New Style: prioritizing problems in a management consulting project
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New Style: Prioritizing Problems in a Management Consulting Project
Authors: Helena Costa and Luís Felipe Paulino
Summary
This case deals with a fashion company created by two sisters, Gabriela and Laís. Pooling their skills, they founded New Style, which now faces challenges to continue growing. The entrepreneurs realize some problems and decide to invite a management consultancy to support them in the necessary transformations. The case, based on a real company, brings the opportunity for the student to experience the perspective of a management consultant who needs to carry out an organizational diagnosis, prioritize problems and propose a work plan that can bring solutions to New Style.
Birth of the company
New Style was founded in 2005 by sisters Gabriela and Laís Ferreira, current partners of the company. Gabriela is an administrator graduated from a private educational institution and Laís was a fashion blogger. The sisters have always wanted to be financially independent and working with something they enjoy. In this way, they decided to open a fashion store together with the objective of making quality clothes for the day-to-day work of the modern woman, but that were versatile clothes, that is, that the woman felt free to leave work and go to a party with the same clothes.
In the first year of operation, the partners realized that just making fashion clothes would not be enough and started to resell clothes from some brands that aligned with the product's value proposition. In this way, the company began to grow rapidly delivering quality clothing to women in the Federal District. Currently, the company has 4 stores distributed in Asa Sul, Asa Norte, Lago Sul and Lago Norte, in addition to a factory in Taguatinga. In general, Gabriela takes care of the administrative part of the company and Laís is responsible for creating clothing models.
Structure
New Style has approximately 40 employees who perform various functions, such as administrative activities, sales, production/creation and distribution of clothing. They can work in the stores, in the factory or at the company's headquarters located in the Asa Sul store. The company does not have a formalized organizational chart, but the employees are divided into the following areas
As presented above, New Style has an organizational structure divided into the areas of Presidency, Sales, Production & Creation and Support. First, the Presidency has a total of two people, the partners. The main responsibilities of the area are to supervise the company's activities, represent New Style in fashion events, execute marketing actions, create goals and production indicators and finally manage partnerships. A problem cited by the partners is that, in addition to the duties of the presidency, they must carry out other activities. Gabriela, for example, pays employees, manages inventory, analyzes results, manages accounting and pays all bills. The same happens with Laís, who has to create new styles of clothing, monitor market trends, coordinate the production and transportation of clothes, among other minor activities.
The Sales area consists of 6 people in each store. She is responsible for serving customers, receiving payments, training new employees, opening and closing stores. In addition, the Manager of each store still has to manage the cleaning lady hired to take care of the physical space of the place. Store salespeople often report that they do not know the activities they should perform, they feel that the tasks are performed differently in each of the stores. Among several factors, the Managers believe that the main cause of this lack of standardization is the fact that the training is done by the oldest salespeople who teach good individual practices, as there is no manual on how to perform each activity.
Regarding the Creation and Production area, it is composed of 8 people. The main objective of this area is to create the clothing lines of each season and the production itself of them. Partner Laís is directly linked to this activity, as she is responsible for the design of the clothes. She reports that taking care of production directly is quite tiring since it is a very dynamic reality and there are many small details such as transporting products, adjusting clothes, receiving raw materials, managing inventory and other small activities. Still in relation to production, the employee responsible for the stock complains that some materials run out constantly and he has to run to be able to replenish the stock. However, Laís reports that as much as there are some resources missing in the inventory, it is always replaced on time and does not generate major losses.
Finally, the support area is responsible for assisting in the development of the company's general activities. In a previous analysis, the area is a combination of positions that did not fit into the other areas. The positions that make up the support are: Information Technology Technician, Driver and Cleaner (1 for each store).
Service and Target Audience
Currently the company has 2 clothing lines. The first and main one is aimed at women from 30 to 50 years old from classes A and B (counting on clothes from their own, New Style, and clothes from external suppliers). The second line was implemented in 2015 with clothing from external suppliers and aimed at women 18 to 25 years old. Because the line has been implemented recently, there has not yet been time to verify whether the products are viable or not.
In addition to selling clothing, New Style also sells accessories and footwear (both from outside suppliers). The average monthly sales of all stores is around 150 to 500 items in total. Despite the variety, most of the revenue comes from the sale of clothes. The price of the products varies a lot, most products are on average 100 to 200 reais a piece, but many products have a much lower margin.
The partners' desire is to serve a younger target audience and they are thinking of making online sales soon, but they do not know if it is the right step at the moment. They believe that the younger public is buying online, but they are not sure of this information.
Business Explanation/ Value Chain (Business Process)
The Value Chain is a tool that shows in a summarized and visual way the processes of an organization that generate value for the customer. Next, New Style's business process will be presented, which is a part of the value chain that translates the organization's business.
New Style's main service may vary according to the origin of the product. The Value Chain above only represents how the business works with clothing from external suppliers. This begins with an exploratory research of a producer by Laís Ferreira who chooses and buys products from outsourced brands, after the product is purchased, it is prepared so that it can be sold and, finally, carry out after-sales actions.
When the product is made by the company itself, the service changes a little. The service begins again with exploratory research. After the clothing model is created, its production and post-production take place in sequence. Finally, the sale and after-sales take place.
Competitors and competitive differentiators
Currently, both partners are very overloaded and do not know who their main competitors are and some market information. However, they know that the sector is very competitive. In this way, New Style seeks to differentiate itself through quality and versatile clothing for women in the Federal District, in addition to having its own exclusive production line.
Problematization
A number of factors led the firm to turn to AD&M. The first concerns the overload of both partners, who work an average of 14 hours a day. They claim that they have to closely manage the 4 stores and do not focus much on more strategic activities and that some routine activities are not carried out due to overload.
With the rapid expansion of the company, the partners also felt the internal structure did not follow the growth in the best possible way, generating communication problems between the 4 stores. In this way, some activities that take place in a store are different from the others. An example is the service that customers praise more in the Asa Sul store than in Asa Norte.
About the financial part, Gabriela is able to manage the organization's inflows and outflows in a basic way. However, she would like to find easier ways to manage cash flow, she raised that it would be interesting to hire financial software. The company also does not have budgeting and financial planning processes in place so that it can better allocate its resources.
Another problem faced by the company is the lack of market information. The partners have no knowledge of the main competitors. They feel that they are being overtaken in the market and that prices are misaligned with the reality of customers. Gabriela would like information such as the price charged by competitors, the cost required to manufacture the clothes and if there are ways to reduce manufacturing costs.
Finally, the partners say they are lost in relation to the business. They want to expand the stores but do not know if they should do so at the moment, they also feel the lack of clearer directions on how to execute the company's activities and identify what is missing in the internal structure so that they can expand.
Discussion questions
- As a consultant, you were called upon to carry out an organizational diagnosis. Identify the company's problems and rank them in order of priority.
- What solutions could the consultancy offer to this client?
- What would you take into account to assess the feasibility of expanding the company?
This case was written based on information made available by the company, available in the media and/or based on other references cited. The names are fictitious. It is not the authors' intention to evaluate or judge the company in question. This text is intended exclusively for academic study and discussion, and its use or reproduction in any other form is prohibited. Copyright infringement will subject the offender to the penalties of Law No. 9,610/1998 ↩︎