2006/07. The loss of revenues in the business was also due to the economic fluctuations in the international market which affected their competitive position in the international market. Composition of Company’s product portfolio in relation to future earnings IC Companys developed new product portfolio in order to check the decline in the business operations and slowdown of efficiency in revenue earnings after the point of merger. The company started to build a composition of multiple brands and ensure that the organizational success is driven by the overall brand image of IC Companys. The prospects of future earnings of revenues and net profits were addressed with the uniqueness of each brand controlled by the individual directors and the management. The functions of the various brands were supported by a shared platform where the back office activities were standardized and were applicable to the functioning of these brands. The synergies in the product portfolio were achieved with this measure with an eye to foster the growth of future earnings (Afuah, 2003, p.57). The product differentiation was strategically focused in order to drive the acceptance of the international retail clothing brand in the markets. Answer 2 IC Companys is an international retail brand in clothing which had several brands functioning under different labels and headed by individual brand directors. Henrik Theilbjørn strategically decided to implement a shared platform for supporting the functions of the various brands of IC Companys that would not only provide freedom to the brands in developing its uniqueness by also create synergy with the brand driven organization. Two major issues concerning the brand focused and decentralized organization The two major issues that cropped up on the aspect of brand focus and decentralized operations are as follows. The management identified the uniqueness of each brand and their potential to contribute to the brand image of IC Companys. At the same time, a shared platform was set up in order to standardize the back office activities supporting the functioning of individual brands. As a result of this the directors of the individual brands in the company had to transact the shared platform for undertaking the business transactions. This led to the curtailing of powers of the individual directors in making business decisions related to the individual brands. The second issue in the functioning of the decentralized structure of the brand driven organization was the difficulties faced in the aspect of knowledge sharing across the various brands developed in the organization. Due to the decentralized set up, there were difficulties in the flow of information across the brand units in the company (Foss, Pedersen, Pyndt and Schultz, 2012, p.175). These brand units were unique and had different cultures which caused barriers in adjusting to the shared mode of business of the company. Reason for frustration among country managers There were sufficient reasons for frustration among the country managers taking care of different brands in IC Companys. Although the shared platform was set up with the objective for supporting the various brand units and attaining synergy of business operations of IC Companys, the country managers lost their freedom in taking ultimate business decisions. The responsibility of the sales team had to be carried out in the common interest of brand promotion of IC Companys. The recruitment and firing decisions on the employees of their brand units were no more taken solely by the country managers. Moreover, the strategic decisions on the business function were no longer taken for the profitability of single brand units but had to be in line with the organizational objectives. This added to the frustration among the country managers. Although the country managers were held accountable for the brand performance in the respective countries, these country managers lost their independence in taking tactical and operational decisions for which they had to consult the brand managers of the company. Ways of sharing experiences and best practices The ways of sharing experience and the best practices among the various brand units and at the same time encouraging the uniqueness of each brand has been explained as follows. The experiences and the best practices were disseminated with the help of a commonly shared platform between the brand units in different countries which encourage creativity in the design of the clothes (Newell, Robertson, Scarborough and Swan, 2009, p.62). The management believed in employing agile designers who could invent creative designs of threads that match the demands of the market. The dissemination of best practices included the idea of commercialization. The brand units designed clothes that fulfilled the commercial purpose of the business. The clothes were designed for the mid and high price segments and were sold with high turnover. The best practices included encouragement to the creative genius of the brand units while still fulfilling the commercial goals of the company. IC Companys’ revenues increased from 3155 DKK million to 3354 DKK million from 2000/01 to 2006/07. The company moved from a net loss of 149.5 DKK million in 2000/01 to a net profit of 240.6 DKK million in 2006/07. Answer 3 The initiatives were taken by IC Companys to keep the complexities in the business under control and at same time motivate the creative genius and the commercial attitude of the brand units. Multi-brand strategy The management undertook the initiative of incorporating the multi-brand strategy in order to address the rising complexities in the business and its falling revenues after the point of merger. In this strategy, IC Companys functioned as an international retailing brand in clothing which was constituted of multiple brands in several countries. The brands which operated as independent units were encourage in producing creative designs and at the same time comply with the commercial goals of the organization. The multiple brands were supported by standardized back office activities which were shared by the different brand units through a shared platform (Luecke, 2003, p.28). The policies and the goals of IC Companys were required comply by the brand units and the strategic decisions were taken by the country managers in consultation with the brand managers in the areas of advertising, marketing and sales, logistics, human resource, information technology, finance and administration. Reason for comparing Theilbjorn’s role with a football coach Theilbjorn’s role as the CEO of IC Companys has been compared with the role of a football coach. The football coach is the key person in the football ground who knows the strengths and