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Warnaco is not exactly a household word, at least not in the same way that AT&T, IBM, Ford, GM and Exxon are. But with total sales of nearly $600 million, Warnaco Inc. is one of the largest businesses in the country and has become firmly entrenched in the Fortune 500. Warnaco’s business is manufacturing and selling apparel, especially intimate apparel. Some of its brands and products include Warner’s, Olga, Valentino, Scaasi, Ungaro, Bob Mackie and Blanche. Warnaco also makes menswear, including Christian Dior, Hathaway, Chaps by Ralph Lauren, Golden Bear by Jack Nicklaus, Puritan and Valentino accessories. In 1992 Warnaco become a fortune 500 company, the only one headed by a woman at that time. That woman was Linda Wachner. Wachner become CEO of Warnaco after helping a group of investors capture the company in a better, hostile takeover in 1986. She immediately replaced most top managers and energized employees throughout the firm. She quickly cut Warnaco debt by 40 percent and nearly doubled its operating cash, largely by cutting weak division (women’s apparel, for example) and combining those that remaining into only two divisions (intimate apparel and menswear). After restoring the firm’s financial health, Wachner took the company public (that is. She changed it from a privately owned company into a company whose stock can be bought and sold by the general public). Further she accomplished al of this during the late 1980s when many department stores and other retailers were going bankrupt and consumer spending for apparel was dropping. Wachner attributes her success as a manager to three main guidelines. The first is keeping in close touch with customers’ tastes, wants, and needs – clearly vitally important in the apparel field. The second is keeping on top of the business itself. For Wachner, this involves keeping up with technology, distribution channels, store layouts, problems, and the like so that there are no surprises in running the organization. Her third guideline is carefully monitoring the cash flow. She constantly checks both costs and revenues to ensure solid profits for the organization as well as to identify both opportunities and problems in time to take advantage of or solve them. Wachner is known to be a tough boss and has been criticized for pushing profits so hard that occasionally people get treated roughly. She is blunt and to the point. Further, she can get angry with fellow manager is they seem to be talking too much about problems and not enough about solutions. She believes that she tries not to hurt people and admits that criticisms of her still hurt. Fortune recently named her one of the toughest bosses in the United States. Her meeting frequently start as early as 5:00 AM, and she has been known to run evening meeting to as late as midnight. She expects results and is willing to put in the hours necessary to obtain them. By most indications, Wachner’s efforts are paying off handsomely. Warnaco’s sales, profits, and stock prices are all strong and rising. Wachner has also increased the value of stockholder equity and seen her own personal stake in the firm mushroom to $72 million. In a highly competitive environment, she has led her firm to a lofty position, and she seems determined to keep it there. Wachner clearly knows how to manage. Question: 1) What aspects of the management process can you identify in Wachner’s handling of Warnaco? 2) What managerial roles and skills do you think contribute most to Wachnr’s success?
3) Would you want toinvest in Warnaco? Would you want to work for Wachner? Explain your responses to each of these question.