Oran is a large UK retailer that offers fashion apparel, footwear, and other fashion accessories for men, women, and children. Oran has greatly expanded its business from a single store, which was established in 1995, to a fashion giant with 883 stores and 19,000 employees in 23 countries across the globe. Following its inception, Oran has been engaged in innovation in the fashion industry, initiating a strong foundation for product creation, focusing on trendy products, and reasonably pricing them. The company operates according to the philosophy of “cheap and chic.” For years, Oran has been a dominant player in the industry, adhering to the business principle that is centred on the value for money. The company focuses on being up-to-date with the latest trends in the apparel and footwear market and offers significantly lower prices than its competitors.
Business Case Overview
In the recent years, the apparel and fashion market has been facing the growth crisis and stiff competition. Most players believed that survival in the industry would require them to compete based on their pricing strategy, product-based strategy, or customer-based strategy. Combining these competition strategies, Oran’s management opted to use cheaper raw materials (such as polyester and fibres), purchased in large volumes, to reduce costs of production and, consequently, set affordable prices. Although by the use of polyester the company intends to achieve cost-effectiveness and efficiency, polyester is a petroleum-based raw material, which implies Oran’s reliance on non-renewable resources for raw materials. Oran gets some of its fibre supplies from companies based in Bangladesh and Benin, which have been accused of practicing child labour (Moulds n.d.). Besides, in its latest production and marketing strategy, Oran did not mention recycling programs and waste management as part of its sustainability measures (Claudio 2007, p. 5). In addition, to grab the attention of their younger target market and ensure an attractive ambience of its stores throughout the 23 countries of operation Oran uses bright lighting systems. These lights remain switched-on even when the stores are closed to illuminate window displays. Further, there is no mention of whether the aforementioned lighting system are energy saving or not, and, therefore, the company possibly excessively wastes electricity. Finally, the company’s stores play loud music to attract customers, raising the issues of noise pollution and electricity consumption.
Using the McKinsey 7-S Model to Analyse Oran Sustainability
The McKinsey 7-S model, created by Waterman, Peters, and Phillips (1980) is generally useful for the analysis of organizations and their effectiveness with regards to elements that make them successful. The model’s framework includes the following seven elements: strategy, structure, systems, style, skills, staff, and shared values (Hayes 2014, p. 137). All the aforementioned elements are interdependent, and failure to integrate all of them may influence the success of an organisation. While analysing the success of Oran using the 7-S model, the study will base on the principle that all the seven elements must be aligned and mutually reinforcing for the company to be deemed successful. Moreover, the use of the 7-S model is justified because of the need to help Oran improve its performance and maintain its alignment during other types of changes. Below is the analysis of all the seven components of Oran.
- Strategy: Strategy implies a plan that a company devised to build and maintain competitive advantage in the market (Peters 2011, p. 3). Oran has a sound customer-driven strategy, and the company’s management is constantly implementing long-term ideas to design and present to the public new collections season after season. Besides, the company strives to create a couple of new designs or items on a weekly basis. Oran’s brand strategy is to focus on being up-to-date with the latest trends and offering them at a significantly lower price than its competitors to survive in the fast fashion market.
- Structure: The company’s structure implies the framework upon which the activities of the company are coordinated. It entails the manner in which the organisation is structured, including the structure of who reports to whom. Oran’s structure is shown below.
Figure 1: Oran’s Corporate Structure
The structure presented above captures the essential departments that are concerned with the product development and creativity of the company. However, a department that deals with sustainability issues is either conspicuously missing or is erroneously merged with other departments, which fails to charter the right direction for the company with regards to sustainability issues (Schaltegger & Wagner 2010, p. 230).
- Systems: Systems are the formal and informal procedures that the company staff employs to attain its objectives. They include compensation systems, innovation systems, and information management systems among others. Oran has relatively well-organised systems that coordinate the activities of all the satellite subsidiaries of the company. For instance, Oran uses enterprise resource planning (ERP) software to enhance integrated applications and management, and to automate the functions of human resources. Through ERP, Oran has been able to achieve business agility.
- Style: This element defines the style of leadership that is adopted by a company (Peters 2011, p. 3). At Oran, the management has been attempting to adopt team leadership. Departments organise teams to smooth operations at different segments of the company.
- Skills: Skills are the distinctive capabilities and competencies of a company. One of the many strengths of the company is its ability to maintain strong relationships with its partners. With regards to staff skills, Oran does not own any of its factories, but instead depends on its network of external suppliers to operate its purchases and production. The company makes efficient use of 400 companies in over 15 countries. Oran buys raw materials from 450 suppliers. Furthermore, seventy percent of the production occur primarily in Asia, whilst the remaining thirty take place in various parts of Africa. With regards to style, one of Oran’s shortcomings is that it outsources its raw materials from companies with tainted images, particularly companies from Benin and Bangladesh that use child labour (Moulds n.d.).
