Critique of The Limited INC Essay

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Critique of The Limited INC



Critique of The Limited INC.

Overall, we think that our classmates, Melissa and Jay, did a good job in their paper.
Here are just few comments and suggestion that we think our classmates have missed.


History:

The management of the Limited relies heavily on the shoulders of CEO Leslie Wexner. The
analyst has criticized him that he is frequently creating new businesses that evidently
fails. The underperforming stores are as follow:

*sum* 1995 Limited Inc. own 84% of Intimate Brands, Inc.
o Closure of 79 underperforming stores
*sum* 1996 Closure of 135 underperforming stores.
*sum* 1998 Abercrombie & Fitch became independent. Limited Inc. on longer have ownership
*sum* 1999 Limited Inc. became independent through a tax-free spin-off.

He has not been successful in being a good day-to-day manager. As recent as the mid-1990’s
he had 24 associates reporting directly to himself. His employees should not rely upon him
and instead they should be able to make decisions by themselves without consulting with
Mr. Wexner. This direct communication between Mr. Wexner and his employees probably
hindered the business. Not empowering his employees to make decision-making can be
detrimental to the company business because his employees’ suggestions may have had
significant contribution to the company and its ability to remain open. They need to
implement a strategy where the employees are allowed to make suggestions and comments.


Mission Statement

Their mission statement is weak. It has been criticized to be a sexiest advertisement.
Limited focused heavily in promoting women in their advertising. Limited needs to revise
this mission statement so that the consumer will realize that Limited also caters for men.


External Analysis

Limited has encountered a few lawsuits. On September 14,1999, two complaints were filed
against the company and its subsidiary, Lane Bryant. The complaint was related to labor
practices allegedly employed on the island of Saipan. It was dismissed because the
Department of Labor has commended their high labor standards; the DOL has placed the
Limited Co. on the "trendsetters list", which insures that their goods were not made in
sweatshop conditions. DOL supported Limited Co. with this lawsuit because Limited Co. has
a reputation to conduct business according to ethical standards.


The employees of Limited Co. take pride in complying with their high policy related to
labor standards. Limited Co. is known for its problem solving abilities; the company takes
precautions when faced with any lawsuit. They meticulously research the lawsuit and make
immediate changes to eliminate future lawsuits. Limited Co. is fast to respond to any
accusation they encounter. Limited Co. has a very strong connection with DOL and DOL will
continue to support their corporate image. Limited Co.’s employees are encouraged to
comply with policies that maintain the integrity and honesty of the company. Limited Co.’s
website encourages visitors to send in comments and complaints, so that they can correct
unknown problems immediately


Social Factors

Their second strength is that Limited Co. is a highly active member of the community. They
participate in hundreds of charity functions, such as the "Columbia reads" program. This
program in conjunction with the government has sponsored 400 employees that visit
kindergarten classes in the Ohio area for one-on-one tutoring on company pay. The 400
employees voluntarily participated in this program because they are committed and they
take pleasure in helping improve the community.


Industrial Analysis-Porter’s Five Forces Model

1. Potential Entry of New Competitor (Medium)
The barrier to enter the market is minimal and free to entry. This makes the potential of
new entrants high. However, it is difficult to compete with Limited because it involves
many factors, such as capital, patent, economies of scale, and market leader position,
therefore, the potential to entry for new competitors is medium.


2. Bargain Power of Customers (Medium)
There are many alternatives in the market; therefore the buyer’s switching cost is low.
Consumers do not have the power to bargain because Limited does not sell their merchandise
at wholesale or at a discount. Limited provides qualitative features such as, better
quality and they enhance their brand image.


3. Bargaining Power of Suppliers (Low)
Limited offer fair compensation and benefits, consequently this will motivate their
suppliers to comply with their laws and regulation.


4. Potential Development of Substitute Products (High)
Ideally, Limited product can be easily substituted. There are many substitute products.
Many consumers are price conscious which induces them to shop at discount outlets. There
are several stores that sell similar product as Limited at a cheaper price. The only
difference is that Limited merchandise has better quality and the brand name.


5. Rivalry Among Competing Firms (High)
Limited is a mature company and has established itself in the market successfully. In
order to compete with Limited competitors need to differentiate their product, provide
additional feature that Limited does not provide, lower their pricing strategy, and have a
substantial amount of capital for advertising.


Internal Analysis -Value Chain
Primarily Activities
Inbound/Outbound: Most of the merchandise and related materials for the Company's stores
is shipped to the Company's distribution centers in the Columbus, Ohio area. In addition
to Mast and Gryphon, the Company uses common and contract carriers to distribute
merchandise and related materials to its stores. The Company's businesses generally have
independent distribution capabilities and no business receives priority over any other
business. The Company's policy is to maintain sufficient quantities of inventory on hand
in its retail stores and distribution centers so that it can offer customers an
appropriate selection of current merchandise. The Company emphasizes rapid turnover and
takes markdowns as required to keep merchandise fresh and current with fashion trends.

Operations
To ensure the consistent quality, The Company has established a separate division named
Independent Production Services (IPS) to assist the company to control and monitor its
vendors through programs, such as Vendor Qualification and Compliance and Vendor
Monitoring. The IPS establishes and maintains in reliance on specific qualification
standards and protocols developed from time to time on behalf of the Company. All vendor,
subcontractor and supplier factories will be inspected periodically over time to

Limited's qualification criteria and procedure standards.

Services
The Company offers its customers a return policy stated as "No Sale is Ever Final." As
the Company continues to develop strategic relationships with vendors, it will continue to
intensify its commitment to vendor education.


Support Activities
Firm Infrastructure
The Limited, Inc. is supported by a number of strategic functions, or centers of
functional excellence, known collectively as The Center. The Center provides strategic
direction and support to the individual businesses and to the enterprise as a whole. By
designing key business processes and leveraging best practices throughout the enterprise,
The Center adds value to each of its Brands. Some of these functions include:

Distribution Services:The purpose of Limited Distribution is to design and implement
operations that will provide the retail businesses with the most effective and efficient
delivery operations available. Limited Distribution Services will have achieved its
objective if each of its customers believes that it has been an asset in helping them
achieve their goals.

Real Estate and Store Planing: Responsible for locating and leasing all store sites for
retail businesses of The Limited, Inc., Intimate Brands, Inc. and Limited Real Estate
continually searches for new and exciting retail environments where our brands can be
showcased. Limited Store Planning's mission is to create the most innovative, successful
stores in the retail business. It employs talented design, engineering, architectural,
construction, purchasing and finance associates -- highly focused teams designing and
building leading-edge retail space.

Design Services: Limited Design Services oversees the design of branded apparel and
merchandise for the retail businesses.

Limited Brand and Creative Services: will work with the Chairman and the individual
operating businesses to create brands with powerful, singular personalities that are
consistent with the founder's visions, and meet customer expectations.

Limited Technology Services (LTS) is responsible for worldwide computing and
telecommunications for The Limited, Inc. LTS is committed to partnering with The Limited,
Inc., its brands and support businesses as joint stakeholders to increase shareholder
value through the innovative applications of technology, business process and information.


Human Resources
Limited has successfully recruited talents. Within the last two years, Limited has built a
powerhouse team of proven retail executives, recruited from Banana Republic, Estee
Lauders, J. Crew, Liz Clairborne, Macy, Pillsbury…In addition, Limited has developed many
successful employee-training programs that help to redefine and utilize employee’s role
and talent. For example, the company’s buyers have moved from a product development role,
to a new analytical role. The new role includes three disciplines: competitive
intelligence, client intimacy, and fashion radar. These disciplines enables buyers
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