Home Plus Case Study

820 Words 4 Pages
Organizational change is the altering of organizational structure, technology, and business strategy (Robbins, Decenzo and Coulter). As consumer preferences change, competition increases, and the economic environment fluctuates, business need to adapt to these changes to remain competitive and profitable. The management of Home Plus, a regional discount store, proposed a new strategy which involved doubling the number of high-end products the organization offered and cut its discounted packaged goods in half. This is a change from the initial business strategy in which the primary products the organization offered were discounted products. Before implementing the proposed strategy, Home Plus management must consider its advantages and disadvantages. …show more content…
Firstly, there will be a negative impact on Home Plus current customers who are discount shoppers. If Home Plus changes a majority of its products to high-end products this will isolate current loyal discount shoppers who make up a majority of the organization’s target market. Moreover, the strategy could also tarnish the organization’s relationship with its current customers. Another reason is, Home Plus will now have to contend with new competitors such as Macy’s, Bloomingdale 's, and Lord and Taylor. Stores such as these are already have a dominating presence in the market and offering superior services along with their products. Furthermore, the proposal will require that management invest heavily in promotion and advertisements to gain customer awareness. According to an article published in the Luxury Daily, a news leader in luxury marketing, the number of high income earners in the United States have decreased. Organizations must actively engage, pursue, and attract these kind of customer. In the same article founder of the Shullman Research Center stated “in many respects [organizations] have to go after these people.” (Jones). An alternate plan, perhaps a better use of these resources, is to cater more to current customers’ needs which may result in an increase of market share. Managers should also be aware that the organization’s input cost …show more content…
Additionally, though managers believe the new strategy will differentiate the organization from its competitors, there is a chance that competitors may replicate this strategy. Managers also look forward to enter a new market, however, doing this will turn away existing loyal customers and as a business most valuable advertising agents are its customers this will not be beneficial to the organization. Managers should also consider the resources it will take to enter a new market and to purchase high-end products can be very high. Instead, managers should invest in new and better ways to satisfy current target market’s needs and build core competencies that will set them apart from their competitors. These are the reasons I disagree with the new strategy management of Home Plus have proposed.

References
Jones, Sarah. Hihg-income Tops High-wealth for Luxury Purchase Intent:Report. 4 August 2015. Web. 20 March 2016. .
Mitroff, Sarah. iPhone vs Samsung Galaxy S6: Here 's The Difference. 28 March 2015. Web. 20 March 2016. .
Robbins, Stephen P, David A Decenzo and Mary Coulter. Fundamentals of Management Essential Concepts and Applications. 9th. Pearson, 2015.

Related Documents