Raleigh and Rosse Case Study
Describe Raleigh and Rosse’s Strategy
Raleigh and Rosse (RR) have remained one of the best companies selling luxury goods brands in countries such as Europe and the US among other notable parts of the world. The firm has been able to compete accordingly with other firms in the industry like Louis Vuitton, Nordstrom, and Neiman Marcus among others as witnessed in the 1970s. In 2007, the firm owned 38 retail stores and its average revenue was $1200, which is $550 higher as compared to the industrial average. There are various strategies adopted by the firm, thus remaining competitive. One of the main approaches is through high-quality customer service (Simons & Mahoney, 2011). It is notable that, for any business to remain competitive there is a need to adopt a comprehensive customer experience, leading to higher loyalty levels, which mostly translates to raised profitability levels. From this article, it is clear that RR has adopted an extraordinary customer service, thus engendering high levels of customer loyalty. Each of the stores was being overseen by a manager who was supposed to produce a customer evaluation report as this was considered to affect the revenues significantly.
Sales associates of this firm were supposed to retrieve all out of stock items or even deliver items bought by the customers, and this made them (sales associates) earn high salaries. For instance, in 2007, sales associates were able to earn $ 63,000 in salaries as well as commissions, which was 20% higher than the industry average. The other strategy which has helped the firm is the ownership culture. As a result, there is a high level of accountability and entrepreneurship. Some of the ownership cultures adopted by the firm revolve around the hiring of the sales associates, promotions from within, and investing in the field of IT, thus enabling the firm to tap on the larger markets as well as reduce costs of setting up physical retails shops (Simons & Mahoney, 2011).
Describe Raleigh and Rosse’s Organizational Architecture
As indicated by Brickley, Smith, & Zimmerman (2009), organizational architecture entails three important aspects that determine whether a firm will succeed or not. The three components include the methods used to reward individuals, procedures employed in evaluating the performance of business units and individuals as well as the way of assigning decision rights. From the article, it is clear that RR had a sound organizational architecture, and this ownership culture ensured that managers, as well as other employees, were accountable for their activities at all depths. To achieve this, recently graduated college students, who were supposed to be highly ambitious as well as possessing strong working ethics, were hired. This made the firm adopt a program referred to as “R&R University”, thus allowing its top sales associate to earn at least $ 100,000, which was the highest salary in the market (Simons & Mahoney, 2011). To motivate and reward its employees, the promotion was made from within, thus raising the experience of middle-level management. The use of IT raised the ability of the managers to increase merchandise mix in their stores raising the levels of customer loyalty.
Why Do You Think the Company Has Been Successful?
There are numerous issues that have made R&R one of the most luxury goods brand. One of them is the ability of the firm to adopt policies geared towards the improvement of customers’ experience. It is clear that, due to raised competition between established and upcoming firms in this field like Louis Vuitton and Neiman Marcus among others, there is a need to offer excellent customer services, thus raising loyalty levels. For instance, R&R hired experienced sales associates with high working ethics, which enabled them to tackle issues affecting the customers. The adoption of IT systems helped managers to increase efficiency at the store levels, reducing the time taken for serving customers. The firm has also been successful due to its ability to motivate the employees. It is notable that, employees are the core part of the business, and this has been witnessed in organizations that value and respect employees such as Apple Inc., Google Inc., and Coca-cola Company among others. For R&R, promoting from within meant that hardworking employees would be rewarded and their skills improved, thus motivating them. Other factors include the adoption of the Sales Per Hour Program among others (Simons & Mahoney, 2011).
Why Does Raleigh and Rosse’s Use Sales Per Hour Program?
The main purpose of R&R using the Sales Per Hour Program is to ensure that there would be a simple and common metric that would align store managers and the associates, due to the growth of the firm. Therefore, the need to hire store managers who were not the owners (family members) arose. As a result of adopting the Sales Per Hour Program, R&R was able to grow by over 225%, being named among the Top 100 Employers to Work For produced by the Fortune Magazine (Simons & Mahoney, 2011).
Is Raleigh and Rosse’s Organizational Architecture Good or Bad?
Although the company faced a lot of financial difficulties due to the 2008 financial crises, it is clear that it had a sound organizational architecture. Accountability within the organization will continue to remain the method of attracting as well as retaining customers, which will improve profitability. Promotion based on merit, developing a simple and common metric of evaluating the managers, programs such as Sales Per Hour and ownership culture among others significantly strengthens R&R organizational architecture (Brickley, Smith, & Zimmerman, 2009).