Case - a Limited View

Case: A Limited View

Structure has to follow strategy: While The Limited were leader in fashion retailing, the company applied a result-oriented business strategy. The founder, Leslie Wexner, believed that all division managers should operate their division free of interference with its only focus on sales targets. This way of thinking led to a loss of sight concerning the changing customers’ needs and habits. This strategy was the foundation of their success but it in the mid-90’s a major problem was found in the structure of the company: so-to-say in its strategy.

The company was in multidivisional form with independent brands, however this form reached its limits in the mid-90’s. Leslie Wexner had to find a new solution to this problem

Wexner studied different ways to resolve his organisational problems. Firstly, he understood that it is essential to consider the organisation as a whole and not as separate divisions or entities. The Limited company has a multidivisional organisation structure, but it should have an H-form because the company should be structured by business units where each business has a clearly defined target market and adjust to the customers’ needs. Following Alfred Chandler’s theory, he wanted to set objectives for the whole company which involved the centralisation of operations, installation of new executives, evaluation of performance goals and the closing or spinning off of company brands. He understood that communication to structure the company is key.

MORE STRUCTURED → MORE CENTRALISED → BETTER STANDARDS → BETTER SERVICE

Environmental factors influence how the organization fits within, and adapts to, the surrounding business environment. There were three main changes: new needs for the customer, new trends and a new technology for the sales.

In the 90’s and early 2000, the world opened itself to globalisation having a huge impact on many sectors, especially the fashion business. Furthermore, the customer diversity is growing tremendously; these two factors made new fashion brands to open and The Limited should have positioned itself better after having made a new analysis of the customer’s needs, wants and behaviour. But fashion had a rough time to adapt itself in the beginning of the globalisation: economically speaking, the whole fashion industry was affected by a slowdown. General sluggishness in the whole fashion industry forced The Limited to emphasise on decentralisation in order to adapt itself efficiently. The technology is also changing, nowadays the computer analyses have helped to improve the methodology for marketing goods as well as the coordination of ordering, production and sales. Overall, the technology has helped greatly the communication of businesses: this was an opportunity to catch for The Limited.