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expected to be down yet again. Sales per employee is also much lower than the industry’s average.

Fortunately for Benson, it still has a number of loyal customers who wouldn’t think of shopping elsewhere. However, the group is facing fierce competition from Hi-Mark and up-and-coming Levinson Brothers.

Hi-Mark are well established, with a clearly defined up-market image. It has a reputation for selling good quality merchandise but at high prices.

Levinson Brothers set up its first store seven years ago. Since then, it has expanded fast. It now has eight stores located in big cities. Levinson Brothers’ target consumer is the 16 - 25 wage-earner. Nevertheless, it attracts to its stores people of all ages and from all income groups.

Levinson Brothers’ marketing is more aggressive and effective than that of its two main competitors. It often cuts prices, and even offers goods at give-away prices to get people into its stores. It advertises heavily in local newspapers and on local television. Its special promotions are often accompanied by a great deal of razzmatazz. Levinson Brothers’ share price stands at $12 - its highest rating this year. Even so, the share is still probably a good buy for investors.

In order to compete more effectively, Benson changed its business strategy about eighteen months ago. It began to rent space to outside firms on a concessionary basis.

Almost 20 % of its stores’ space was rented to selected companies from outside the organization. Unfortunately, this strategy has not been too successful. Several firms renting space complain that their sales have been poor.

Benson’s stores were redecorated recently. This ‘facelift’ has met with mixed reactions from its customers. The layout of the stores continues to confuse customers.

The customers complain that departments are not grouped together in a logical manner. As a result, shoppers get tired out looking for the goods they want.

At present, it looks very much as if Benson has lost its dynamism and sense of purpose. Investors holding shares in the group might be well advised to sell.

Troubled times for Benson Group

This year Benson’s profits dropped by 25 % compared with the previous year. Today, Benson’s share price fell to just under $7 in anticipation of the results. Two or three years ago the share price stood at $10.

One of Benson’s biggest problems is that it lacks a clear image. Although some well-off customers have stuck to Benson through thick and thin, many others have moved on and now shop at Hi-Mark. These customers seem to prefer Hi-Mark’s tasteful décor and high-priced, exclusive goods. Another of Benson’s disadvantages is that its merchandise doesn’t particularly appeal to younger buyers. They prefer the self-service, down-market approach of Levinson Brothers - Benson’s other main rival. Both Hi-Mark and Levinson Brothers are profitable organizations. Hi-Mark’s strategy is, essentially, to maintain good profit margins on all its merchandise. Levinson Brothers, on the other hand, aim for high volume and lower margins.

All these organizations - Benson, Hi-Mark and Levinson Brothers - face a common problem. They are all aware of the threat coming from the new multiple stores – retailers like Classic, Marginal and Clique. These are ‘muscling in’ on the other groups’ traditional markets of clothing, home decoration and food. The new multiples

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have been very successful attracting to their stores fashion-conscious customers, both young and old. They seem to have the knack of offering exciting, stylish goods at prices people can afford.

Rising costs have been the main cause of Benson’s low profits. Stock levels tend to be high, but very often goods are not available when required by customers. At present, goods are kept in warehouses at each store. Benson is considering changing this system. It may build one or two huge distribution centers which will supply all the stores. This could be a less costly way of organizing its warehousing facilities. In addition, it has been suggested recently that service at Benson’s stores is not what it used to be. It is believed, also, that staff turnover and absenteeism is too high.

Unless Benson’s management take action soon to revive the company, it would seem that the future of the organization is bleak.

up-and-coming company – стабильно развивающаяся компания fierce competition – жёсткая конкуренция

up-market – верхние эшелоны рынка down-market – нижние эшелоны рынка target consumer – целевой потребитель

well below expectations – гораздо ниже ожидаемых

on prime sites in the high streets – в лучших местах на главных улицах disappointing, bleak, depressing – неудовлетворительная, удручающая merchandise – товар

give-away prices – низкие (бросовые) цены razzmatazz – шумные представления

on a concessionary basis – со скидкой

the layout of the stores – планировка универмагов well-off customers – состоятельные покупатели

to stick to the company through thick and thin – быть преданным компании в трудное время

to muscle in on the market – пробиться на рынок multiple – универмаг

to have a knack of – иметь особый дар (талант) warehousing facilities – складские помещения staff turnover – текучесть кадров

absenteeism – прогулы

to revive the company – возродить компанию

Describe the company’s profile according to the main points of SWOT analysis: strengths, weaknesses, opportunities and threats.

Communication skills: Exchanging information / Making suggestions

Read the following phrases and be sure to use them while discussing the problem with the Benson group.

