Table of Contents: Case Study IC Companys

1. Introduction
2. Theoretical Background
3. Understanding Power in IC Companys
3.1. Conflict, Power and the Multi-Brand Strategy
3.2. Decentralized Power?
3.3. The Hegemony of Niels Martinsen
4. Recommendations
4.1. Strategic Positioning
4.2. Organic Cultures
4.3. Communities of Practice
5. Appendix
6. Bibliography
















1. Introduction
In this case study I will analyse the Danish fashion company IC Companys - a merger
between InWear Group and Carli Gry International. Following their merger, IC Companys
experienced intra-organizational difficulties which included a poor working climate,
inadequate management capacity, and tensions between country and brand managers to
name a few (Foss, Pedersen et al 2012:165). To resolve these issues IC Companys took a
number of initiatives such as the re-establishment of industrial competences, strategic
clarification, and a shift in the managerial paradigm (Foss, Pedersen et al 2012:182). Most
importantly, CEO Theillbjrn developed a multi-brand strategy. While these initiatives
seemed to drive growth, they predominantly based themselves on creating new agency and as
a result changing the power relations within the company. For example, the multi-brand
strategy entailed giving the brand managers new intra-organizational power at the expense of
the country managers; 400 employees were made redundant; and the main shareholder Niels
Martinssen was able to install a new management team which included then-CFO Theillbjrn.
As part of this academic analysis of IC Companys I will concentrate on the multiple levels
and implications of power within the organization. In recent decades the issue of power has
been of much interest to those studying management practices (Pfeffer 1981, Steetz 1999).
Central to such a project is an understanding of the relations among power, discursive
practices, and conflict suppression as they relate to the production of individual identity and
corporate knowledge (Steetz in Alvesson & Willmott, 1999: 22). Thus such an analysis will
allow me to give recommendations which can minimise internal struggles and allow IC
Companys to overcome its strategic impasse.


