Critique Of The Limited Inc. Essay, Research Paper

Critique of The Limited INC.

Overall, we think that our classmates, Melissa and Jay, did a good job in their paper. Here are just few comments and suggestion that we think our classmates have missed.

History:

The management of the Limited relies heavily on the shoulders of CEO Leslie Wexner. The analyst has criticized him that he is frequently creating new businesses that evidently fails. The underperforming stores are as follow:

*sum* 1995 Limited Inc. own 84% of Intimate Brands, Inc.

o Closure of 79 underperforming stores

*sum* 1996 Closure of 135 underperforming stores.

*sum* 1998 Abercrombie & Fitch became independent. Limited Inc. on longer have ownership

*sum* 1999 Limited Inc. became independent through a tax-free spin-off.

He has not been successful in being a good day-to-day manager. As recent as the mid-1990?s he had 24 associates reporting directly to himself. His employees should not rely upon him and instead they should be able to make decisions by themselves without consulting with Mr. Wexner. This direct communication between Mr. Wexner and his employees probably hindered the business. Not empowering his employees to make decision-making can be detrimental to the company business because his employees? suggestions may have had significant contribution to the company and its ability to remain open. They need to implement a strategy where the employees are allowed to make suggestions and comments.

Mission Statement

Their mission statement is weak. It has been criticized to be a sexiest advertisement. Limited focused heavily in promoting women in their advertising. Limited needs to revise this mission statement so that the consumer will realize that Limited also caters for men.

External Analysis

Limited has encountered a few lawsuits. On September 14,1999, two complaints were filed against the company and its subsidiary, Lane Bryant. The complaint was related to labor practices allegedly employed on the island of Saipan. It was dismissed because the Department of Labor has commended their high labor standards; the DOL has placed the Limited Co. on the “trendsetters list”, which insures that their goods were not made in sweatshop conditions. DOL supported Limited Co. with this lawsuit because Limited Co. has a reputation to conduct business according to ethical standards.

The employees of Limited Co. take pride in complying with their high policy related to labor standards. Limited Co. is known for its problem solving abilities; the company takes precautions when faced with any lawsuit. They meticulously research the lawsuit and make immediate changes to eliminate future lawsuits. Limited Co. is fast to respond to any accusation they encounter. Limited Co. has a very strong connection with DOL and DOL will continue to support their corporate image. Limited Co.?s employees are encouraged to comply with policies that maintain the integrity and honesty of the company. Limited Co.?s website encourages visitors to send in comments and complaints, so that they can correct unknown problems immediately

Social Factors

Their second strength is that Limited Co. is a highly active member of the community. They participate in hundreds of charity functions, such as the “Columbia reads” program. This program in conjunction with the government has sponsored 400 employees that visit kindergarten classes in the Ohio area for one-on-one tutoring on company pay. The 400 employees voluntarily participated in this program because they are committed and they take pleasure in helping improve the community.

Industrial Analysis-Porter?s Five Forces Model

1. Potential Entry of New Competitor (Medium)

The barrier to enter the market is minimal and free to entry. This makes the potential of new entrants high. However, it is difficult to compete with Limited because it involves many factors, such as capital, patent, economies of scale, and market leader position, therefore, the potential to entry for new competitors is medium.

2. Bargain Power of Customers (Medium)

There are many alternatives in the market; therefore the buyer?s switching cost is low. Consumers do not have the power to bargain because Limited does not sell their merchandise at wholesale or at a discount. Limited provides qualitative features such as, better quality and they enhance their brand image.

3. Bargaining Power of Suppliers (Low)

Limited offer fair compensation and benefits, consequently this will motivate their suppliers to comply with their laws and regulation.

4. Potential Development of Substitute Products (High)

Ideally, Limited product can be easily substituted. There are many substitute products. Many consumers are price conscious which induces them to shop at discount outlets. There are several stores that sell similar product as Limited at a cheaper price. The only difference is that Limited merchandise has better quality and the brand name.

5. Rivalry Among Competing Firms (High)

Limited is a mature company and has established itself in the market successfully. In order to compete with Limited competitors need to differentiate their product, provide additional feature that Limited does not provide, lower their pricing strategy, and have a substantial amount of capital for advertising.

Internal Analysis -Value Chain

Primarily Activities

Inbound/Outbound: Most of the merchandise and related materials for the Company’s stores is shipped to the Company’s distribution centers in the Columbus, Ohio area. In addition to Mast and Gryphon, the Company uses common and contract carriers to distribute merchandise and related materials to its stores. The Company’s businesses generally have independent distribution capabilities and no business receives priority over any other business. The Company’s policy is to maintain sufficient quantities of inventory on hand in its retail stores and distribution centers so that it can offer customers an appropriate selection of current merchandise. The Company emphasizes rapid turnover and takes markdowns as required to keep merchandise fresh and current with fashion trends.

Operations

To ensure the consistent quality, The Company has established a separate division named Independent Production Services (IPS) to assist the company to control and monitor its vendors through programs, such as Vendor Qualification and Compliance and Vendor Monitoring. The IPS establishes and maintains in reliance on specific qualification standards and protocols developed from time to time on behalf of the Company. All vendor, subcontractor and supplier factories will be inspected periodically over time to

Limited’s qualification criteria and procedure standards.

Services

The Company offers its customers a return policy stated as “No Sale is Ever Final.” As the Company continues to develop strategic relationships with vendors, it will continue to intensify its commitment to vendor education.

