Introduction The exercise in which you are about to take partis designed to assess your ability to analyse information, come to conclusions and work as a team to generate recommendations. You are to assume the role of a graduate trainee working for Steeds Ltd, a retailer selling bikes and cycling accessories. As part of the graduate trainee programme all participants undertake a range of placements in different areas of the business before specialising and applying for a permanent role as @ manager in the area to which they are best suited. You are currently on secondimeent to the head office Retail Operations Unit. Along with your graduate trainee colleagues you have been asked to form a ‘task force’ where you will work together to help resolve a number of issues that are currently facing the business. The issues have been referred to the Operations Unit either by a head office Functional Manager or by the field based Regional Managers. The Head of Retail Operations has put together 6 issues for you and the ‘task force’ to address and you are about to attend the first meeting. Task + Individually: you have 15 minutes to read and make notes on the information in the brief (during this time you should not confer with other members of the group). + Asalteam: you will then have 45 minutes to work as @ group to come up with clear courses of action/decisions for each of the issues. You should back up your decisions with a clear rationale which demonstrates that you have thought through all the possible pros and cons. You may divide up the time and tackle the issues in whichever way you like but all members of the group must agree on the courses of action you put forward. ‘Your proposals must be ready at the end of the discussion period and should be listed on the flip-chartwhite board provided. Please do not destroy any handwritten notes that you make during the exercise since these will be collected at the end of the discussion.wwn.sni.com Issue One: Request for Compensation From: Regional Manager (North) Ihave received a letter from a customer, Mrs Khalid, requesting compensation following an accident that she had 10 months ago in one of my stores (Newtown). Apparently she tripped on the stairs and sustained injuries to her ankie which meant that she was unable to work for 2 months. At the time of the accident the store manager inspected the stairs and since there was no apparent reason for her fall he came to the conclusion the soles of her shoes may have been slippery due to the wet weather. The manager recorded the accident in the accident book, but he was unable to confirm whether or not the required accident risk assessment checks had taken place before the store opened that morning. Mrs Khalid declined the offer of an ambulance at the time and since there wasn't a frst aider in the store that moming she accepted the offer of a cup of tea and called her husband who came and took her home. (/'m not sure why a first aider wasn't present — I'm pretty sure all of my managers are aware of the legal requirement to have a first aider present at all times...) Mrs Khalid’s letier was prompted by the fact that she read in the newspaper that Steeds had recently paid compensation to a gentleman who tripped on the stairs and twisted his ankle. The customer apparently lost his footing on the stairs when he was disoriented by the glare that was reflected off the chrome stair treads from the overhead lighting. Apparently the store manager (Thirlston store, East Region) was quoted as saying - “The store has recently boon refitted and so averything is very shiny and now. This coupled with our siato of the art lighting in the stairwell may have contributed to the customer becoming distracted and losing his balance’. Mrs Khalid is aware that Newtown has also recently been refitted and feels that since the nature of her accident is s0 similar she should be compensated in a similar way. She is requesting an immediate settlement of €6000 due to her lost earnings and general inconvenience, and has threatened legal action f her request is declined. She also attached ¢ letter from her doctor confirming she sustained a bad sprain to her ankle. | was going to recommend that we settle to avoid any negative publicity, but I'm concemed this might open the flood gates. I'm aware that 40% of our stores across the regions have been refurbished in a similar way in the last year, and wonder how many other people may have been dazzled and disoriented by our new stair treads! | can‘ personally see any difference in the lighting the contractors have installed in the stairwells, and maybe the stair treads will just dull down over time. Please can you give me some advice on how to handle this situation from a head office perspective? | could just settle it locally but | can see it has wider implications. Thanks. ‘Team — How do you think we should resolve this?Issue Two: Ethical Business? From: Head of Buying (Clothing) ‘As you are aware there have been a number of cases recently where retailers have suffered significant brand damage by undertaking contracts with unscrupulous suppliers, in low cost countries, where workers are being exploited. Following the CEO's request that Steeds should find ways to focus on our corporate social responsibility, and also ensure this is reflected in our company culture, we have conducted a review of our suppliers and the'r business practices. (1m not sure what my colleagues in the other buying departments are doing but we've made a start). Unfortunately the review has revealed that one of our suppliers (BD Sportswear) is operating with an array of ethical and legal labour violations. My predecessor, who by the way is no longer with Steeds, apparently awarded the contract to BD 11 months ago in a bid to deliver savings. The large supply contract (€5.3m) for Hi Vis Bomber Jackets included a minimum monthly stock call off and a committed 2 year tem. BD is based in rural Shorland (an underdeveloped fictional country), and at the time we believed the company was considered to be a good employer