2. Theoretical Background
Contemporary interpretations of power in and outside management studies emphasize its
symbolic, cultural and discursive dimension (Clegg 1989, Alvesson 1987, Laclau & Mouffe
1985). In light of this, key signifiers such autonomous, decentralized, supportive,
own universe and subculture, engender feelings of independence, blurred (Foss,
Pedersen et al 2012:166) cannot be reduced to describing IC Companyss de facto
management practices. In fact, they create a symbolic order which (1) presents intra-
organizational power vis--vis employment relations as networked, capillary, enabling, and
perhaps even democratic (2) attempts to win employees to relations a self-regulative exercise
of power or what Peter Drucker would refer to as greater self-discipline (Drucker 1988:47).
Too often these discursive and symbolic interpretations of power downplay, or even omit the
economic root of unequal power relations at the workplace. While a vulgar Marxist approach
would suggest that the economic base determines the superstructure, it is nonetheless
necessary to understand the political-economic dimension of power in organizations. Hereby,
I build on Gramscis insight that that the old dichotomy between base and superstructure,
state and civil society be dissolved into a broad ensemble of relations [my italics] (Boggs
1976:120,121). In the case of IC Companys this helps us to pose the right questions: Is it
necessarily the highest revenue-generating brand which wields the most intra-organizational
power? What does the appointment of former-CFO Theillbjrn mean for the strategic
orientation of IC Companys? What economic power is vested in the brands?
Gramscis ensemble of relations is then mediated by discourses, symbols, and most
importantly, (the (in-)accessibility of) information. By taking information into account we
are able to distinguish between informal and formal power (Greve & Mitsuhashi 2007;
Mechanic 1962). This is of particular importance in IC Companys which I would label an
information-based organization (Drucker 1988, Castells 1997). It also allows us to use
information which emanates from outside the organization as a resource to enhance the
companys performance.
In adopting this theoretical framework it is no longer a question whether IC Companyss
brands are too autonomous. Instead we start to understand autonomys contested nature,
and the way that those in powerful, dominant or hegemonic positions within the company can
use it to their own benefit. In other words, the autonomy of the individual brands is not the IC
Companys problem but its foremost core competency. The companys symbolic order rests
on this and related notions (i.e. subcultures, freedom) while its brands are non-imitable and
scarce (rf. Prahalad & Hamel 1990).
3. Understanding Power in IC Companys
3.1.Conflict, Power and the Multi-Brand Strategy
Following the restructuring, IC Companys reduced the organisational responsibility and
power of their country directors. Economically this should not come as a surprise given IC
Companys was not necessarily growing internationally as outlined in Foss, Pedersen et al
(2012) but in fact concentrating its market power in places where markets quickly become
saturated. They continued to operate in the same geographic areas while emerging markets
such as Brazil, China, South Africa and India were not being covered. This is confirmed by
the fact that sales were concentrated in population-poor countries (70.62 per cent) in small
countries. While growth rates in smaller countries were above 10 per cent most larger
countries the exception being Russia - had less than 10 per cent growth (see appendix).
Foss, Pedersen et al describe how this move by management led to a conflict between
country directors and brand managers (2012). The conflict between these two groups of
actors is a mediated expression of a number of structural problems within IC Companys.
Elevating the position of brand managers within the organization is not the same as
developing the brands. While these brand managers are key agents within the company who
embed knowledge they cannot substitute themselves for a successful brand strategy which
was not in place. This is underlined by the fact that as part of the restructuring IC Companys
shut sixty retail stores and focused its attention on outlets. In other words, the power of retail
in harnessing brand identification downstream in the value chain was consistently
underestimated. The strategy to use outlets [] to become more brand-oriented (Foss,
Pedersen et al. 2012:184) only works if boutiques and retail stores in city centres and high
streets reinforce the brand as part of peoples everyday lives and shopping experience. This is
highlighted by Guercini and Runfola who link retail-activity to product innovation processes
(rf. Guercini & Runfola, 2008:10)
Another industry-related issue which might create tensions between country and brand
managers is the fact that luxury or price-level are associated with certain countries and even
sometimes cities. Brand names may likewise communicate the country and associated quality
(Usunier 1993). In other words, Sweden and the Scandinavian countries are known for H&M
and associated with a lower segment, while brands from Milano, Italy are, for example,
associated with haute couture. On the other side, Hoskins argues that there increasingly
blurred distinction between high fashion and street fashion insofar that River Island joined
TopShop in the London Fashion Week, H&M has organised fashion shows in the Muse
Rodin in Paris. Versace, Armani, Stella McCartney have done collections for H&M (Hoskins
2014). IC Companys falls into neither of these categories. All of IC Companys brands are
situated somewhere in the middle segment which suffers from the problem of
undifferentiation in which no players hold dominant positions. (rf. Foss, Pedersen et al
2012: 178).
The problems outlined in this section highlight that internal organizational tensions are
frequently rooted in structural and environmental limitations that the company faces. Further,
it raises the question whether IC Companys actually employed a multi-brand strategy, or
whether it was more of Brand manager-strategy? Given that I have identified IC
Companyss brands as their foremost core competence this offers a possible explanation for
the strategic impasse.
3.2. Decentralizing Power?
Gramsci points out that power in advanced capitalist societies operates through consent rather
than coercion (Gramsci 1971). This has fundamental implications for information-based
organizations and their employment relations. Rather than using coercive management
practices which seek to maximize employees efficiency, IC Companyss decentralized
organizational set-up can facilitate consent from its employees. This is of particular
importance in the creative industries where knowledge workers such as fashion designers
demand a stimulating environment, creativity and even decision-making power (Amabile
2005). Rather than seeing this level of autonomy as a threat to the companys strategy it can
harness it as one of its core competencies which give the firm competitive advantage, and
allows it to exploit synergies which the industry creates.
As Alfred Chandler pointed out with his organizational M-Form structure follows strategy
(1962). In other words, companies which deal with complex, multiple-product, and multiple-
market firms sought to devolve their intra-organisational decision-making power not for the
sake of their employees but in order to boost their bottom-line. While employees might not
have to confront power in their day-to-day activities, we start to understand how IC
Companyss symbolic and discursive order is rooted in the economic reality of the industry it
competes in, and the products it makes. Thus we have to distinguish between essence and
appearance when analysing IC Companyss decentralized nature vis--vis its organizational
form.
The subcultures which exist inside IC Companys are a by-product of this type of
decentralization. Writing about youth subcultures Stuart Hall argues that subcultures have
