Maidenform Restructuring: An Analysis of its Benefits and Negative Effects
Maidenform is an intimate apparel manufacturing company that specializes in women’s undergarments. It recently revealed a massive restructuring plan in order to reduce on its forecasted losses for the first quarter of the year. This essay aims at providing an in depth analysis of the Maidenform restructuring plan with particular attention on the extensive effects of the process.
The Restructuring Plan
The restructuring will take place over 2013. Over the year, the company plans to close all unprofitable segments of businesses. These unprofitable lines require considerable resources ...view middle of the document...
Cumulative annual savings from the reduced operation costs will be essential in reinvesting in profitable areas of Maidenform’s market.
The Restructuring Steps
The company plans to start the restructuring by exiting all unprofitable business segments it has previously dealt in. The exit will focus on the segments that require considerable resources but return little or no profit (Marian, 2013). One of the unprofitable segments is the Charm brand. This would lead to the closure of its 10 retail outlets. The next step in the restructuring process will be the reallocation of resources saved from the closed ventures to the remaining key ventures. After this, the company will engage in increased marketing to boost the Maidenform brand. It will also consolidate all departmental store shape-wear designs under the umbrella Maidenform brand. The restructuring will also include an introduction of a full figure lingerie brand within the year’s fourth quarter. The initial design will include four new styles. Market research shows that Maidenform has a market opportunity in about 40 percent of the market that is dependent on full figure lingerie. The company forecasts an increase in revenue by about US$ 30-40 million for 2014. This strategy will be coupled with a reduction in SKUs by 20 percent before the completion of the trading period. It intends that the SKU reduction lead to efficient brand management. The company forecasts that through careful sustenance, SKU productivity will increase by 25 percent. This will also lead to reduction in its markdowns and significant improvement on its inventory turns. Maidenform also plans to fund the renewed branding via the reduction of overhead costs. The reductions will occur in the company’s supply chain. The restructuring plan includes expansion into Canada, Mexico, South Korea and Germany.
Benefits of the Restructuring to Maidenform
The restructuring will result in reduced operating costs. Its plan to reduce spending on its supply chain will ensure the company achieves this. Cost reduction ensures sustainable economic interests (Griffin, 2003). The restructuring also ensures that Maidenform readjusts according to the market changes. Its decision to focus on additionally developing a full figure outfit is in line with readjustments. Failure to readjust might lead to future losses. All progressive companies in extremely competitive markets have to develop in order to stay afloat (Lanmin and Xianfeng, 2012). In the European Union, previous restructuring plans in the telecommunications industry have ensured that market performance increases and the companies enter into new markets (Siengthai and Pinprayong, 2012). Therefore, Maidenform’s restructuring plan will also ensure that it prepares against its competitors.
Apart from the reduction in operating costs, Maidenform will realize increased revenue in the long term. The restructuring plan focuses on the closure of low profit segments...