weaknesses of his eleven players and marshals his players on the ground with an aim to optimize the performance of the team. In a similar way, the CEO of IC Companys have envisaged the plan of multiple branding where the different brand units have been offered the flexibility of inventing creative designs and at the same time designs should sell highly in the markets. In order to optimize the performance of the brand units which could be viewed as eleven football players, the CEO has set up a shared platform for supporting the operations of the brand units. The shared platform would offer standardized back office support to these business units (Tidd and Bessant, 2011, p.73). Transition of management from gut feeling to fact-based orientation The management of IC Companys carried out transformation in the business activities of the company backed initially by a sense of gut feeling and then moving towards a fact based orientation. The multiple brand strategy was set up with eleven brands offering sports and lifestyle clothing to both men and women in various parts of the world. The CEO had the gut feeling that the eleven brands offering fashionable and sportswear clothes to both men and women in the worldwide markets had the potential to generate increasing revenues and profits once the complexities in the business were resolved (Urabe, Child and Kagono, 1988, p.38). This was supported by the facts that the middle price segment of the market which the company has focused was highly fragmented. The mid price segment of the market was valued at 170 billion Euros and was not dominated by any single company. These facts led to the orientation of IC Company in attaining synergy across the various brands so that the brand image of the company could be leverage to create loyal set of customers. Answer 4 The matrix structure of the organization changed as the multiple branding strategy offered powers to the brand directors in making decisions on the business operations of brand units in consultation to the top management. This resulted in the reduction of freedom of the country managers. Plug and Play IC Companys adopted the strategy of multiple branding where the CEO and the top management decided to motivate the individual brand units to undertake innovative and creative designs for better commercialization of their products. At the same time, the shared platform for standardizing the back office activities of these business units was implemented. This has allowed huge scope to the top management in making tactical decision in future to include new brands through acquisition by the company. This resembles the plug and play concept where the new brands could be supported by the shared platform in achieving the standardized process requirements for meeting the organizational goals (Clegg, 2009, p.92). Pros and cons of keeping recruiting process internal The pros and cons of Theilbjorn’s decision to keep the recruitment process internal are explained below. The internal recruitment refers to the allocation of human resources who have already been trained and educated by the company over a period of time. The talent which has been harnessed over a period of time by the company is assigned appropriate business roles across the various brand units. This is advantageous for the company as the employee is aware of the organizational policies, goals and expectation and would be able to deliver at least possible time. The cost of recruitment via external channels is also reduced. However, this could create bottlenecks in infusing creativity in the business units. This is due to the fact that the internal talents may become mechanical over a period of time for delivering the same work on a routine basis. Reason for dedicating managerial and financial attention to HR After the adoption of the multi-brand strategy, the CEO realized that the function of the HR is crucial for boosting the growth of sales, develop leadership and manage talent pool for sustainable business. Thus the HR department required to take important decisions over the ways of recruitment and the costs involved in the process of training and development of the newly recruited employees. The managerial attention was dedicated to HR in order to enhance their powers of choosing between the internal and external recruits. The financial attention was dedicated to HR so that the recruitment, training and retention costs of the company could be optimized. Balancing employee mix between commercial and creative skill sets The management focused on establishing a balance in the employee mix through harnessing the commercial as well as creative skill sets. This was achieved through the HR policies on recognizing and rewarding the talents that have contributed in developing creative designs for the boosting the brand driven performance of IC Companys. The commercial skill sets were also developed through policies of learning and development of the employees, succession planning and career growth prospects. In order to attain high career growth, the employees also focused on creating designs that would accepted highly by the customers that would generate more commercial profits to the company. Conclusion The CEO of IC Companys, Theilbjørn adopted the tactical strategy of multiple branding in the organization. In this strategy, the CEO acknowledged the uniqueness and creativity in the various brand units. At the same time a supporting platform was set up for these business units where the functions of HR, IT, Finance, Administration, Sales, Logistics, advertisement and Promotions were shared. This reduced the freedom of the country managers and they had to consult with the brand managers for undertaking operational mandate. However, the shared platform encouraged both creativity and commercial attitude of the employees that boosted the managerial and financial performance of the company. References Afuah, A. 2003. Innovation Management: Strategies, Implementation and Profits. Oxford: Oxford University Press. Clegg, B. 2009. Creativity and Innovation for Managers. New York: Taylor & Francis. Foss, N. J., Pedersen, T., Pyndt, J. and Schultz, M. 2012. Innovating Organization and Management. Cambridge: Cambridge University Press. Luecke, R. 2003. Harvard Business Essentials: Managing Creativity and Innovation. London: Harvard Business Press. Newell, S., Robertson, M., Scarborough, H. and Swan, J. 2009. Managing Knowledge Work and Innovation (2nd Edition). New York: Palgrave. Tidd, J. and Bessant, J. 2011. Managing Innovation: Integrating Technological, Market and Organizational Change. NJ: John Wiley & Sons. Urabe, K., Child, J. and Kagono, T. 1988. Innovation and Management: International Comparisons. Berlin: Walter de Gruyter. Read More