The current paper "Organisational Behaviour: David Orton PLC Case" represents a case involving two retail merchandising businesses involved in an acquisition transaction. The case centers upon the demoralization of employees formerly of Costwise, and now of David Orton plc…
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The chairman was known to have commented that he does not know or care what a middle class shopper is’. This supports the perception that as a leader he lacks flexibility and empathy with the customers as well as the staff, particularly Costwise staff because it is their business that the Chairman found not worthy of knowing. This also casts the Chairman in the eyes of the employees as a leader who is not aware of the issues and does not view a problematic situation with an open mind, but entertains preconceived notions to the detriment of his business.There was a sudden and perceptible shift in marketing strategy for those stores that used to be Costwise stores. Formerly, the choice of merchandise and retailing management was determined by the store management which enjoyed some autonomy from the central management in these matters. Costwise stores were therefore well patronized because they catered to the locality’s tastes and preferences. As converted Orton stores, however, the choice of merchandise and details of their retail distribution were uniform for all stores and centrally determined. In those locations therefore where former Costwise stores were located, the new procedures were perceived to be ill-suited to the local market which was seen to have caused the significant drop in turnover.As mentioned, Costwise employees and management at the local stores were used to a great amount of discretion in deciding on matters pertaining to the store’s business....
The problems of the case The case centers upon the demoralization of employees formerly of Costwise, and now of David Orton plc. The root cause of their demoralization is traceable to the fact of the merger, and the circumstances surrounding it, the more important of which are the following: 1. High level of uncertainty At the time of acquisition, there were unsettled matters on strategy, i.e. Costwise ‘compact’ stores business may be divested because they do not fit into Orton’s strategic thrust, but this matter is still unsettled. The eventual size and structure of the surviving company is not yet determined. This is causing morale problems among the staff. 2. Differences in management style Prior to merging, Orton and Costwise had different management styles. Orton was more centralized, autocratic and traditional. Costwise was more participative, dynamic and entrepreneurial, allowing greater managerial discretion to its branches. 3. Differences in business strategy Orton has a more homogeneous business, concentrating on large superstores and having a uniformity in its businesses. Costwise has greater diversity, with a portfolio of sites of varied size, product range, and retailing approaches. The variety of Costwise shops offered Orton to establish presence in other areas where it has not yet penetrated; however, Orton’s strategy here is not certain. 4. Declining turnover Due to re-branding and refurbishment activities, Orton found itself in a regime of declining turnover and profits, having has to issue at least five profit warnings in one year. While some of the decline was accounted for by the divesting of stores to comply with CC ruling, much of it also has to do with confusion among former
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In this case, the dilemma centers on the feelings, attitudes and behaviour of workers employed by a company that had recently been acquired by another company. The acquired company, Costwise, is a retail store operating in several areas which the acquiring company, Orton, does not.
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