Assessment Brief:
The assessment is to produce an individual reflective account on leadership styles, traits and competencies that were exhibited in the case. Evaluate the leadership styles and traits of A. S. Watson Group. Assess how the company utilizes its first-mover advantage in the context of the company's culture and the wider competitive environment. What might have they done to go from a regional company to a global retailer? Give your reasoning for your choices of alternative actions and behaviours.
Assessment: Case-Based Assignment (3000 words)
A.S. Watson Group
A.S. Watson Group was founded in 1828 as a small dispensary in southern China's Guandong Province. In 1841, the dispensary was moved to Hong Kong, and the company was officially traded under the name A.S. Watson & Company since the 1870s. in 1981, the company was acquired by Hutchinson Whampoa - a Hong Kong conglomerate controlled by business magnate Sir Ka-Shing Li. Benefitting from Hutchinson Whampoa's solid economic strength, A.S. Watson Group launched a number of mergers and acquisitions in Asia and Europe in the late 1990s. For example, A.S.Watson Group entered the United Kingdom by acquiring Savers Health and Beauty in 2000. In 2002, the company extended its European business by acquiring Dutch Kruidvat Group. Today, A.S. Watson Group is one of the largest health and beauty retail groups with more than 10,000 stores operating in more than 30 countries. Its business spans from health and beauty products and luxury perfumeries and cosmetics to food, beverages (fine wine, bottled water, fruit juice, and tea drinks), and electronic products.
Despite the successes in market and business expansions, managers at A. S. Watson Group find it difficult to integrate the newly acquired businesses with existing ones. How to transfer a local pharmacy into a global health and beauty group is a huge challenge for the company's senior managers. Effective procurement, efficient logistics, and distribution systems can help to achieve positive financial returns in the retail industry. Indeed, many retailers endeavour to maintain efficient distribution systems, lower labor costs, and firm-level economies that give them bargaining powers over their suppliers in order to cut costs. Compared to many other big players in this field who rely on price wars and low costs to gain sales revenue and expand market share, A. S. Watson is gaining competitive advantage by providing unique shopping experiences to its customers.
In recent years, A. S. Watson Group highlighted its uniqueness with the proposition to help customers to "Look Good, Feel Great, and Have Fun". A. S. Watson Group adopts a set of employee training modes to not only improve staff's product knowledge, sales, and service skills but also to promote the groups business philosophy to each employee. The top management team believes that appropriate training will facilitate employees to understand the company's strategy and, hence, smooth its change from a regional company to a global retailer.
Following these managerial techniques, A. S. Watson Group has expanded its business in a creative way. The company introduced a "personal care store" concept in more than 15 Asian countries and regions, offering food, drugs, and health and beauty products. Compared to traditional "one-stop" supermarkets (e.g. Wallmart, Tesco and Carrefour) and local cosmetics boutiques, an A. S. Watson Group personal care store emphasizes excellent customer services and sells its own brand products. Although its own brands account for an average of 15 percent of all sales in the retail sector in developed countries, this branding strategy was at the introduction stage in Asian countries in the 1990s. This new business model caters to local emerging middle-class tastes and thus sets up the new industrial standard in many Asian countries. So what factors have made A. S. Watson Group and its personal care stores successful in Asia? The economic strength from its parent company?
Its international mergers and acquisition strategy? Or managerial capabilities that enable A. S. Watson Group to identify market niches inAsian economies and then creatively implement a "personal care store" concept to fill the niche? It seems like there is no single answer to this question. A. S. Watson Group was the first retailer who realized the importance of emerging middle-class customers and developed a business model to meet their needs. However, such first-movers advantage will not be sustainable as competitors can easily imitate its business model.
The firms continued success depends on its competency to provide innovative products and services in response to an individual market's preference.
Assessment Requirements:
1. Analyse and evaluate the managerial techniques employed by A. S. Watson Group in implementing and managing change and innovation.
2. Examine the implications of change processes experienced/implemented by A. S. Watson Group.
3. Provide at least 10 references.