Business Management and Decision Making
Executive Summary
The Topshop and Matalan Companies operate in the highly vulnerable and dynamic fashion and design industry in the UK. The Matalan Company focuses on the local market while the Topshop Company channels its marketing efforts both locally and internationally. Topshop is, therefore, a multinational company. Both companies have been in existence for a couple of years. The Matalan Company is owned by a single individual while Topshop is owned by two companies. The ownership of Topshop dictates the source of its management challenges. Its management issues arise from its ownership with problems relating to delayed decision-making processes due to the unclear source of direction and leadership. The management issues in Matalan arise from planning, organizing and controlling functions. The strengths, weaknesses, opportunities and threats of each of the companies have been summarized in a SWOT matrix in this report. Further, it is evident that after a while, the Matalan Company changed from a decentralized organizational structure to a centralized one. Topshop has, however, been known to use the decentralized organizational structure.
Introduction
The UK fashion industry is turning out to be one of the most vulnerable industries in the UK economy due to its high dynamism. A popular invention and innovation today might turn out to be a flop tomorrow. Firms in this industry must, therefore, continue to invest in innovation and heavy market research to keep to up to date with the current market requirements. As such, one of the major market challenges faced by the Matalan and Topshop and any other firm in the fashions industry in the UK is the rising cost of production fueled by the need to invest in advanced technology, innovation, and market research (Nordstrom 2016). Also, common retail firms must be ready to face stiff competition from modern retailers who are seen to adopt the online retail method of customer-buyer interaction. Most of the newbies in the fashion industry are seen to facilitate their sales through online retail methods with home delivery being prevalent. This eliminates the need for customers to travel from their homes to the retailer’s premises to facilitate the transactions. This management report provides the results of a comprehensive assessment of the UK fashion industry with a focus to Matalan and Topshop from an investment perspective (Nordstrom 2016).
Matalan
The Matalan is a privately held retail company in the British fashion and home ware industry. The company was founded by Preston in 1985 with an intra vires role of trading clothing and home ware. The company operates with an estimated annual revenue of £1000 million (Matalan.co.uk 2016). The company operates both shops/stores and an online website where customers can shop from. Matalan’s stores are said to be of an average of 30000 square feet with most of them being based out of town locations. These stores have adopted a similar departmentalization strategy into women’s, men’s, kids’ and home ware as the major categories.
Topshop
It is a privately held British multinational company in the fashion retail industry. The company was founded in 1964 with a focus on the clothing, shoes, make-up and accessories as the main trading products. The company is jointly owned by the Arcadia Group (75%) and Leonard Green and Partners (25%) (Nordstrom 2016). The parent company is, however, perceived to be the Arcadia Group. Like other companies in the same industry, the company owns both shops/ stores and online websites where customers can access their products. Currently, the shop has approximately 510 shops some of which have been franchised. The majority of these shops, over 300 of them are located in the UK while the rest are distributed unevenly across the other 36 countries where the company operates (Nordstrom 2016).
SWOT Analysis
Matalan
Topshop
Management Challenges (Matalan)
One of the main challenges facing management in planning is the high unpredictability of future market situations. Plans are made for the future, and it is difficult for the company to come up with the plans because the fashion and design industry is highly dynamic and volatile. The changing government regulations also make the planning function of Matalan’s management a hectic task. It is important for plans to be well consistent with the prevailing regulations and to comply with the various tenets that are relevant to such plans (Bhattacharya 2009). As such, changes in these regulations cause major disruptions to both operational and strategic plans.
In facilitating the management’s role of organizing, the Matalan Company is faced with the challenge of allocating and arranging permanent duties and responsibilities to its members of staff. This is because the industry that the firm is operating in is highly dynamic and the operations of the company keep changing to keep-to-date with the changing circumstances. As such, most employees have temporary jobs (Catlin-legutko & Klinger 2012). Ensuring that work is divided in a logical and timely manner is challenged by the fact that employees, especially those in marketing, keep changing roles.
Considering that Matalan has diverse operations, measuring and correction of the performance of employees and other organization’s resources to ensure everything is going according to plan. The control function of the management is inconvenienced by the complicated organizational operations. The dynamic nature of the industry also poses as a challenge to the control function in the sense that the strategies put in place to measure, monitor and make corrections in the organization have to be kept to date with the prevailing conditions in the industry. For instance, when new fashions and designs are developed and adopted, the management has to establish new standards for measuring performance and the measurements must be done in a different manner that is consistent with the new fashions and designs. This is challenging because developing new fashions and designs is the main business of the organization.
