Boston Retail: Lecture 2 Illustration

Boston Retail
An edited summary of a case from: Simons, R. (2000). “Performance Measurement & Control Systems for Implementing Strategy”, Ch. 1-5: Foundations for Implementing Strategy & Building a Profit Plan.

Background
Imagine you are the owner of a small clothing chain in suburban Boston. You started with one small store and a novel idea: to offer cheap but fashionable clothing, along with a selection of decorative merchandise to university students in Boston. By focusing on the college student market and staying in tune with youthful fashion and lifestyle changes, you have successfully built up a company with six stores. Your business now employs more than 100 employees. Innovation – focusing on the local youth market – differentiates your merchandise from the big department stores in the area. The key to success is your employees – young and in tune with the college clientele. They experiment continually with new products and fashion fads and recommend changes in merchandising mix. However, as the company has grown larger, unanticipated problems have surfaced. Profitability among the six stores has been uneven. Two of the units are especially profitable, but it is not clear what causes them to be more profitable than the others. Another store seems to consistently underperform. Moreover, if you are not always in a store, you suspect that sloppy financial controls may be eroding profits. Other issues have absorbed a lot of your time. You worry about missing the next fad. In one store, employees began experimenting with non-traditional products such as vegetarian foods. Some of the new products sold briskly but overall store sales declined. You are considering expanding into New York State, but you worry about how much to invest in new facilities and inventory. As the business becomes larger and more dispersed, you