and met our usual standards (although these were net stipulated in the contract). We understood the contract would provide a major boost to the local commurity by offering increased employment, and this has definitely happened. Our review found, however, that employees are regularly asked to work at least an extra 100 hours per month which is twice the legal limit in Shorland. One employee claimed that workers were receiving minimal training, with no mention of health and safety, were required to sleep in cramped dormitories and had very few opportunities to raise grievances. We also gota sense that some of the hiring practices were rather irregular, e.g. favouring family members and discrimination against some ethnic groups. ‘As you can see the issues are far ranging and ones that are unlikely to be sorted out overnight. | fea! uncomfortable remaining with this supplier since we are open to being ‘found out by the press, and partnering with BD can hardly be seen as following the CEO’s wishes re corporate social responsibility! | would like your approval to switch to an alternative Shorland supplier (ZP Apparel) who we have recently identified and vetted. The contract with ZP is less favourable in terms of price and margin but would provide us with greater reassurance with regards to the treatment of workers and the environment. 'm obviously aware this would break our commitment to BD, and I'm also aware this would leave them with large stock holdings and potential lay-offs. We have only called off the minimum stock for the past 11 months because our projected sales forecast hasn't panned out as hoped. I'm sure this sort of thing happens all the time and don't see that BD would have the means to take legal action. What do you think? Thanks. *Team - please can you consider: + Whether we should or shouldn't remain with BD Sportswear + How we should handle the remainder of the contract if you feel we should see the contract through, or how we should work with ZP Apparel going forward + What initiatives we could take internally to ensure everyone focuses on the CEO's wishes so that corporate social responsibility bocomes embedded into our culture and practices. Thanksvwrnw.sil.com Gos ranmurpanne | omews orvupe Issue Three: Customer Loyalty Scheme From: Regional Manager (East) As requested I recently undertook a review of various customer loyalty schemes with a view to whether or not Steeds should offer this type of scheme. My personal view is that a customer loyalty scheme is a ‘must’ if we are serious abaut combating our main competitors such as Rossi, who by the way have a very well established ‘money-off card based scheme. All research points to the fact that customer loyalty schemes are one of the best ways to improve customer retention. The high cost of bringing in new customers compared to retaining existing customers is undisputed and so customer retention can significantly increase profitability. know that you wanted to ask the graduate trainee ‘task force! to come up with some suggestions on what type of customer loyalty scheme we could offer, and also provide ideas for a successful implementation, I'd suggest they start by considering: + What is the objective of the scheme? + Who are the target group (e.g. first time customers or all customers) and what are the needs of the target group? + What will incentivise the target group to repeat purchase? + What is the most appropriate media to reach the target group? + What customer information do we want to gather and how will this be used? + How will the scheme be launched both intemally and to customers? In terms of deciding on the features and benefits of the scheme they may find the following research useful, as well as their own experiencas of loyalty schemes, of course. Features of Loyalty Schemes that incentivise customers to spend more Excellent customer care Poor customer care Relevant rewards Unobtainable rewards Money off rewards Unrealistic points/expiry Simple sign-up m% Encouraged to spend ‘Communication overload eau saeeto spe! immediate Rewards \m% Discouraged to spend Complicated paints Intermittent vouchers, =— Lack of reward choice None ofabove jm None of above 50 “Team - Please give me your ideas on the above bearing in mind our values and our customer community,From: Head of Research & Development, H.0. I received the following manufacturer's report this morning and would welcome your advice since the situation is rather unclear and the consequences of any action could be very disruptive to trade. “Following an incident of rivet failure which poses a potential safety hazard to users of the DUO Bike and ‘Skateboard Helmet (serial number 0201777) the company suggests stocks should be withdrawn from salo until further notice”. Released by the manviseturer - Harisons Li. ‘Apparently a customer returned a DUO helmet to a Steeds store (in ‘ the South Region) complaining cracks had appeared around the . rivets which secure the chinstrap to the helmet. The customer f happened to mention the cracks had appeared on her son's helmet uring a recent snowboarding holiday. The manager of the store pointed out that the helmet is not designed, or intended, for use when snowboarding, however, the customer became quite aggressive saying “surely a helmet is a helmet it should do the job whatever’! She also went onto say there was nothing to indicate the helmet shouldn't be used for snowboarding and she was pretty sure other parents were allowing their children to do the same. There have been no other reported incidents of rivet failure and the manufacturer suspects the high altitude and low temperatures are likely to have contributed to the fracturing of the helmet. Although the type of polycarbonate micro-shell used in this helmet is a relatively new material, the manufacturer has confirmed the Product meets all standards in terms of impact and safety for the use in which it was intended, Following this, incident, however, they recommend the product is withdrawn from sale whilst the cracks are investigated which they think will