Pledge of Cotton Company: Analysis and Development

1861 words (7 pages) Business Assignment

25th May 2020 Business Assignment Reference this

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Executive Summary

This report provides an analysis and evaluation of the development of Pledge of cotton from 1987-2007 and between 2007 and 2013.

This report draws attention to the fact that in 2011, PFC rebranded itself as a low-cost clothing retailer, having been reputable as a company for all classes, with products appealing to the wealth and masses since 1987.

The Method of analysis used to diagnose this case is the SWOT analysis, a method clearly stating the strength and weakness of the organisation, taking both internal and external factors into consideration. Results of the information gathered from the case indicates that comparative performance before and after change was poor, with weakness in key areas such as the Organisations vision, Leadership vison, Partnership relationship, Employee and employer relationship. This led to a noticeable drop in employee motivation, profit margins, a collapsed partnership relationship as well as a bad reception of products by the public.

The report finds the prospect of the company’s position after experiencing leadership change not positive, and recommends that Action Research Model is used to implement change, this model enables effective ways to communicate change with all parties involved and also carry them along,

INTRODUCTION

Founded by Gail and Benito, Pledge of Cotton was a fashion-based company that launched its first store at Oxford high street in 1987, in the space of 5 years, the organisation experienced quick growth and became an instant success with stores in every major city in the UK and eventually entered the European market, opening stores in major cities such as Paris, Madrid, Budapest, Athens, Lisbon and Barcelona. The organisations success is owned to its affordable fashionable product lines and its commitment to Corporate Social Responsibility.

Pledge of cotton remained a global success until 2007 when the Visionary and Leader behind the organisation’s success, Gail, retired, and the reigns were handed over to her vastly experienced twins Maria and Franco. Despite having a wide range of experience in business, the pair struggled to cope with the scale of responsibilities handed to them, they lacked any real experience of strategic leadership of the company which eventually lead to the organisation’s downfall in 2013

Report Aim

The aim of this report is to briefly but clearly present the structure of business approach that made pledge for cotton a globally successful organisation for a long time, and succinctly review the weaknesses that led to the organisations downfall when change took place. Furthermore, recommendations would be made on how to solve the problems faced by the organisation while experiencing change.

CASE DIAGNOSIS & ANALYSIS

The case of Pledge of Cotton will be examined using the SWOT analysis to point out the organisations strength and opportunities which led to its monumental success for two decades, and the weakness and threats that led to its sharp decline between 2007 and 2013

SWOT analysis studies the Strengths, Weaknesses, Opportunities, and Threats in business. When completed, SWOT analysis addresses where a business stands right now and which hindrances are obstructing the way to progress.

PfC’s Strength

One of PfC’s greatest forte is their brand identity, the company’s priority was to manufacture top quality clothes that is affordable by most classes, and not just the rich. To achieve this goal, the CEO Gail Knew that importance of reducing cost by keeping costs below that of competitors and yet maintain value. This led her to subcontract clothes manufacturing to a company in Bangladesh, where labour costs are minimal.

PfC also had an effective and consistent communication system with its partner company by constantly visiting its partner company in Bangladesh to develop a close and personal relationship with the owners. Gail did not just develop a close relationship with the partner companies within the organisation’s supply chain, but also with staffs across PfC’s 30 stores, the workers admired, trusted and believed in her; she prioritized the well-being of her employees which led to establishment of a trust-based culture.

PFC’s exhibited their commitment to CSR, when the company strongly encouraged and promoted cotton farmers change from traditional to organic cotton production, despite been more expensive. This highlighted Gail’s devotion to the welfare of the less privileged.

Staff motivation was another key strength at PFC, they heavily invested in staff training and development, created ‘Best Employee of the Month for employees’ bonus initiatives. The CEO firmly believed that a committed workforce and openness to CSR were key factors that differentiate PFC from its rivals in the highly competitive retail industry.

