Even though we reinforced our production, we were not able to reap the expected profits due to the decrease in demand. According to Baur and McDermott (2010), the purchasing power of a consumer decreases during recessions. As the buying power reduced, consumers opted to purchase low-priced products from our competitors. The unforeseen change in economy negatively affected our business and strategies pursued. Other reasons to the non-performance include: REASONS EXPLANATION Overly compensated employees Management did not handle financial resources well Exorbitant spending for marketing Excessive bidding for celebrities High TQM expenses Too focused on private-label operations while setting above-average bid prices Fortunately, regardless of the decrease in overall market share, Esquivel could capture 100% of private-label market share in LA due to lack of competitors and low bid price set. Succinctly, the poor performance in Year 13 was primarily due to the recession and poor resource management. 3.5 Year 14 Homogenously, the recession period continued to impact Esquivel’s performance. Unfortunately, Esquivel’s position in the market dropped …show more content…
Since the employment of new managers, a tight cost control was initiated to minimize costs in line with the cost leadership strategy to stabilize the financial crisis the company was facing. For instance, the retailer support costs were lowered in the wholesale market across the regions. Furthermore, the costs pertaining to product quality and styling features were also lessened while still maintaining the global S/Q ratings. We also discontinued the private-label production to decrease overall costs and increase efficiency in producing standardized products. Besides, Esquivel also reduced its product price to below industry average to retain its competitive position in both wholesale and internet