Reasonable management action

0

REYNALDO C. LUGTU

Given Singapore’s already teetering retail sector, Amazon’s recent entry to serve the Southeast Asian market will only force retailers to downsize, relocate to a cheaper location, or completely shut down. Since 2016, the booming e-commerce and the entry of less expensive brands have been forcing known global retailers such as Celio, Raoul, and M)phosis to retreat.

In the United States, the latest casualty was Payless Shoes, which recently filed for bankruptcy, pushing it to close more than 1,000 stores globally. Pressured by consumer shifts to digital and a growing preference for experiential spending among millennials and young adults, a host of other retailers have filed for bankruptcy since the start of 2017, including BCBG Max Azria Group, The Limited and Rue 21.

In the Philippines, some well-known brands have also pulled out, such as Shu Uemura, and more recently Lancôme, both under the L’Oreal Group. The first (and last) of the iconic Gift Gate store in Greenhills closed its doors for good on May 31, ostensibly due to changes in consumer tastes. A host of other retail brands are hurting due to the growing popularity of online shopping for a wide range of products, from clothing apparel to cosmetics.

In contrast, SSI Group Inc., the local franchisee of Payless, remains committed to putting up additional Payless Shoes outlets in the country. But the specialty retailer is also set to continue streamlining its store network to boost profitability. It is expected to reduce its selling area by about 6.8 percent this year to 129,352 square meters, in response to the tightening competition, as well as capitalize on the new market opportunities, a clear management action in response to tightening competition and new emerging opportunities.


Failing to respond to market drivers and external forces is one of the main sources of failures of CEOs and business leaders. I call this management inaction – a state when leaders in an organization fail to act on internal and external forces due to organizational inertia and myopia, or just simply oblivious to the need to move and decide on where to go and start, and how to get there.

With the fast-changing consumer tastes due to the maturing millennials, ever-changing technological landscape, and entry of nimbler start-ups, there is a clarion call for business leaders to think differently and act differently – a call for management action.

Reasonable management action refers to an executive’s ability to exercise managerial prerogative in an appropriate manner. This includes making decisions that affect the whole organization – from environmental scanning and objective setting and planning to execution and monitoring of activities.

*This brings us to this maiden article of “Management Action”, a weekly rotating column with the objective of sifting through social and business issues to provide practical and actionable insights for executives. We will also endeavor to share pragmatic frameworks that will help the busy executive in effective decision-making.
The roster of writers for this column, apart from myself, will all be knowledgeable in their respective fields and experts in their own right, namely:

• Atty. Ira Pozon, CEO, founder, and counselor for Compliance, Trade and Investment, and Government Relations and Public Policy of Caucus Inc, a business advisory firm. He is also a counsel at Valdez Law Offices; legislative consultant at the House of Representatives; former legal counsel and chief of Foreign Affairs to the Vice President of the Philippines.

• Vincent Pozon, a veteran public relations and advertising executive, who is chairman of Estima Inc. He was previously vice chairman and CEO of Adformatix, vice president/
executive creative director of Leo Burnett, and professor at St. Scholastica’s College.

• Kay Calpo Lugtu, a seasoned sales, marketing, and business development professional

from the technology and business process outsourcing industries, several years of which involved covering the Asia Pacific region. She is the chief marketing officer of The Engage and deputy director of Global Chamber Manila. Her advocacies include data privacy, financial literacy and nation-building.

The author is co-founder and counselor of Caucus Inc. and president of The Engage Philippines. He teaches strategic management under the MBA Program of De La Salle University. He is also an adjunct faculty of the Asian Institute of Management. The author may be emailed at reylugtu@reylugtu.com.

Share.
.
Loading...

Please follow our commenting guidelines.

Comments are closed.