Oakes Boot and Shoe Company

Oakes Boot and Shoe Company was founded in 1880 in Middletown, UK –

then the footwear manufacturing centre of the UK – as a maker of high-
quality boots and shoes. For over a hundred years Oakes has managed to
maintain a healthy niche market despite competition from cheap imports.
Many other Northampton shoe companies have not been so fortunate:
many have disappeared entirely and others have chosen to move their
production to countries with cheaper labour costs. Twenty years ago,
Oakes faced difficulties as a result of:

• higher costs of ‘raw’ leather from South America, as Argentina and

Brazil expanded their own manufacturing capabilities

• large reductions in the number of North American visitors (the main

buyers of UK high-quality shoes since the 1950s) visiting their
specialist shops in London, Birmingham, Edinburgh and Dublin

Oakes considered moving production from Northampton to another part of

the world, but quickly dismissed the idea. The brand was built on high-
quality raw materials and craftsmanship. Many of the customers are from
families and small retailers who have bought quality boots and shoes from
Oakes for generations and the company holds on file the foot
measurements of all the customers of its ‘made-to-measure’ service so
that clients can order by mail and phone.

So far, Oakes has managed to survive and is now the only shoe maker in
the region. However, the market problems that the company is currently
facing have led to rising excess stocks of its ready-made range of
footwear and a decline in their ‘made-to-measure’ market. Short-time
working, lay-offs and a reduction in profitability could soon be the
inevitable outcomes.

Recently, however, a new growth in the UK demand for high quality shoes
has occurred as a result of changes in the age distribution within the top
10% of the income distribution in the western world. These groups are
now dominated by working people - men and women - between 26 and 45
and their purchasing habits have moved away from the large retailers to
smaller select shops and on-line catalogues. It now becomes imperative
for the small producers of high quality shoes to become known via their
brand rather than by their large presence in the High Street or reliance on
their very traditional customers. New designs, small scale promotions and
fast and efficient customer service are now the key commercial activities.
Oakes’ have fallen behind in this new competitive arena.

At present the Firm employs:

180 skilled production and technical employees .

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80 part-time employees concerned with enquiries, orders and returns

16 employees concerned with sales,

10 employees concerned in technical design and engineering.

6 employees involved with marketing including web-design

20 employees concerned with building and equipment maintenance

They also have regularly employed over a100 people annually to meet
seasonal increases in demand.

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The Oakes family are still very involved in the business UK. The family
members have spent most of the lives involved in running the business
but recent developments in the market for their products have revealed
tensions in the previously smooth running of the firm.

Katie Oakes is Managing Director of the company. She has a degree in

Management and also has given lecture courses on Management and
Entrepreneurship at the local University’s Business School. She is married
and has three children, two of whom are studying for a Business degree in
the US. She was appointed to this position by the Board of Directors in
recognition of her ability to get on with all the Board members and
because of her previous experience of being Marketing Director in her
husband’s firm that supplies imported building and garden materials to
the local construction companies and Garden Centres.

The members of the Board view her as an intelligent and friendly

individual with great integrity. Katie’s father, Benjamin, is the Chairman of
the Board. He is due to retire in three years’ time. He feels strongly that
the company should continue to run the business as it has done since
1880. He is worried that any changes will be disruptive to the business,
making it even more vulnerable to a takeover. Her role has always been
seen as a collaborative one although she does have extensive experience
of dealing with suppliers to the family firm.

Richard – Katie’s youngest brother – is Finance Director and has only held
this position for 5 years having worked as a senior accountant for a
clothing manufacturer in Spain for 7 years. With this experience, Richard
is able to study the detailed financial accounts and the movements of
production costs of competitor firms. Richard is also the youngest
member of the Board. He is only 35 and he understands the need to enter
these new markets and to change the ways in which the company views
its production and distribution activities. Katie also appreciates the need
to establish the sophisticated on-line marketing techniques that her
children are learning in the US.
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They both believe that the production department is over-staffed and that
many of its processes are wasteful. Richard points out the virtues of ‘Just-
in-time production’ and wants all production to be more demand led. He
also would like the production and marketing teams to focus on
introducing new designs to appeal to the rapid changes in tastes of his
age group.

As a result of his experience in the clothing industry, he also sees the

need to collaborate not just with other shoe makers but also with those
companies that have already established on-line selling of shoes and the
emerging demand for boots. On-line selling also encourages firms to sell
shoes and boots in conjunction with other items of clothing. This
collaboration, he argues, would increase sales, enhance the company’s
brand and allow the firm to establish a concession base in the main high-
street retailers such as Debenhams, Marks and Spencer, John Lewis,
Selfridges etc. These companies (brands!) are now looking to attract
wealthier and more adventurous shoppers into their stores by allowing
other well known brands to have small concession outlets in their stores.

‘This is the only way we will survive’ he told his elder brother, Daniel at
the last Board Meeting.

Daniel has been Marketing Director for 25 years and still thinks that the
US is the main market for Oakes Boot and Shoes Company. He regularly
visits the US and relies on all the business connections that he has made
over the last 25 years.

Richard knows that Daniel will find it difficult to make new connections
with the new marketing and distribution organisations in the US. Richard
also knows that the new marketing trends demand quick response to
customers’ on-line requests, constant innovation and a flexible workforce
that can meet all the rapid changes in demand. It also needs a flexible
workforce that can meet the swift and efficient packaging and mailing of
goods as well as speedy and informed response to any complaints and
returned goods. Also sales will only grow if the large retailers and on-line
catalogue companies will market the Oakes brand and if Oakes customers
tell their friends and colleagues about their new products. Richard
understands very well that this is, of course, yet another reason why all
complaints have to be managed very skilfully. What happens after the
shoes have been produced is probably more important for Oakes brand
than the actual production of the shoes. Oakes are moving into a new
business environment which will require new people with new attitudes
and competencies.

