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8279 Downloads1 I Published: 03 Jul ,2017
The key issues faced by the company are change in structure of the leadership style,high demand of raw material, low standard of designing, problems with the suppliers, government laws and regulations. Mia followed participative leadership style which was the reason of success of LJ Cotton. The new management of the company dictated the employees with the use of autocratic leadership style. The change in structure of the leadership style followed by the directors generated various issues in the company. This led to series of events leading to de- motivation of employees, which hampered the business of the company. The company was criticised for its use of cotton from Uzbekistan. As the cotton producers in Uzbekistan followed low standards of safety and quality and promoted child labour for farming of cotton. LJC's brand image was hampered by allegations of use of child labour by the Uzbekistan supplier. Government formulated rules and regulation against these malpractices. The design team of LJC faced problems for ideas of innovation in product line. Low support from the management for the designing of new product line brought out various flaws in the product line.
The case study showed various points which had to be worked out by the company. Implication which can be drawn from the issues faced by the company are discussed in the research. The major recommendation brought by the case study is the change of leadership style. Democratic leadership style must be followed to promote participation. Participative methods of management will be helpful to boost the confidence level of the employees. The company need to build its brand image, reduce the number of physical store and expand business through online website. The company also to find an alternative fibre that can replace cotton. Design and innovation has to be brought out in the products to gain customer satisfaction.
The aim of this analysis is to provide a detection of LJ Cotton, and an examination of key issues that are affecting the organisation. The scope of this report is to study and analyse main issues currently impacting LJ Cotton and their implication on the business of the company (Ingram, 2014).
The key elements studied in the report are factors affecting the company. Rising Competition, changing fashion trends, raw material problem, government laws and regulation are few issues faced by the company. The management suffered due to ill decision making of the new appointed directors. This low level of decision making and strategy formulation led to rise in various issues of the company. The purpose of the report is to provide a brief research on the issues faced by the company and to analyse the impact of the issues to generate appropriate recommendations (Morville and Rosenfeld, 2006).
The management of the company is currently following autocratic leadership style. The directors did not got involved with the workforce of the company. Low support was provided to the design teams which generated issues among them. This practice is unsuitable as it hindered team building and employees commitment. The use of this style in LJC generated one way communication which hampered the growth of the employees (White, 2004).
The director of the company did not pay attention on the requirement of the design team for new design ideas of the product line. No support was provided and the low level of involvement with the design team brought out low standard of product design.
The management of the company tried to rebuild its image in the market by entering into the low cost market with low price product ranged. But they failed as this market was already occupied with its competitors (Randall, 2006). Competitors like Marks and Spencer, Tesco, C&A, H&M and Walmart banned the cotton from Uzbekistan supplier for its low standards of production. They shifted the price of the products towards low cost to target low market. Their methods of retailing and promotion of the products was interrupting with the business of LJC. LJC's promotional techniques were low as compared to its competitors. The competitors were highly concentrating on attracting the customers through media and paper advertisement whereas LJC was struggling with its internal issues of the company at that time.
The cotton industry have seen tremendous revolution but still there is high scope of technological advances that can be brought out. These technological advancement can save the degrading effect of cotton farming on the environment and the farmers (Lawler and Bilson, 2013).
The changed style of leadership followed by the top management of the, company has directly affected on the employees. The employees are de-motivated from inappropriate behaviour the management. Their is co-ordination and dedication among the team mates of the company. Lack of knowledge about the latest fashion trends is impacting the production line of the company. Cotton is used as the main raw material in the products (Porter-O'Grady, 2014). The government strict laws about safety and standard for cotton production has impacted the production of the company. Cotton farming degradable affect on the environment is also a topic of discussion for the management. This negative factor of the cotton farming is criticizing with the corporate social responsibility of the company. Low level of advancement in the technology for the textile and cotton industry has left the company with very few alternatives of innovation.
The decision of the directors to work with the Uzbekistan supplier despite warnings by the government on use of child labour in Uzbekistan, indicates how the company failed to implement its corporate social responsibility. The companies mission was to operate with performing corporate social responsibility. It failed on the parameters of business ethics. The management knew about ill situation of child labour and discrimination in Uzbekistan but still conducted the business activity with the supplier. Just for companies own advantage of profit making it neglected the environmental and social responsibility of business (Hahm, Jung and Moon, 2013). This in return spoiled the brand image as LJC was criticized by media for importing cotton from the Uzbekistan supplier.
The affect of autocratic leadership style can be seen with the issues faced by the company. The need to change in leadership style will benefit the managers and the employ tees in promoting the work culture of the company. As per Kurt Lewin theory of leadership, democratic style will promote more participation of the employees with the management. Democratic decision making involves all the people of the company, despite the fact that final decision will still betaken by the main leader of the company. This style will improve the commitment skills of the company. Democratic leadership style is appreciated by the individuals working in the company. It enhances the motivation and problem solving skills of the company (Changing Minds, 2015).
