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Raleigh - Rosse

In: Business and Management

Submitted By stoneashhi
Words 1828
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Raleigh and Rosse (R&R) is a retailer of luxury goods such as clothing, handbags, accessories, footwear, jewelry, fragrances, and watches, etc. R&R had a total of 38 stores in USA as of 2009. R&R has established a good reputation for its extraordinary customer service since 1920. Beginning in 1992, R&R began to use the firm’s “Ownership Culture” program. The heart of the Ownership Culture was SPH (Sale-Per-Hours), the system to measure sales performance such as weekly sales, weekly revenues, and a customer satisfaction metric. In 2002, the company was named one of the “Top 100 Employers to work for” by Fortune magazine. Between 1995 and 2007, R&R grew by more than 225%. However, in the economic downturn of 2008 and 2009, this had a big impact on R&R, which revenues declined tremendously. Moreover, in 2007, Linda Watkins became the CEO of R&R. And later on in 2010, R&R sales associated filed a class action lawsuit under the Federal Fair Labor Standards Act (FLSA). Thus, Linda not only has to deal with the lawsuit but also has to build up the company’s image and reputation.
(Simons, 2011)

1. What is the cause of the problems described in the case? How serious are these problems? How would you quantify the potential financial risk to R&R.

The SPH program was the cause of the problems because it put a lot of pressure on store managers and sales. Even though this program stimulated the store managers and sales to work hard in order to be the one who sold the most multiple-item purchases in a given day, it made them stressful. In addition, the rewards program could help to motivate the employees to pay more attention to their jobs. According to Simon, “Repeated honorees were recognized as “client All Stars”; they received their frame photo hung above the customer service desk and additional discounts on clothing”. However, it…...

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