MGMT 1030 Lecture Notes - Lecture 9: Canadian Historical Association, Scientific Management

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20 Jul 2016
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Outline of David Monod, “Bay Days: The Managerial Revolutions and the Hudson’s Bay
Company Department Stores, 1912-1939”, Historical Papers of the Canadian Historical
Association 21 (1) (1986): 173-96
Monod offers a cautionary tale to business historians by emphasizing that the
adoption of the most current management theories is not a guarantee of success;
in the case of the Hudson’s Bay Company, the adoption of scientific management
principles nearly caused the bankruptcy of this iconic Canadian company
Monod outlines the problems of the HBC after it had moved away from focusing
on the fur trade to a retail empire in the period before World War I
oStores were opened in small markets that were former fur trade outposts
with limited market potential
oIndividual stores were in charge of all purchasing
oThe Canadian Committee that controlled HBC operations consisted of
business leaders with no experience in retailing
In the 1920s and early 1930s, HBC adopted the latest managerial styles to try to
ensure profitability
oCentralization of purchasing and accounting functions at the national level
oEmphasis on the concept of “turnover”
Decrease the availability of brands formerly sold at a high mark-up
and focus on selling mass volumes of cheap brands at a low mark-
up
oThese initiatives failed, because every other retailer in Canada was
following the exact same managerial model and the turnover philosophy
cheapened the HBC brand image
In the 1930s, the HBC returned to profitability by rejecting scientific management
and adopting different management styles, many of which were traditional
oEmphasis on cost-cutting by closing unprofitable stores
oReturning control of some store functions to the local level, with national
purchasing only in areas of bulk items
oExtension of credit to customers
oMarketing campaigns emphasizing not the company’s modernity, but its
historical role in Canada’s business development and its position as
Canada’s first corporation
Monod closes his article by noting the role of business historians in examining
corporations’ activities in the past
oHBC essentially sanitized its published accounting records in the 1920s to
hide the magnitude of the financial losses incurred under scientific
management—a practice similar to modern corporations such as Enron
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