Case Study
Chapter 15: Turnaround Decision Making at Liz Claiborne
Ashley Scott
West Georgia Technical College
Chapter 15: Turnaround Decision Making at Liz Clairborne
Liz Claiborne was once the largest women's brand on the market. It took less than a decade from the brand being founded to make it into the Fortune 500, where it continued to set all kinds of firsts. Even throughout the company’s rough times, it always found a way to reinvent itself (Just Style).
By 2005, the company had grown to support 36 different nationwide brands with sales reaching 5 billion. Unfortunately, there was not much of a profit because operating costs were not decreasing, but instead increasing due to the complexity of managing so many different brands. In 2006, the company appointed 43 year-old William L. McComb as CEO, to turn the company around. McComb decided that the best option was to downsize the company in order to be managed more efficiently. He felt that the managers were spread too thin and suffered from “information overload.” Subsequently, the company was rearranged from five apparel divisions down to two divisions in order to eliminate the duplication of work.
Since then, McComb's five-year-plus tenure has seen the stock collapse, and five consecutive years of annual net loss totaling more than $2 billion dollars. Liz Claiborne, Inc. was forced to sell off many of its brands, including the Liz Claiborne label (Just Style).
1. Using information in the chapter, what kinds of decision-making errors and biases do you think may have led its managers to grow the size of the company so much and to add so many brands that the company became too complex to control?
I think the managers believed they were making well-informed decisions at the time. Perhaps, if they had used the classic model of decision making that may have had a better idea of the consequences of those decisions. However, the classic model is unrealistic because no one knows all of
Ashley Scott
West Georgia Technical College
Chapter 15: Turnaround Decision Making at Liz Clairborne
Liz Claiborne was once the largest women's brand on the market. It took less than a decade from the brand being founded to make it into the Fortune 500, where it continued to set all kinds of firsts. Even throughout the company’s rough times, it always found a way to reinvent itself (Just Style).
By 2005, the company had grown to support 36 different nationwide brands with sales reaching 5 billion. Unfortunately, there was not much of a profit because operating costs were not decreasing, but instead increasing due to the complexity of managing so many different brands. In 2006, the company appointed 43 year-old William L. McComb as CEO, to turn the company around. McComb decided that the best option was to downsize the company in order to be managed more efficiently. He felt that the managers were spread too thin and suffered from “information overload.” Subsequently, the company was rearranged from five apparel divisions down to two divisions in order to eliminate the duplication of work.
Since then, McComb's five-year-plus tenure has seen the stock collapse, and five consecutive years of annual net loss totaling more than $2 billion dollars. Liz Claiborne, Inc. was forced to sell off many of its brands, including the Liz Claiborne label (Just Style).
1. Using information in the chapter, what kinds of decision-making errors and biases do you think may have led its managers to grow the size of the company so much and to add so many brands that the company became too complex to control?
I think the managers believed they were making well-informed decisions at the time. Perhaps, if they had used the classic model of decision making that may have had a better idea of the consequences of those decisions. However, the classic model is unrealistic because no one knows all of
References: 1. Barrie, Leonie (2011). Ten steps taken to turnaround Liz Claiborne. retrieved 11/11/2013, from Just-Style Web Site: http://www.just-style.com/analysis/ten-steps-taken-to-turnaround-liz-claiborne_id112129.aspx 2. Unknown, (2013). J.C. Penny Tramples on Liz Claiborne and Misses Great Opportunity. retrieved 11/11/2013, from Forbes Web Site: http://www.businessinsider.com/liz-claiborne-disaster-timeline--fortune-500-to-failure-2012-7