PfC’s Weaknesses

The first noticeable weakness in PFC was the lack of involvement of important Board members who will run the company in the future in key decision-making process. Despite the hands-on leadership approach practiced by PFC’s CEO, she also ran the company with a firm grip, making the key decisions alone. Despite having a wide range of experience in business and being core board members, the pair were hardly involved in strategic leadership and decision making in the company.

A significant proportion of store managers and employees left PfC in search of alternative employment due to a lack of communication, participation and support from the CEOs in combination with lower sales and insufficient investment in store developments.

The company changed its initial strategy in 2011 from selling high-quality clothing at affordable prices to the majority of people and not just the wealthy and rebranded itself as low-cost retailer, which will make their products less attractive to the rich. While this approach is not inherently bad, the fact that the brand did a U-turn upon its original strategy indicates weakness in the internal strategy model of the business adopted by the new CEOs.

PfC’s Opportunities

PFC highlighted the potential benefits of partnering with a solid and established brand who shared the same goals as them, it was important to protect PFC’s obligation to CSR throughout its supply chain. In its search for a clothing factory, cotton fabric producers, and cotton suppliers, they found a family production company in Bangladesh that carefully and properly managed its workers, and paid them decent wages with good working hours. Having felt that PFC and the Bangladesh based company share the same aim of building a “family-like” working atmosphere, PFC partnered with the company.

PFC also invested money in the company to improve the manufacturing process with modern technology for improved productivity level that matches PFC’s demands. After being assured of their reputation, PFC also accepted the company’s existing cotton fabric suppliers and their network of cotton farmers in India as a gesture of good will.

PfC’s Threat

The continuous steady communication with partner companies enabled PFC to know and respond to its customers’ needs based on feedback and suggestions received from the staffs. Such demand management was lacking when Maria and Franco took over, due to lack of communication, the company did not match their products with customers’ expectations and this caused problems (Gluyas, 2004).

The market dynamics had changed when PFC launched their low costs market strategy. The competitive market was concentrated in the low-cost sector. Heavy discounting strategy was used by key players, including Primark, C&A, H&M, Tesco, Kiabi and Matalan. In addition, established players like Primark incurred increased costs to ensure prices are kept low and market share preserved.

After the company rebranded itself as a low-cost clothing retailer in 2011, they sorted for new manufacturers and supply chain, sudden supply changes may cause wastage of resources. There should be an optimal combination of demand management and supply chain management to cope with market trends and to earn advantage over competitors (D. Walters, 2006).

CONCLUSION AND RECOMMENDATION

PFC’s major strength during its successful period was its strong internal communication system, it guaranteed staff motivation, commitment, and productivity. And by satisfying employee’s needs (internal clients), the company was in a good position and delivered the best to potential customers.

In order to make change successful, what the company needs is a structured approach to moving the organisation from the current state to the desired future state. It is recommended that Action Research Model is adopted to make change easier. An example of Action Research Model that will be effective is Gerald Susman action research process (1983). With this model, a problem is initially identified and data is collected for a more comprehensive analysis.  This is followed by a joint postulation of several possible solutions, that lead to the development and execution of a single action plan.  Data on the results of the intervention are collected and analysed, and the findings are interpreted in light of how successful the action has been.  At this stage, the problem is re-evaluated and the process begins another cycle.  This process continues until the problem is resolved.

This process of change is recommended because it requires the input of all parties involved in an organisation to make it work, and as PFC is an organisation that prioritise communication with all its partners and employees, change process will be smooth and achievable.

Gerald Susman action research process (1983)

Reference

  • Andrew C. Inkpen (2018), “The Rise and Fall of Iridium Harvard Business Review Case Study. Published by HBR Publications.
  • David Walters, Effectiveness and efficiency: the role of demand chain management, The International Journal of Logistics Management, Vol. 17 No. 1, 2006, pp. 75-94, Emerald Group Publishing Limited.
  • Gluyas, R. (2004), The Australian, 15 November 2004
  • Susman, Gerald I. Action Research: A Sociotechnical Systems Perspective. Ed. G. Morgan. London: Sage Publications, 1983. Pp. 95-113.

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