- Staff: This element refers to all human resources activities, including development, training, motivation, and integration (Peters 2011, p. 3). With international subsidiaries in 23 countries of the world, Oran uses global staffing approaches that support its goals and objectives. The company uses both geocentric and ethnocentric staffing approaches to net employees with desirable leadership skills in different areas of its operations. To maintain effective leadership and management styles, Oran’s employees regularly undergo orientation, repatriation orientation, and continual development, which help them to understand Oran’s goals, objectives, and strategies.
- Shared values: These are the guiding principles of an organization, such as aspirations and values, sometimes unwritten, including the fundamental principles upon which a business idea is built (Peters 2011, p. 4). Despite the many positive attributes, it appears that Oran has failed to develop sound corporate values to guide individual values and objectives. The company’s environmental sustainability approaches are weak, with no guidelines on how to best protect the environment. The fact that Oran purchases its raw materials from producers that are condemned due to the employment of child labour suggests its disregard for corporate sustainability values. Moreover, since Oran is more profit-driven, it has not initiated the use of raw materials from renewable resources, but instead uses cheap materials from non-renewable resources. Consequently, there is need for Oran to define its values and integrate them with other six components of the McKinsey 7-S model.
Level of Sustainability Engagement and Target
In addition to the 7-S model, Brown and Flynn (2009) describe stages of sustainability processes and employee engagement. Figure 2 below shows different stages of employee engagement.
Source: Brown & Flynn (2009)
A company should start by developing a resounding strategy and sustainability vision to engage employees and enhance performance (Brown & Flynn 2009). With a weak sustainability strategy and vision, Oran is still on the first level of sustainability engagement, namely awareness. Therefore, Oran should target the next three stages of sustainability and social development. It must build on the company vision and strategy by increasing awareness and understanding of sustainability and social values among employees. Moreover, ongoing interaction among employees and management teams can enforce sustainability value connections. The final level that the company should target in the sustainability engagement continuum is action-oriented results, which can help in building a healthy completion and recognition of the company’s efforts in sustainability.
Most Urgent Issues Identified
The 7-S analysis of Oran allows to create a list of the most urgent issues that the company should resolve to enhance success in the market.
- Oran has no explicit principles regarding the company’s shared values.
- The company ignores corporate sustainability, since there is no department that handles corporate sustainability and social responsibility issues.
- There is need to improve the company’s skill base and reduce the outsourcing of production components.
- The company needs to replace its price-based competition strategy with the product-based competition strategy if it aims to achieve market leadership.
Core and Minor Issues
Among the issues presented above, there are two core issues that the company needs to address immediately. These are lack of emphasis on corporate sustainability and lack of explicit principles on company’s shared values. The issue of Oran buying from companies in Bangladesh and Benin can be regarded as a minor issue, although it also requires intervention if Oran plans to initiate changes in its shared values.
Sustainability Management Using Environmental Management Systems
The main purpose of the environmental management system as a sustainability tool is to help an organisation to plan, monitor, and control its environmental impacts, as well as to reduce carbon footprints, pollution, the amount of waste produced, and save resources (Revell et al. 2010, p. 275). The two main environmental management systems that I recommend for Oran are according ISO 14001and the Eco-Management and Audit Scheme (EMAS) (Lee 2009, p. 1102; Heras & Arana 2010, p. 731). Below is the list of tasks that I recommend the company accomplish to achieve sustainability (Gelbmann 2010, pp. 91-92):
- Oran must establish new organisational targets, programs, and objectives.
- Oran must ensure the continuous improvement of the environmental system and achieve success with regards to all environmental aspects.
- Oran must conduct an analysis of the environmental impact of its activities to improve its environmental systems.
- Oran must create an organisational department and prepare personnel to implement objectives and programs related to sustainability.
Role of the Team
A team of environmentalists will help Oran achieve the aforementioned tasks. Their role in the entire process is to guide the newly created sustainability department in the conduction of an environmental impact audit and the suggesting of recommendations for the mitigation of the impacts. The team will ensure that the environmental management system tool is effectively implemented during the transition period.
Conclusion and Recommendations
Despite its success in the market, Oran has problems with corporate sustainability issues. The cutting-edge technology that Oran uses to enhance customer experience has environmental impacts. Consequently, the company’s management should strive to ensure zero harmful emissions and limited impacts of production on the environment. The company must employ specialists who will model the system that will help to save environmental resources. Besides, Oran needs to produce and market its products based on sustainability-oriented mentality. The proposed comprehensive environmental sustainability plan will include such goals as the reduction of energy consumption, the decrease of water use, and the minimization of greenhouse emissions, while encouraging recycling at the company. Figures 3-5 below present suggested benchmarks for sustainability that Oran should seek to emulate in order to attain acceptable standards.
Figure 3: GHGs footprint
The diagram implies that 99 percent of the raw materials used by the company should have emission/carbon footprint of at most 1 percent.
Figure 4: Suggestions for sustainable water use
Although Oran does not manufacture its materials, it should adopt a policy to only purchase from suppliers that observe sustainable water use as suggested above.
Figure 5: Waste management