Managing Change Burtons Case Study
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Burtons Casestudy
Managing Change
Ladislas Rice
1969-1975
1) When Rice took over as CEO at Burtons in 1969, the mens clothing industry was beginning to have a higher demand. Due to the Beatles era during the 60s, men became more fashion conscience. Up in till Rice was appointed, Burtons menswear specialised in made-to-measure suits but young males were buying more ready to wear clothes. Competition was becoming stronger, coming from Italian designers, which offered ready to wear suits and more colourful casual clothes. Not only were these garments ready to wear but also they were less expensive to buy. This was becoming a serious problem for Burtons and changes had to be made.
The first decision Rice made was to switch Burtons from selling made-to-measure to selling ready-to-wear clothes; the need for this change can be illustrated in forces of change diagram below.
Driving forces can be internal and external likewise for restraining forces. The external forces of change are outside factors that can force a company to change and internal factors are factors within the company that may force or restrain change. In the case of Burtons the external forces that influenced this decision was the customers, more males especially the age group of under 25s became more fashion conscience. This may be from a change in culture and lifestyle from the swinging sixties and the Beatles era rubbing off on young males across the nation. It was cooler for men to take notice in their appearance and fashion, men tried to do out each other by wearing more flamboyant clothing. The stronger competitors were also a force of change, more and more designers were coming into the market. Italian designers were becoming more popular; imports of ready-to-wear suits and casual clothing were more frequently seen on the high street. Also as these other clothing companies were making ready-to-wear garments, they would probably have mass production meaning they could offer quality clothing at lower prices, out pricing Burtons.
The internal factor that threatened against change was the increase in productivity. Switching from made-to-measure to mass production of ready-to-wear clothing would mean a larger productivity and a larger amount of stock. “An increase in output above a certain level generally necessitates a rethink of production methods and internal logistics as well as quality control procedures and supply policy”. Pendlebury et al (1999)
This was seen as profound change, as this change completely transformed Burtons. This change was necessary by Rice as the competitive stakes needed to be raised.
Also to be avoid over reliance on the clothing sector, while this change was going on, Burtons diversified. If properties were not be used by the group, they were to be let out to other retail companies to gain more income. Also acquisitions of other clothing companies were planned to allow expansion in an ever-increasing market.
2) To implement these changes, internally Rice took a top-down change approach. This involved a programme of change determined and implemented by senior management. Rice made the Burtons group into separate profit responsible divisions. Rice recruited fifty new senior executives to help cope with all the sub division he had created. By separating the manufacturing and retailing, it made it easier to set different goals and objectives which could be followed by each of the division. Middle management was kept informed of any changes by monthly reports, which were revised every six months. This was to ensure all staff members knew what was expected of them in order for them to contribute to the companys performance.
Rice made superficial changes like tightening control on costs, increased mechanisation in manufacturing and training centre for employees. Rice done this has he believed this would make the transition go more smoothly. As Burtons were only used to making suits, a new retail-buying director was brought in, given the job of widening the product range.
From 1970 to 1971 acquisitions were made following Rices plan of expansion. St Remy a French company was bought which retailed men and women clothes. Burtons wanted to expand in France, as the market for made-to-measure clothes still had a high demand. This was also bought to add volume to the Burtons factory, as it wasnt manufacturing to its full capacity due to the slump in demand in Britain. Another acquisition was Evans Outside, which had 76 shops and computerised stock control systems, which could help Burtons menswear deal with larger stocks with increased productivity due to the move into ready to wear clothes. Also with the takeover the retail skills of Cyril Spencer were acquired. Further acquisitions included Ryman Conram and Greens. Ryman Conram sold stationary and had 75 retail outlets with four manufacturing units. Greens, then at the beginning of its growth in the consumer market, were electrical goods retailer. In 1972, a separate property company was established called Montage Burton Property Investment Limited.
3) Rices strategy of diversification wasnt very successful; as the switch from made to measure clothes seemed to disappear. A way of showing this, can be done by using the Kaleidoscope analysis:
Time: Rice tried to change things to quickly which in the end slowed down the process of changing to ready to wear clothing. His mass of takeover happened very quickly, enough time wasnt taken to properly assess the companies. Scope: The changes Rice implemented were to involve the whole business but by breaking it into two separate divisions retail and manufacture. Which probably proved to hard to keep track of, as he was CEO of each of them. Diversity: Some of the retail companies bought werent in the same markets as Burtons which the meant the company had very little experience of how to manage them. Rice tried to move away from the central problem that was the menswear clothing. Capability: Rice was originally a business consultant, which meant he had no retail experience, this probably why less focus was placed upon fashion. Also Burtons factory workers maybe werent capable of coping with the change in productivity, which resulted in distribution being slow. Capacity: There was no doubt Burtons had the financial power to implement change but it never really had the right people in the right places. The marketing and focus was all wrong,