take about 2 to 3 weeks. ‘As you probably know this product is the only dual function helmet we sell and it has been selling really well since it was introduced 6 months ago. In fact | understand the DUO has done a really good job at restoring customer confidence in our children's helmets following the recall last year of the TXO Bike Helmet, due to buckle failure on impact. Interestingly Harrisons also produced the TXO! This is a tricky decision - what do you suggest we do? "Team - Please come up with a strategy to do deal with this, | haven't had a chance to think about the different factors but if you think a customer announcement is required can you draft something.Issue Five: Sponsorship of ‘Ride Rushland’ From: Regional Manager (West) ‘As you have probably heard the long awaited 'Ride Rushland' cycling event is due to be launched in the summer of next year. The first stage of the tour will be predominately in the West Region starting from Ashton town centre. As Steed’s representative for this event | have been doing some research about sponsorship marketing so that we can make the most of the opportunity. In summary the pros and cons of sponsorship appear to be the following ‘Advantages Disadvantages + Brand enhancement — by tying up with an» _ Negalive image association, e.g, i there Ss event or organisation that has a strong crowd trouble or negative drug testing etc reputation + Awareness raising —by ourbrandname |» Lack of control, eg. poor weather, poor being linked to the event and included in attendance ete media coverage = Improved sales — either by selling = _ Sponsorship overload — this happens products at the event or by raised when there's too many sponsors and the Customer awareness audience gets saturated + Cost effective — sponsorship can be more |» Hijack marketing — this is when another cost effective than mainstream advertising company, usually a competitor, ‘steals’ the exposure ‘The main sponsor of the event is one of the county's largest companies, Rushland Telecom. The organisers of the event have approached us and other organisations, including our competitors, to see if we wish to become support sponsors. There are various packages that a support sponsor can purchase which give different levels, Of visibility depending on price. With the budget we have available, | believe we should decide on one of two possible marketing options. + Extemal - Elect to become a support sponsor and purchase a ‘Silver’ level package which would entitle us to supply either water, fencing or clothing branded with our logo. + Internal - Market ourselves at the event by sponsoring our own team of cyclists. We have time between now and the event to identify, train, equip and promote the team. If successful, the team may well go on to compete in other events. ~ rE Whichever option we go for we will need to create a company logo that (CA C markets us and the event. | suggest we stick with the existing logo but add an event related tag line. Which approach would you recommend we take? “Team ~ Can you discuss the pros and cons of the two suggested options, compare and contrast and give me your recommendation. Please also get your heads together on a tag line and come up with something suitable. | look forward to hearing your ideas!Issue six: Interval Loss/ Shrinkage From Finance manager — H.O | recently read a piece of research provided by Retail World which rang alarm bells in my head. “The main causes of retail shrinkage (the loss of products between manufacture and point of sale) are employee theft and shoplifting. According to the Rushiand National Retail Security Survey employee theft currently accounts for 48.7% percent of all shrinkage. Shoplifting makes up nearly one-third, or 33.8% percent of shrinkage. Accounting errors and vendor fraud make up 19.5% percent of the remainder” I think, as with most retailers, all of us at Steeds (including the Board!) tend to ‘blame’ any intemal shrinkage on shoplifters since this is easier than having to consider that we might be working alongside dishonest colleagues. I'm aware that we have taken some measures to prevent shoplifters, e.g. | understand each Region has recruited a team of store detectives whose sole purpose is to visit stores and catch or deter shoplifters, The above article left me with a feeling that we should be doing more to identify where employee theft is taking place, and why. One of the reasons according to the article is that thieves now have the ability to shift stolen items quickly by selling them on via online markets! Other reasons seemed to stem back to employee engagement and so I had a chat with HR. We looked at levels of dismissals due to dishonesty and also some findings from the recent employee survey. Here's some data that | think we should be paying attention to: HR Data and Extracts from the Employee Survey Region Nis [ET w We increase in dismissals for dishonesty (compared to last yea) 2fe|2|3 Extracts from Employee Survey: % of new staff who felt their checkout training was good oe | 75 | a2 | ‘6 of staff who don't see the need to log on and off at the checkout 52] 80 | az | 30 6 Jeel their assistant store manager is interested in them 46 [33 [78 | 69 6 feel the store manager knows them by name 6 [41 [ 71] 80 % feel they know haw the company is doing 35 | 24 | 40] 45 % feel they are listened to and can influence how their store is run 31 [a2 [er | 65 % feel they are well paid 45 | 42 | 55 | St % feel Steeds provide sufficient parks’ and benefits 40 [36 [42 | a7 36 feel they could talk to HR in confidence - necessary, 20 [10 [30 | 25 % of new staff who felt their interview and induction were well conducted 63 [39 [40] 80 * ‘South Region has a higher percentage of temporary staff — not sure if this is relevant! ‘Team - | think it's time wo introduced a Loss Prevention Plan. To get this off the ground I'd like you to consider the above and think about what we need to do as a management team Please come up with ideas to tackle the internal shrinkage. sues and also ways in which we can raise awareness of