Main Challenges (Topshop)
One of the main management issues in that bothers Topshop the binary sources of management decisions that lead to long decision-making processes. As pointed out earlier, the company is owned by the Arcadia Group and the Leonard Green and Partners. The two parties take a considerably long period before they settle on decisive issues. Wide consultations that consume time and resources are always seen as an important tool before settling on certain decisions. The organization, therefore, take long to approve particular operational activities that could be urgent. Delays are, therefore, prevalent especially for issues that require management approval (Daft 2008). As much as this poses as a challenge to the organization, it is also beneficial in the sense that it ensures that high-quality decisions are made as a result of extensive consultations. The organization also has a pool of ideas from which it solve the identified problems.
A major challenge exists when it comes to giving directions about the various dilemma that the organization goes through. Having pointed out that the Arcadia Group owns 75% while the Leonard Green and Partners own 25%, the responsibility to give directions is divided. The Arcadia Group may, however, fill that since it owns a higher percentage, the responsibility to make decisions should be inclined towards it. The Leonard Green and Partners also feel they have the right to give directions (Cameron & Green 2012). This creates a minor internal conflict amongst the owners of the company. As a result, the directions and leadership responsibilities are delayed thereby compelling some of the employees to take primary decisional roles.
Finally, it is challenging to ensure that employees of the Topshop Company work together as a team. Most of the organizational operations also find most of the employees engaging themselves in fieldwork rather than working from within the organization’s premises. Ensuring that a certain group of people works together with a clear and common vision, objective and a common set of rules is more efficient when such a group is operating nearby as opposed to when it is widely dispersed.
Organizational Structures
Matalan
Before July 2015, Matalan used a decentralized management structure with several top management individuals making decisions on behalf of the organization (Geoghegan & Hounslea 2015). However, after the mentioned period, Matalan changed from using a decentralized structure to a centralized one after failing to replace its buying director, Mitch Hughes. The figure below illustrates Matalan’s organizational structure:
Figure One: Typical Centralized Structure
Source: www.12manage.com
With the centralized structure, decision making is quick and extremely efficient. There is no confusion about the party from which the directions should come from. The organization, due to its current organizational structure, suffers from several layers of bureaucracy (Nieuwenhuizen & Erasmus 2007). The central nature of the organizational structure leads makes decisions to emanate from a single source and encourages non-consultative decisions to be made.
Topshop
It uses a decentralized organizational structure where decisions are made by several individuals at different levels of the organization. All the organization’s subsidiaries participate in making major organizational decisions.
Figure Two: Typical Decentralized Structure
Source: www.12manage.com
This approach proves to be helpful to the organization in that a wide range of opinions and views is incorporated in the overall decision-making process. Further, a decentralized structure is seen to enhance efficiency in making minor decisions. Also, by having a broad base of company managers, the organization places itself in a position to solve and handle various types of business situations. This structure, however, lengthens the decision-making process as it creates a pool of individuals with widely views, opinions and perspectives.
Codes of Ethics
They are an important part of the operations of both Matalan and Topshop especially after the consideration that their target customers are considerably social (young people). For stock and new products to move, the organization must ensure that the acceptable behaviors in the society they operate in are being upheld. As such, Topshop should consider that it operates from different parts of the globe with different people who have different cultural values. Certain codes of ethics may be relevant in some cultures and not others. The fashions and designed developed and offered to target particular groups should be consistent with their culture and cultural values.
Even so, most cultures expect certain common codes from the companies. Topshop and Matalan should ensure that they treat information from their clients and other stakeholders with confidentiality. The information given to employees of the company during their professional activity should not be used for personal gain but solely for professional gain. This is important as it satisfies customers. Most of the customers hoped that the information they give to the company should only be used for that particular activity and treated with confidentiality (Dumas 2013). Further, employees should avoid conflict of interest. This ensures that the workers focus on ensuring client’s value for money as it is the interest of most of the clients.
Other codes that are useful include transparency and compliance with legal obligations. The employees are expected to ensure that they conduct their duties and responsibilities with unimpeded visibility. Beyond that, one should be ready to explain their actions, and they should comply with all the legal obligations (Kakkar 2009). Transparency and compliance with the legal obligations are important as it promotes public relations between the company and its customers. For instance, customers would go for satisfaction of their needs from a company that is compliant with the legal obligations and transparent as opposed one that is not. Other codes of ethics that should be maintained include due diligence, honesty, and integrity as well as impartiality and fairness.
Conclusion
The Topshop and Matalan companies in the fashion and design industry have different SWOT analysis features in spite of operating in the same industry. While the Matalan Company focuses on the local market, the Topshop Company goes beyond the local market to venturing into international markets; a feature that poses various opportunities and threats over the Matalan Company. Both companies have, however, ventured into online marketing in a bid to acquire more customers and to keep to date with the prevailing competition trends (Burrow et al. 2008). While the Matalan Company faces various management challenges arising out of planning, organizing and controlling, the Topshop Company have challenges resulting from the ownership, leadership, and direction of the organization. The Matalan, most likely because it is yet to go global, operates with a centralized organizational structure while the Topshop Company, a multinational corporation, operates with a decentralized organizational structure. Maintaining high ethical codes is essential for both companies.
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