Firm suggestions

In my opinion we ought to (should) launch the product in May.

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Surely we ought to /must _____

I (would) recommend / suggest launching it earlier.

I recommend (that) / suggest (that) we put it on the market in June. I think (that) / feel (that) we should do a marketing study first.

Why don’t we show it at the National Exhibition Center?

How / What about introducing it just before the summer season?

Tentative suggestions

It might be a good idea to launch it in December.

It might be worth (while) bringing it out in the summer.

You / We could perhaps get a well-known player to try it out. One possibility / option would be to put off the launch for a while. What if we ____

It’s just an idea, but why don’t we ___

Role play

You are directors of Benson Group. Each of you plays one of the roles described below. Some of you can act as assistants to directors.

The purpose of the meeting is to decide:

1.how Benson can improve its performance and increase its market share;

2.what its future strategy should be.

Chief Executive

You will chair the meeting. You must ask people for their opinions and encourage them to discuss fully the questions on the agenda. At the end of the meeting, you and your board of directors must try to agree on the future strategy of the company. Personally, you are not sure what to do in the present situation. You are retiring in five years’ time and you hope there will be no big changes in the organization before you go.

Deputy Chief Executive

You think that Benson should compete strongly against the Hi-Mark stores, and forget about Levinson Brothers. Therefore, Benson should make every effort to upgrade the quality of its goods. By doing this, it will be able to create an image of quality and luxury. It should also concentrate more on fashion clothing. The stores could sell more designer clothes and well-known brands which appeal to young people. They could buy high-quality goods and sell them under the Benson brand name, too.

Company Secretary

In your opinion, Benson cannot compete successfully against Levinson Brothers and Hi-Mark. You would like the company to join with Levinson Brothers to form a merger. Suggest that your Chief Executive should meet the President of the Levinson organization as soon as possible to discuss this possibility. A merger is a good idea because:

1.the new organization - Benson-Levinson - would appeal to all age and income groups

2.Levinson’s cash resources could be used for Benson’s future development

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3.Levinson would bring to Benson new ideas, management expertise and dynamism.

Director - Corporate Strategy

In your view, the present Chief Executive is no longer suitable to lead the Benson

Group. He’s too old and has ‘lost his touch’. Try to suggest - in a diplomatic way - that he should give up his job. You would like to bring in someone from outside to run the Group. This person would probably be the successful head of another organization. To attract the right candidate, Benson should offer a top salary, a share in profits, and other benefits. As a long-term strategy, the company should consider building huge stores in out-of-town locations where customers would have a lot of parking space.

Director - Public Relations

You feel strongly that Benson must go down-market and compete directly with Levinson Brothers. Young people are pouring into the South, so Benson must aim its marketing at the 15-25-year-old consumer. After all, these days, young people have plenty of money to spend. Therefore, you want Benson to:

1.redecorate the stores in bright colors, blue and yellow perhaps

2.change its sales approach by gradually offering more goods appealing to young people

3.introduce new types of racks and counters which allow self-service

4.have eye-catching window displays to attract teenagers and young adults.

You will, of course, have other suggestions for attracting young people.

Director - Corporate Finance

You have no doubt that the company must cut costs and increase its cash flow as quickly as possible. Benson needs cash to reduce its loan capital – this is much too high - and to finance its future development. To cut costs, the company must reduce its work-force by 20%. The Group must also have a new distribution system, with one or two large centers supplying goods to all the stores. This will reduce stock levels. You have plenty of ideas for improving the cash flow. For example, the stores could increase the profit margins on goods which were selling well. In addition, they should be ready to buy up cheap, good-quality merchandise. This could be sold in a special part of the stores, known as The Market Place.

Director - Marketing

You want the company to bring in specialist management consultants to do a study of Benson. They could work with the Marketing Department and Corporate Strategy Unit. Their job would be to analyze the organization, and make recommendations about future strategy. It might be a good idea, too, if Benson developed new activities. For example, they could open an optician’s service - very profitable - or offer financial services. A Financial Department could trade in stocks and shares, offer credit facilities, store credit cards, etc. You have several other ideas for new activities.

Director - Personnel and Staff Development

For some time, you have wanted to have a three-week training program, for all sales staff. After the program, they would be allowed to choose which department they wished to work in. Whenever you have suggested this scheme, the Finance director has opposed it. “We can’t afford it,” he always says. Try once again to persuade the board to agree with the proposal. You think, also, that Benson should stop all its concessions. Outside firms renting space in the stores should be encouraged not to