QUESTION FIVE (20 MARKS) Read the following Mini Case study and answer the question that follows: During 2015 financial year, XYZ Clothing stores faced the challenge of realigning its strategy to fit the changes in its environment. Worsening economic conditions had reduced real disposable income and changed customer preference towards increased debt aversion and cost sensitivity. As higher interest rates propelled customers into cash based sales, retailers could no longer win customers by offering better credit terms. Value had become the most significant factor in the success of any retail company. This put XYZ Clothing stores in an unfavourable position characterised by losses in market share and stagnating sales revenues. While the group had pioneered some innovative concepts, its weakness in implementation skills, coupled with underlying inefficiencies in the business, had not allowed it to make a positive impact on the business.

Question

QUESTION FIVE (20 MARKS) Read the following Mini Case study and answer the question that follows: During 2015 financial year, XYZ Clothing stores faced the challenge of realigning its strategy to fit the changes in its environment. Worsening economic conditions had reduced real disposable income and changed customer preference towards increased debt aversion and cost sensitivity. As higher interest rates propelled customers into cash based sales, retailers could no longer win customers by offering better credit terms. Value had become the most significant factor in the success of any retail company. This put XYZ Clothing stores in an unfavourable position characterised by losses in market share and stagnating sales revenues. While the group had pioneered some innovative concepts, its weakness in implementation skills, coupled with underlying inefficiencies in the business, had not allowed it to make a positive impact on the business.

Question: Assume you have been appointed as a Strategic Manager for XYZ Clothing stores. Advise the company on the strategy change management process to turn the business into a profitable venture. (20)

Answer 1

To turn XYZ Clothing stores into a profitable venture, the company needs to undergo a strategic change management process. Here is the advised strategy change management process for the company:

1. Analysis of the current situation: Begin by conducting a thorough analysis of the current internal and external environment. This analysis should include an examination of the company's strengths, weaknesses, opportunities, and threats (SWOT analysis). Additionally, assess the competitive landscape, industry trends, and customer preferences to identify the key challenges and opportunities.

2. Set clear objectives: Based on the analysis, set clear and specific objectives for the company's turnaround. These objectives should be realistic, measurable, and aligned with the company's vision and mission. For example, the objectives could include increasing market share, improving profitability, and enhancing customer loyalty.

3. Develop a new strategic direction: Formulate a new strategic direction for XYZ Clothing stores that addresses the challenges identified in the analysis. This may involve revising the company's mission, vision, and values statements, as well as identifying new target markets, product offerings, and competitive positioning. The new strategic direction should be distinct, customer-focused, and aligned with the changing market dynamics.

4. Create a detailed action plan: Develop a detailed action plan that outlines the specific initiatives, projects, and activities required to implement the new strategic direction. This includes identifying the resources, timelines, and responsibilities involved in each step of the plan. The action plan should be comprehensive, feasible, and prioritized based on the potential impact and urgency.

5. Engage and communicate with stakeholders: Involve key stakeholders, including employees, customers, suppliers, and investors, in the strategy change process. Communicate the rationale behind the change and the expected benefits. Encourage open and transparent communication channels to address any concerns and obtain feedback from stakeholders. Effective stakeholder engagement will help gain support and commitment towards the new direction.

6. Build a change management team: Establish a cross-functional change management team responsible for driving the strategy change process. This team should consist of individuals with diverse skills, knowledge, and experience, including representatives from different departments and levels within the organization. The team will lead the implementation of the action plan and monitor progress regularly.

7. Provide training and support: Offer training and support to employees to equip them with the skills and knowledge necessary for the new strategic direction. This may include providing specialized training programs, mentoring, coaching, or bringing in external consultants. By investing in employee development, XYZ Clothing stores can ensure that its workforce is capable of executing the required changes effectively.

8. Monitor and evaluate progress: Continuously monitor and evaluate the progress of the strategy change process against the set objectives. This involves tracking key performance indicators, conducting regular performance reviews, and making necessary adjustments to ensure alignment with the desired outcomes. Regular communication and reporting on progress with all stakeholders will help maintain transparency and accountability.

9. Sustain the changes and learn from the process: Embed the changes into the organization's culture, systems, and processes to ensure their long-term sustainability. Foster a culture of continuous learning and improvement by reflecting on the strategy change process and identifying lessons learned. Encourage innovation and adaptability to address future challenges and opportunities.