Fashion Design and Manufacture

68% of Turnover Walks Out the Door

Executive Summary

The Competitive Strength Review was used by this small family business to help them identify what they could do to avert a looming business failure.

Their key client had decided to bypass them and go straight to China, resulting in significant pressures, extended credit and collapse looming.

12 months later, after completing the Competitive Strength Review and working with the recommendations, they had refinanced more appropriately; redefined their relationship with their client thus securing further orders for a new service being offered.

They had retained their sole agency rights for Australia for an international fashion brand and identified then dealt with an internal fraud situation affecting their agency agreement. Their internal brands has been assessed and those losing market share were discontinued, whilst newer, more market appropriate brands created.

Four years later, this business merged with a larger fashion manufacturer and the original owners were free to pursue their other dreams.

Challenges

  • Six months prior to working with us, this client’s biggest customer (68% of their business) had implemented a previously announced decision to self-source and had cut their orders by 70%.

    The owner/directors initially sought to reverse the decision – which was an action they acknowledged had very little chance of success.

    They had also taken no other action as they believed the customer would fail to self-source and come running back to them for help.

  • Eventually, and too late, they took the usual cost-cutting actions, extended their credit as far as possible and sought professional advice from accountants and business mentors.

    Their international agency agreement was also under threat as they were not meeting their agreed targets.

    They had a team of marketers who were meant to be managing this account and who were traveling to stores across Australia.

How Competitive Strength Review (CSR) Helped

The Managing Director heard about the CSR from a presentation made to his Senior Executive networking group (TEC). By now he was looking for a ‘miracle cure’. We made it clear to him what the CSR could help him do… i.e. see his issues in a different light and gain insights as to what he could do (differently) to avert business failure.

The comparative condition of the business came out as Constrained to Comfortable but there were a number of attributes rated as Excellent or above.

The key outcomes were the inconsistencies highlighted within the MD’s assessments and significant divergent views expressed by his management team

The Decision to Act workshop confirmed what the Competitive Strength Report indicated i.e.
• The organisation believed its own rhetoric.
• It made decisions based on perceptions, not realities.
• It acted on beliefs, while ignoring the facts.
• The failure in aligned thinking within the management team coupled with the (over-optimistic) perceptions of the MD meant that no one was running the same organisation.

This was clearly backed by examples & evidence:
• in the flawed decisions taken,
• investing in multiple new brands at the same time,
• holding a range launches and
• ignoring the precarious state of their license to market their flagship international fashion brand.

The most significant conclusion and insights for both owners and managers was every resource was spread so thinly, no one had the capability and/or the capacity to be effective contributors to turning the business around.

This conclusion and associated insights provided the platform for everyone to think and act differently in order to avert the looming business failure.

Results, Return on Investment and Future Plans

  • This business was competitively 38.1% as strong and as fit as the comparative organisations. They had the potential to increase their competitive advantage by 67% – as long as they stayed in business and changed how they thought about the decisions they were making.

  • Competitive Strength Profile

We worked with the Directors and management team to develop a phased action plan and to address the change management implications of…
• Retrenchments.

• The need to increase productivity.

• The introduction of more focused personal accountabilities (starting with the owner/directors).

• Bringing about the alignments necessary to get the organisation functioning effectively and achieving immediate and mid-term goals.

• Getting things done faster, at less cost, with more things got right, first time, and more often.

12 months after the CSR Decision to Act workshop.

• The organisation was still in business. It certainly looked likely to succeed in the long term.
• It had reduced its losses by 90% and was making a trading profit.
• It had retained its sole agent license for an international women fashion brand.
• It had embraced discipline, structure and process including the effective use of the Achievement Profiling and Process.
• It had taken and successfully implemented some very tough decisions.

  • Four years later, both directors had sold their share of the business and are now pursuing their own lives.
  • Success story competitive strength review and competitive strength report