Liz Claiborne Subsidiaries
Liz Claiborne clothing company had a vision of growth and expansion of new clothing labels, and had achieved these goals very quickly. In 2006 the company had expanded to 36 different brands and saw revenues climb 2.5x to 5 billion dollars. While the company as whole showed great signs, their profits had not consistently grown with their expansion do to an increase in operational costs. Weary of her company’s fate, Liz Claiborne hired a new CEO, William McComb, to reorganize and take control of the large corporation in order for them to receive the profits they should be earning. McComb saw the company was stretched far too thin, he cut the company down to focus only on 20 of the original 36 brands, and reorganized the divisional structure from 5 divisions to only 2, retail and wholesale divisions. This allowed for functional area across all brands to collaborate and communicate much faster and smoother in order to cut down on operational expenses. The retail division is made of those brands that are the fastest growing to allow marketers to focus on customer demands more effectively. In the Wholesale division, the idea was to cut down operating costs allowing for a lower market cost on products, thus creating a competitive edge for the wholesale department against private labels. McComb believes he has set the company up to be very competitive and is adding 300 stores to its existing 783 stores as he sees the company advancing its profits by facing environmental forces with a much better strategy. 1. Liz Claiborne’s old organizational structure was a divisional broken into departments based on the nature of the clothing line. Each division had its own set of management team, along with all the functional areas creating a lot of duplication of activities and coordination problems. Coordination is major factor for corporations who are involved in a global market with different demands and problems arising on day to day bases. The old divisional