Strategic Issues at Esprit Holdings
Esprit is a manufacturer and retailer of clothing that sells its products in more than 40 countries via 800 directly owned stores and more than 14,000 wholesale locations. The company enjoyed strong success in the 1980s and 1990s, but has since faced strong competition and a loss of focus that has resulted in lackluster results. The company targets those consumers looking for an "international youthful lifestyle" (Quality First, 2011), but it is not clear that the company itself understood either how to grow as its customer base aged, or how to attract new customers within its target demographic. In either case, the company now faces strong competition, a shrinking market share, and pressure to rebuild itself under the leadership of a new CEO. This research explores the company's situation using McKinsey's 7S framework, identifies several strategic alternatives that the company could pursue, and identifies implementation issues associated with the recommended strategy.
As illustrated below, the 7S strategy model incorporates "hard" and "soft" factors that contribute to a company's ability effectiveness. The "hard" factors-strategy, structure and systems-are typically related to a company's infrastructure and formal organization, while the "soft" factors-shared values, skills, style and staff-are associated with the company's culture and organization. All of the factors are interrelated, so a change in one factor brings about changes in the others and in the company's overall performance (Kotelnikov, n.d.).
Esprit has a good structure in place that has proved successful at managing operations around the world. Its strategy, however, has proved lackluster as the company has been unable to realize the potential that it once had, or maintain the momentum that it generated in the 1980s and 1990s. The systems aspect is good, but also needs realignment in that the co...