The CSR of the company stated four obligations of the company towards the society. They were economic responsibility, legal responsibility, ethical responsibility. The company failed to provide economical products as it was struggling with production of cotton and supplier of cotton. The companies failed to generate its legal responsibility towards the farmers and workers who were working in cotton farming. LJC did not paid attention to the low wages and poor farming methods used by the producers in other country (Davies, 2006). Ethical responsibility of the company was to understand what's right for the farmers and workers. Despite getting criticized for working with Uzbekistan supplier the company did not take immediate actions.
Transformational change is designed for LJC in a way that a drastic change can be brought in internal, external and marketing policies of the company. The new changed plan designed is discussed below.
Structure-LJC in order to bring change in the company needs to develop its culture and structure of the company. The company needs to introduced a proper lined organizational structure. In this structure, different level are formed on the basis of different department. Lined Organizational structure will improve the decision making of the management (Margolis and Huggins, 2012).
Leadership-The company needs to adopt new democratic leadership style to increase employee participation and promote training and development. Participative leadership style will help company to improve communication and will enhance the decision making of the company.
Employees as stakeholder-The company must value its employee as a stakeholder. Employee must be included in the decision making yo improve their motivation and development (Frost, 2012). Employees must be provided with incentives and appraisal on half yearly basis to generate maximum output from them. Employee welfare and management program must be introduced to promote self learning and training among the employees.
Rebranding-The company has to rebrand its image in the customers and with the sup[pliers. Promotional and marketing tools must be incorporated in the advertising strategy of the company. Innovations has to be brought to re surface the product line to meet the latest fashion trends (Wei Johnson and Piggott, 2004).
Supply chai-LJC needs to respect the conditions of the supplier. A new manufacturing unit can be established in China as Uzbekistan doe not meet to the requirement of the vision of LJC. Entering in Chinese market will help bring out new sales and will help the company to bring out low cost product in the market. Participation in management of the manufacturing unit will bring out better result for LJC (Lawler and Bilson, 2013).
CSR and Business Ethics-LJC has to adhere to its corporate social responsibility of protecting the rights of workers and safeguarding the poor environmental affects ion the kind by cotton farming. The company should take care to not misguide the consumers just for the fulfilment of its profit making objective (Brynjolfsson and McAfee, 2012). The company needs to be sensitive towards various environmental affect of cotton farming on ecological system.
Environmental awareness-The company needs to bring out awareness against the negative effects of cotton farming on the farmers and workers. LJC needs to provide with training programs to the farmers and producers. Specific guidelines must be generated to maintain the ecological balance of the land used for farming. The company also has to bring out sustainable measures against the affect of cotton farming (Hahm, Jung and Moon, 2013).
Products refuelling society and customer demands-In order to meet sustainable needs of customer and the society the company can introduce a chain of organic cotton products. Organic cotton will reduce the harmful affect of cotton farming on the workers. This will promote corporate social responsibility of the company.
LJC needs to expand its business to online store. E shopping facility will help to increase sales and generate revenue. Online store will also reduce many expenses this will improve the financial position of the company. Online presence will let the company raise its customers support to global market (Beck and Cowan, 2014) . The company will be able to register itself to the global market.
The company has to bring out more advertising in the print and digital media. Advertisement in the newspaper, fashion magazines, social media will benefit the company to generate new customer base. The company also has to bring pout email and SMS alert system, to inform the customer about new updates in the product. This will help the company to generate market awareness about the products. International stores must be linked with a database operated through the headquarters of the company (Davies, 2006). This database may be designed in a way which will guide and update all the franchised store about new products and schemes brought out by the company.
The company has to formulate the above change design in a year. The company must re introduce itself in the market with the next financial year. The budget of the company must be decided with the current financial position of the company. In order to expand the business in online market the company may require to shut down few physical store. This will help to company to save few of the expenses. The budget and cost involved in rebranding must be calculated by the hum,an resource department of the company (Smith, and Hawkins, 2004).
The company is currently facing problems with the leadership style, inadequate raw material, financial instability, low design and innovation standard, Rising competition in low cost market, environmental affects on the cotton and farming and laws formulated for the same. To address these issues the company needs to shut down few of its physical store to expand in the online market. The management needs to follow participative leadership style to promote democratic work culture. Organic cotton can be used in one of the product line to promote sustainability and reduce harmful effect of cotton farming (Hahm, Jung and Moon, 2013). The company needs to understand the demand of innovations and new design to cut back the rising competition.
LJC needs to increase employee participation by incorporating training and learning programs. As per the leadership theory stated in the report the company has to adopt policies to empower employees towards customer satisfaction. Training and development programs will increase the communication and participation with the top level management (Vaccaro and et. al., 2012).
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The analysis done on the LJ Cotton company forecasted major issues related to the leadership style of the directors. The autocratic and dominating behaviour of the leaders of the company forced the company towards downfall. To ensure success and re-establishment it is important for the leaders to learn participative technique of leadership. The expansion plan of the company towards online store and reduction in physical store will boost companies revenue. This will help to bring the company out of the financial troubles faced by the company (Mahdinezhad and et.al., 2013) . The company has to re-strategize its corporate social responsibility to promote sustainability issue to build the lost brand image.
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