Support Activities

Firm Infrastructure

The Limited, Inc. is supported by a number of strategic functions, or centers of functional excellence, known collectively as The Center. The Center provides strategic direction and support to the individual businesses and to the enterprise as a whole. By designing key business processes and leveraging best practices throughout the enterprise, The Center adds value to each of its Brands. Some of these functions include:

Distribution Services:The purpose of Limited Distribution is to design and implement operations that will provide the retail businesses with the most effective and efficient delivery operations available. Limited Distribution Services will have achieved its objective if each of its customers believes that it has been an asset in helping them achieve their goals.

Real Estate and Store Planing: Responsible for locating and leasing all store sites for retail businesses of The Limited, Inc., Intimate Brands, Inc. and Limited Real Estate continually searches for new and exciting retail environments where our brands can be showcased. Limited Store Planning’s mission is to create the most innovative, successful stores in the retail business. It employs talented design, engineering, architectural, construction, purchasing and finance associates — highly focused teams designing and building leading-edge retail space.

Design Services: Limited Design Services oversees the design of branded apparel and merchandise for the retail businesses.

Limited Brand and Creative Services: will work with the Chairman and the individual operating businesses to create brands with powerful, singular personalities that are consistent with the founder’s visions, and meet customer expectations.

Limited Technology Services (LTS) is responsible for worldwide computing and telecommunications for The Limited, Inc. LTS is committed to partnering with The Limited, Inc., its brands and support businesses as joint stakeholders to increase shareholder value through the innovative applications of technology, business process and information.

Human Resources

Limited has successfully recruited talents. Within the last two years, Limited has built a powerhouse team of proven retail executives, recruited from Banana Republic, Estee Lauders, J. Crew, Liz Clairborne, Macy, Pillsbury?In addition, Limited has developed many successful employee-training programs that help to redefine and utilize employee?s role and talent. For example, the company?s buyers have moved from a product development role, to a new analytical role. The new role includes three disciplines: competitive intelligence, client intimacy, and fashion radar. These disciplines enables buyers identify significant opportunities in market place.

SWOT

We think the weaknesses number 8 and 9 of the original group should become strengths for Limited.

The original weaknesses are:

“(8) Working with many different factories make it difficult to ensure consistent quality” We think that with the technological advanced in production and the vendor monitoring and qualification programs of the Limited, the quality of production won?t be a problem. But on the other hand, by interacting with many vendors, Limited will be more industrial wide informative about the market trend and taste. Also, Limited can take advantage of special talents of each vendor in creative designs and ideas that would help its products being more appeal to its target markets. These critical factors will help Limited sustains its competitive advantage over its competitors.

“(9) Closed and sold many stores in past few years.” We also think that this is one of strengths of Limited. We think this is a strategic management. By eliminating under-performance stores, Limited can focus to open new stores as relocation its stores to better positions that have resulted in productivity increasing.

There are also opportunities for Limited to target generation Y, not only generation X or Baby Boomers.

Functional Area

Marketing

Besides catalog and national magazines, Limited has launched celebrity model campaigns that resulted in a million of new customer names added into database, recent introduced quarterly magalogue, and a forty-seven weeks of national television program in 2000. Limited also does marketing research for each target segment. For example, recently, Limited found out that men who have career or interested in mechanical or automobile, very much likely to buy from Victoria?s Secret catalog.

Finance

Here are few graphs that help to explain Limited? financial strength and effectiveness.

Management

The management of the Limited Co. relies heavily on the shoulders of CEO Leslie Wexner. He has been very successful in the turn around of many retail brands within the Limited Co. As analyst feel that he is excellent at creating new businesses. However he has been criticized for not being a good day-to-day manager. As recent as the mid-1990?s he had 24 associates reporting directly to himself.(David, 18)

Recommended Strategies

In addition to the original group?s recommendations, we would like to suggest that Limited should implement the Enterprise Resource Planing system software, such as SAP or Oracle. This strategic system would benefit Limited in many ways, such as just in-time inventory, group work collaboration enterprise wide, knowledge management, and many others. With these benefits, Limited will have competitive advantage of low cost, high quality, and up-to-date attractive styles products that will enable Limited continue to be a leader in its industry.

Strengths

1. Largest Mail order and retailer of women?s clothing in U.S.

2. High policies related to labor standards

3. Community Organizations

4. High cash position

5. Distribution services

6. Technology services

7. Ability to create and deliver Weaknesses

1. Not enough emphasis on advertising

2. Lack emphasis on Men?s clothing

3. Saturation of Limited stores in malls

4. High turnover of finished merchandise

Opportunities

1. Men becoming more fashion oriented

2. Increasing online sales

3. Growing number outlet malls

4. Growing television viewers SO-Strategies

1. Need to introduce a Men?s catalog and internet site

(s4,s5,s6,s7,o1,o2)

2. Advertise through well known organizations

(s3,s4,o4) WO- Strategies

1. Promote more bath and body products for men and children

(w2,o1)

2. Launch advertising campaign on television

(w1,o4)

3. Consolidate divisions selling similar products

(w3,o3)

4. Move merchandise into outlet malls

(w4,o3)

Threats

1. Losing Market share to

Competitors.

2. Downturn in women?s

apparel ST-Strategies

1. Need new line of discounted

Clothing

(s4,s7,t1)

2. Emphasize quality products

(s2,s7,t1)

3. Male available quick and reliable delivery for all products purchased in catalogs or online.

(s1,s5,s7,t1) WT-Strategies

1. Need a trendy advertising

Scheme

(w1,t1)

2. Need to find replacement line for

Abercrombie & Fitch

(w2,t1,t2)

The Limited 1999 Annual Report

The Limited 2000 Annual Report

www.fortune.com

www.limited.com

http://www.online.reuters.com/

www.businessweek.com

PR Newswire – June 01, 2000