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Current Management Issues in the Retail Industry. TEAM 1. What is Retail?. Sale of physical goods, merchandise, or services Sold from a fixed location, ex. department store Stores act as middlemen Publicly or privately owned Classification examples: - Food products

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Current Management Issues in the Retail Industry

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Current Management Issues

in the Retail Industry


What is Retail?

  • Sale of physical goods, merchandise, or services

  • Sold from a fixed location, ex. department store

  • Stores act as middlemen

  • Publicly or privately owned

  • Classification examples:

    - Food products

    - Hard goods or durable goods

     (Ex. appliances, electronics, furniture, sporting goods, etc.)

    - Soft goods or consumables

    (Ex. clothing, apparel, and other fabrics) 

Main Functions of Management

  • Strategic Planning

  • Organizing/Decision Making

  • Leading

  • Controlling

     “Management is the coordination and oversight of the work activities of others so that their activities are completed efficiently and effectively. ” ¹

1. Management by Stephen P. Robbins and Mary Coulter

Issues Confronting the U.S. Retail Industry

  • Revenue growth & margin improvement

  • Cost management

  • Reporting, risk, compliance, and control

Revenue Growth & Margin Improvement

How to continue to generate growth in the current, challenging economy?

  • Issues: Importance of successfully managing margins

    - input costs are rising (commodity and energy)

    - creates inability to pass costs along due to inflation

    - consolidation in the industry is cutting out the need for retail stores

  • Management’s ability to formulate/execute strategically aligned cost initiatives

  • Imperative to moderate pricing pressures with:

    - product innovation

    - supply agreements

    - changing product mix

    - distribution channel collaboration

  • Proper planning / implementation of effective cost reduction programs

Cost Management

How to develop a cost management strategy that maximizes efficiency without compromising growth potential?

  • Issue:

    - Traditional cost reduction methods are:

    • Failing to achieve the targeted reduction

    • Taking longer

    • Becoming more expensive than expected

  • Management Solutions:

    • Understand what money is spent and why on a functional basis

      - Ensure functional costs are aligned to company financial plans / budgets

    • Change the way money is spent

      - Make cost reductions sustainable

      - Create cost consciousness culture that will promote further cost reductions

  • Reporting, Risk, Compliance, and Control

    How to safeguard a company from risk in this world of constant change?

    • Strategic risk management:

      - sets strategy / direction to effectively balance growth goals with risks

      - effectively deploy resources in pursuit of this objective

    • Effective risk management:

      - looks beyond vulnerabilities to consider sources of both risk and opportunity

      - provides a process for balancing growth, risk, and return

      - establish policies to promote a risk-management culture

    • Proper risk management protects:

      - company reputation

      - brand image

      - shareholder value

    Additional Issues Confronting the U.S. Retail Industry

    • Regulatory barriers:

      - Restrictions on real estate purchases

      - Restrictions on foreign investment in retailers

    • Unfavorable taxation structures

    • Absence of developed supply chain and integrated IT management

    • High competitiveness resulting in low profit margins

    • Lack of properly educated / trained work force, often including management

    Examples of How to Manage Retail Industries

    • Blockbuster vs. Netflix

    Early History

    Business and Company Resource Center Database

    Expansion and Phenomenon

    Business and Company Resource Center Database

    SWOT Analysis of



    SWOT Analysis of



    An Industry Replaced by a More Efficient Version of Itself

    Strategic Planning

    Strategic Planning

    • What do we do?

      Create a more effective and cost efficient rental business

    • For whom do we do it?

      Video and DVD rental consumer market

    • How do we expand?

      Movie, gaming, TV shows; online and mail-delivery services, rental kiosks


    Leading Blockbuster

    • Leadership issues

    • Disgraceful leadership

    • John Antioco disagreement

    • Plans to eliminate late fees

    • This debacle lowered investor confidence

    • Created poor public perception of the brand

    Leading Style

    • Blockbuster had two CEO’s

      - John Antioco (1997-2007)

      - Jim Keyes (2007-2010)

    • No teamwork

    • Jim Keyes, had been constantly insulting his competition and disrespecting them

      • "Between the time Keyes took the reins as CEO of Blockbuster and today, the price of Netflix stock is up 500% and the price of Blockbuster stock is down about 90%”

    • hurting Blockbuster’s image

    Decision Making

    Organizing/ Decision Making

    Upper Management Conflicts

    • Frequent turnover in upper management positions

    • Poor repositioning of Blockbuster brand

    • Headquarters moved from Florida to Dallas, Texas

    • Loss of valuable upper management due to move

    Netflix vs. Blockbuster Shares 2008-2011

    Enron/ “No Late Policy”

    • Blockbuster’s Decisions to team up with Enron, and the “No Late Policy” scandal

    • Enron signed a deal with blockbuster

      • DSL, Online streaming

    • Enron scandal

    • Terminated deal

    • 2005 Blockbuster introduced “No Late Policy”


    Present Price Comparison


    Blockbuster is staring to make improvements:

    • Blockbuster acquired with Dish Network

      - No longer an independent stock

    • Improving business model since bankruptcy

    • Implementing ways to keep remain a top competitor, adjusting to modern technology and online demands

    Thank You!

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