Strategic Management and Organizational Change Case Study

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TOPIC: Case Study on Strategic Management and Organizational Change Assignment

Over the last several years, the retail industry has undergone a tremendous amount of changes. Where, the sales and the stocks prices of many retailers would continue to climb higher, with each positive earnings report. Then, the financial crisis began and the industry would face a severe slow down that would challenge, the most solvent of retailers. This is vastly different from an industry that first began out of mom and pop style stores, between the 1930s to the 1950s. Then, over the years, these companies would grow into large multinational enterprises, with stores around the globe. However, the overall focus on increasing the earnings of the company became more challenging. This is because the profit margins became tighter, as the competition became more intense and the tastes of consumers could quickly changes. This forced many companies to engage in ambitious plans of: diversify into new markets. Where, a number of different strategies would be utilized including: e-commerce, reaching out to different classes of consumers (low end / high end retail) and through aggressive cost cutting. (The Retail Apparel Industry 2009) One such company that is facing a similar kind of situation is: Ann Taylor. This retailer has started from humble beginnings in 1954 and has become one the premiere high end retailers. Where, the company was started from: a single storefront in New Haven, Connecticut and grew into a publically traded corporation by 1991. This is significant, because it highlights how the overall growth of Ann Taylor mirrored much of what was taking place from the 1960's into the 1990's. Where, the rapid growth of large retail locations at various malls and other areas would quickly become the norm. However, because the competition was so intense and the company was exposed to changes in the economic cycle, meant that strategies would have to be utilized to diversify the company's core business model. This would lead to the development of the catalogue store, the fragrance retailer and retail shoe stores in 1994. Over the next year, this strategy would lead to a number of unexpected challenges for the company, as the catalogue retailer would be forced to close in 1995. At which point, the company opened Ann Taylor Loft. This was a specialized retail outlet that would cater to: the young, price conscious and professional consumers. In general, the ideal target market was the demographics of: young professionals and the recent college / high school graduates. This is important, because the shift to the Loft store concept; would highlight how Ann Taylor was attempting to diversify its business model. At first, these stores would have trouble adapting to the competitive retail markets. This would cause the company to test and experiment with the concept by placing Loft stores at various discount outlets and malls. Over the course of time, this strategy was successful, as these stores were able to create a core image and brand name of the various products it sold to consumers. At which point, the store would be aggressively expanded in 1998 and it would be placed in middle class as well as upper middle class communities. The results were, that the Loft stores would reach out to the targeted demographic, by offering prices that are 30% below what they sell for at traditional locations. This would help Kay Krill, to rise from the position of Executive Vice President in 1999 to become the CEO of the company by 2006. (Ann Taylor Background 2009) Given financial challenges from the recession, new strategies must be utilized to help the company grow into the future and take advantage of the different opportunities presented. To achieve this objective requires: examining if Krill's strategies are financially prudent (given the economic environment), evaluating alternative strategies for creating growth and examining if Ann Taylor should focus on their existing businesses or diversify into other areas. Together, these different elements will provide the greatest insights, as to how the company can adapt to the changes that are taking place in the retail industry.

Using appropriate theoretical frameworks evaluate whether Krill's new strategies are well considered given the ongoing challenges of AT and LOFT and the difficult specialty retail environment in 2008?

The strategy that Krill used was one that involved cost cutting, restructuring and focusing on expanding the brands within the different stores. As the economy was slowing, Krill was able to see that the Ann Taylor was facing a number of different challenges. This forced her to announce in 2007, that the company would undergo an aggressive restructuring. Where, she would: begin closing unprofitable stores, eliminate the stock buyback program, reduce executive compensation / salaries, slow the number of stores that the company was opening and reduce the company's amount of debt. This would help Ann Taylor to focus on aggressively building its Loft store chains. Where, they would offer lower prices and have always delivered, to the company, higher profit margins. Then, when you combine the cost cutting measures, it would help the company to experience more stability in earnings, while the industry was going through a severe slow down. (Future Plans and Initiatives 2009)

The restructuring effort would help management to focus, on how the company can remain profitable when the economy was first slowing down. Where, Krill would announce that the company would undergo a major restructuring, while other retailers were unsure about what to do. This is significant, because it would allow executives to focus on strategies, to prevent earnings from going into a free fall. At which point, they could help the company identify areas where costs could be reduced. Once the economy began to feel the full effects of the financial crisis and recession, these strategies would help to protect the company's earnings from a sharp contraction in consumer spending. (Future Plans and Initiatives 2009)

Within the different retail stores, Krill would engage in strategy of aggressively expanding the overall amount products that were high margin items. This is important, because it would allow management to find those products that could help the company's sales to grow despite the onset of a recession. A good example of this can be seen by looking no further than when the company decided to expand aggressively into fragrances and beauty supplies. Despite the beginning a major recession that was taking shape in late 2007, the company started to aggressively market these product during the Christmas holiday season. The results were, that the sales of these items would help to generate $15 million in sales, despite the fact that the economy was in a recession. As both items, were priced low enough that most people could afford them, while being able to generate repeat traffic at the same time. This is significant, because it shows how taking Krill's strategy and identifying new products that can increase earnings; were successful in helping to mitigate the negative effects of the recession. (Future Plans and Initiatives 2009)

When you examine if Krill's strategies were financially prudent, it is clear that they were effective at helping protect the company from the implosion in retail sales that would occur in 2008. As the combination of the different elements, would help to focus management on ways of ensuring that earnings were somewhat stable. While this strategy was not completely full proof, it did help to provide the company with earning stability between 2007 and 2008. Evidence of this can be seen by looking no further than, the total growth rate of the company that was taking place between 2004 and 2008. Where, sales were $1.58 billion in 2004, by 2008 the amount of sales had increased to $2.39 billion. The below table chart illustrate the growth in retail sales between 2004 and 2008. (Exhibits 2009)

(Exhibits 2009)

Yet, when you look further beneath these numbers, it is clear that the retail sales of the various segments have been consistent, with the acceptation of the core Ann Taylor retail stores. With the overall amount retail sales; remaining stable from one year to the next (in three out of four divisions of the company). Evidence of this could be seen with the sales at Ann Taylor Loft stores, with them increasing from: $588 million in 2004 to $1.174 billion in 2008. The below table illustrates the overall retail sales growth of the company between 2004 and 2008.

Retail Sales of Ann Taylor by Division between 2004 and 2008







AT Loft






Internet / Fac.






Ann Taylor






All figures are in the billions of dollars (Exhibits 2009)

When you look at the different divisions of the company, it is clear that the strategies worked to provide three out of four of the different divisions with earnings stability. While, the volatile Ann Taylor division would experience: earnings unpredictability. What of all this shows is that the strategies that were utilized by Krill; were effective at addressing… [END OF PREVIEW] . . . READ MORE

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APA Style

Strategic Management and Organizational Change.  (2010, August 18).  Retrieved December 4, 2021, from

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"Strategic Management and Organizational Change."  18 August 2010.  Web.  4 December 2021. <>.

Chicago Style

"Strategic Management and Organizational Change."  August 18, 2010.  Accessed December 4, 2021.