MGMT 1030 Lecture Notes - Lecture 10: Scientific Management, Chain Store

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20 Jul 2016
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Study Questions for David Monod’s “Bay Days: The Managerial Revolution
and the Hudson’s Bay Company Department Stores”
1)What general thesis is Monod arguing concerning the operation of the HBC
department store chain in the period under discussion?
- The large measure for the HBC’s lack of success is stemmed from is excessive
attachments to new theories and innovations: scientific management. (Movement away
from its roots.)
2)Describe the decentralized structure of HBC’s operation initiated in 1911.
What economic crisis hit the company in 1920?
- The Canadian Advisory Committee was appointed to supervise implementation of new
strategy. Not made up of specialists, just successful business men of other industries.
- Hitherto, decentralized system of London based decision-making.
- Opened stores in the most unlikely places: Vernon, Nelson etc… believed rural clientele
was major market. Transformed from fur trading posts.
- Herbert Burbridge left the companies to run as their own device, decentralized buying
caused disorganized pricing.
- Customer credit was handed out freely, with no institution regulating its extension or
collection.
- Ran the department stores as like country general stores.
- The depression hit in 1920. The fear of the buyers strike caused a wholesale stampede,
thus price inflation sparked a crisis in the decentralized HBC hierarchy.
3)What changes were instituted in the HBC management structure in the
1920s and what was the concept of “turnover”?
- Planned on making it more SALES oriented.
- Appointed new store commissioners. Divided up authority between three experts each
of whom was made responsible for either buying, selling or accounting.
- To simplify communication lines, the commission was moved to Winnipeg and made to
report directly to Canadian executive.
- Turnover: The rate at which stock moves through a store. (Increase volume and reduce
inventory.) Turnover selling was the issue, as it was the inappropriate method for the
company to employ.
- Chain store selling. (Centralize buying to get discounts from bulk buying.)
- Came to rely on advertising.
4)Did centralization of the company structure return the HBC to
profitability?
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