their own discourses, symbols, rituals which resist bourgeois hegemony by consciously
adopting threatening behaviours, or fashion styles (Hall & Jefferson 1993). Thus the brands
subcultures might form a counter-weight. While Foss and Pedersen regard the subcultures as
potential areas of conflict, they instead should be viewed as agonistic partners (Mouffe
2000) insofar that they continue to define themselves through diffrence to the symbolic
order. In the final instance, the symbolic order is their source of power. Thus the subcultures
are a source of intra-organizational power which should be viewed as a core competence.
These are not replicable and thus a source of competitive advantage. Knowledge workers will
be attracted to working in such environments (Amabile 2005). This is of particular
importance given the middle-market segment in the fashion industry which is characterized
by undifferentiation.
It could be argued, for example, that decentralized structures create informal powers, groups
and actors which might end up losing sight of IC Companyss overall strategy. The question
though is whether these sub-units really need to be aware of IC Companyss overall strategy.
I would argue not as elaborated in the next part.
3.3. The hegemony of the Niels Martinsen
Niels Martinssen is the major shareholder of IC Companys and the founder of the InWear
Group. It could be argued that his dominant position facilitates the kind of intra-
organizational flatness. When the organization found itself in crisis he was able to call a
general meeting and install a new management team (Foss, Pedersen et al 2012). By
appointing former CFO Theillbjrn as the new CEO, Martinssen changed the formal intra-
organizational power dynamics. Why did he not appoint one of the chief designers, or
perhaps, even one of the leading lights in Peak Performance? I would argue it shows the
dominant or hegemonic which finance commands inside the organization.
The share of profits (Foss, Pedersen et al 2012: Figure 7.2) discloses that the acquired
companies and new creations make up 81 per cent of the profits while the old brands only
make up 19 per cent. If Martinssen had chosen one over the other it would have exacerbated
the tensions between the different brands, and sent a clear signal that IC Companys was either
favouring the new brands endowed with incumbent power or strengthening the hand of the
traditional old brands. Given that brands are intangible assets which can build shareholder
value (Nandan 2004:264) Martinssen acted out of pure self-interest when he appointed
Theillbjrn as the new CEO. His former position allowed Theillbjrn to strip down IC
Companys by making 400 employees redundant, and closing sixty retail stores. This will
have sent the right dog whistles to shareholders who arguably behave like locusts and are
more interested in short-term financial results than building brand identification amongst IC
Companyss client base.
However there is a caveat with Theillbjrns appointment. Foss, Pedersen et al compare him
to a football manager of eleven teams. However the football manager is by no stretch of
imagination the most powerful person in the club in modern financialised football. In fact, he
is subject to the results of the team and his players. He usually receives the blame when
things go wrong. Thus it is no surprise that CEOs are shuffled around when companies do not
meet shareholders expectations. A recent study even suggests that long CEO tenure can hurt
performance. The authors suggest that the length of a business cycle - 4.8 years of service - is
optimal for a CEO (Luo, Kanuri & Andrews 2013).
Whether one buys into the argument or not, the Martinssen-Theillbjrn relationship
highlights the that ownership and control are continual source of conflict in financialised
firms (Fama & Jensen 1983; Froud, Johal et al 2006). It also confirms the extent to which
power relations inside IC Companys need to be seen as an ensemble of relations.
4. Recommendations
4.1. Strategic Positioning
Michael Porters notion of strategic positioning "makes sense when a company can best
produce particular products or services using distinctive sets of activities" (Porter 1996). This
would mean that IC Companys would use its shared platform to create simple consistency
without obliterating the subcultures and instead reinforece the different activities. According
to Porter "competitive advantage grows out of the entire system of activities." (Porter 1996)
While IC Companys has taken steps to cut slack in the value chain downstream it has not
tackled the question of how its individual units establish themselves in the middle-market
segment without cannibalising each other.
4.2. Organic cultures
Adopting a cultural perspective of management innovation (Birkinshaw, Hamel et al 2008)
allows us to see how the subcultures and strong autonomy between the different units can
shape management behaviour and innovate practices across the organisation. It also means
that one can generalise from the experiences of employees and individual units. This does not
mean that different subcultures have to assimilate to one another but could integrate the best
elements of a subculture in their own subculture. It is based on the view that IC Companys
acknowledges that agents are important but constrained by power relations and traditions
(Birkenshaw, Hamel et al. 2008: 827). In other words, IC Companys need to create the
absorptive capacities which encourage cross-fertilisation without forcing assimilation.
4.3. Communities of Practice
Consumption is highly intertwined with branding. The power relationship between
consumers and brand-owners is in a continuous flux and continuously being renegotiated. It
really exemplifies the fact that power is an ensemble of relations. Branding is becoming one
of the core strategic and commercial competences driving firms and a key area within which
consumers become actively involved in commodity processes. (Power & Hauge 2008:124)
Today consumers create fashion blogs, email lists, or youtube channels. Arguably this
constitutes a new source of consumer power. This data could be used for open innovation. If
IC Companys has the absorptive capacities which facilitate exploiting the data generated by
those who frequently set trends, they could be enhance their performance. This means
creating a community of practice (Wenger & Snyder 2000)
While these bloggers, and digital content creators might not be inside the organization they
can pick up the trends as they do not only follow one particular company, or segment as a
whole but act as popularisers, adapters etc. This information could flow into what the IC
Companys are doing and create new value downstream (Chakraborrty 2014). These
communities of practice will require mean that IC companies can extract value downstream
in the value chain. Their informal nature makes them difficult to sustain. At the same time
their interests might not necessarily be aligned to those of IC Companys.




5. Appendix

Revenue (DKK million) Growth
Location of
revenues Market Segment

Brand Ebit
Peak Performance 802 24% 61% in Scandinavia High-price segment acquisition (2001) Highest
InWear 540 14% 39% in Scandinavia upper-part of mid-price Original Highest
Jackpot 445 -11% 20% in Scandinavia mid-price Original Very Low
Tiger of Sweden 388 18% 91% in Scandinavia
lower-part of high price
segment acquisition (2003) High
By Marlene Birger 126 40% 51% in Scandinavia High-price segment acquisition (2003) Above Average
Soaked 104 30% 60% in Scandinavia high street brand
own creation
(2002) below Average
Designers Remix 48 66% 54% in Scandinavia high-price segment
own creation
(2002) Low
Cottonfield 278 18% 32% in Scandinavia mid-price segment Original Low
Matinique 245 23% 36% in Scandinavia mid-price segment Original Very Low
Part two 189 13% 51% in Scandinavia mid-price segment Original Low
Saint Tropez 157 -6% 71% in Scandinavia mid-price segment acquisition (2002) High
Total 2520

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