On this last issue, Richard also faces opposition from the Production
Manager Michael Smith and Edward Newman, the leader of the local
branch of the Shoe Making Trade Union that represents all production
staff and some sales and distribution staff. Richard sees the need to utilise
flexible working- arrangements that are required to meet the often
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fluctuating demand for shoes. The company now employ many part-time
employees from the local community and the town’s new University to
deal with distribution and packaging tasks as well as sales and ‘returns’
inquiries. Richard has already come into conflict with both Michael Smith
and Edward Newman when he suggested that the company should offer
redundancy packages to those employees that refuse to accept the new
flexible working conditions. Both opposed him arguing that this would
destroy Oakes worldwide reputation for quality.

But in Richard’s experience, this is the most important issue as these new
working practices would require retraining for all production employees in
the new computerised manufacturing systems and information systems
that the new shoe designs would be based on. The acquisition of these
skills would also allow Oakes to collaborate with other shoe makers and
firms in the leather goods industry. This should enable Oakes to extend
their range of products and thus encourage greater cooperation with the
large High Street stores and the online-catalogue companies. This sort of
collaboration could also now be international rather than regional, which
again would increase their need for more efficient marketing and
distribution systems.

Katie and Richard are also aware that, as customers become more quality
and design conscious, Oakes must begin to market their products in
conjunction with other items of clothing in order to become part of an all
inclusive image of a ‘style’. Katie and Richard recognise that if this
happens, Oakes would have to have a new brand for their products. The
new brand could include a much larger range of shoes and other leather
goods such as belts and casual jackets so that they can mix with many
other items of clothing. For this to happen, Richard sees the need for the
marketing of their products to be done via their web-site and in the on-
line catalogues of large retailers. This would require immediate action as
at present their web-site still resembles a ‘mail-order’ catalogue. Also the
response time to orders, enquiries and complaints is still far too slow as
their Customer Service employees still lack the necessary computing and
interactive skills to provide a speedy customer focused response.

In stark contrast, Michael and Edward fear that these changes would
severely affect the company’s ability to maintain high-levels of production
quality and would also require the employment of new levels of
supervision. They also argue that it would also affect the payment system
of the company which has been based on seniority and the traditional
qualifications of the Boot and Shoemaking industry. Both Michael and
Edward see the traditional culture of seniority and authority, based on the
acquisition of craft skills, and membership of the Trade Union being
destroyed. In fact, they oppose any attempt to get employees to acquire
different skills and competencies as another example of ‘de-skilling’.

In her role as Managing Director, Katie has good contact with the local
community. She is an active member of the town’s Chamber of commerce
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and she sits on the Advisory Board of the University’s Business School.
She is also a member of the local college’s Training and Development
Programme and regularly sits on committees concerned with skill
development alongside Edward Newman. She understands the
employment potential that is in the town and she is certain that while
some older employees may want to leave, the younger employees -
especially the women - are prepared to take on new roles and
responsibilities. Indeed Katie is certain that the town is full of under-
employed talent. Her marketing experience and local knowledge tells her
that the firm and many of its employees are ready for a change. The real
problem is the composition of the Board.

The family members of the Board are, Benjamin Oakes, Katie Oakes,
Daniel Oakes, Richard Oakes. The other 2 members are Tom Jones
who has been Sales Manager for the last 15 years and was formerly
employed by Katie’s husband, and finally John Lloyd, who was the local
Bank Manager and for 25 years has been a personal friend of the
Chairman and a trusted advisor to the company. He and the Chairman
Ben Oakes have had private meetings in John’s large country house. They
respect Richard’s business judgement and financial knowledge but see his
actions as endangering the traditional organisation of the firm and their
long standing relationship with other senior members of the community.
They are not opposed to the changes themselves but think that there
would be implications for all their employees, their families and the
community in and around Northampton. They understand that
manufacturing needs to backed with good marketing techniques but they
mistrust any policies that would change the traditional image of the
company. However, the prospect of the firm having to merge with another
clothing firm is making them very cautious about taking risky decisions at
the present moment. Here they are both a bit concerned about Richard’s
approach to the current financial problems that surround the family firm
of Oakes.

Dan Oakes and Tom Jones are both very suspicious of Richard’s motives
as they believe that he wants to take control of the company. Although
they are not opposed in principle to his plans, they simply do not believe
that his marketing approach is viable. Both are older and have more
experience of the industry than Richard. They think that he and Katie are
deliberately ignoring their experience. What they both want to know is,
how they are going to be involved in the proposed changes? They are
privately worried that they maybe unable to be part of this new fast and
flexible world of rapidly changing customer demand and they, therefore,
stress the weaknesses rather the strengths of Richard and Katie’s positive
approach to the company’s opportunities. Tom summed this up very
nicely at his last meeting with Michael Smith, the Production Manager “If
we are not careful, we will simply become ‘a fast-shoe outlet’ “.

The next Board meeting is in two weeks time and in order to gain support
for his ‘way forward’ Richard needs support. He has found Katie to be
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100% in agreement with his plans but he has failed to convince his
brother Daniel, Tom Jones and Michael Smith, who although not on the
Board is seen to represent the employees’ interests. They all seem to
want- albeit for different reasons- to simply preserve the firm as Britain’s
leading maker of quality shoes rather than a stylish and innovatory
clothing enterprise. For the next Board meeting, James has drawn up
some financial plans that will make some production staff redundant and
introduce new ways of working. The savings will be spent on trying to
change the company’s brand image.

John Lloyd and Benjamin Oakes, the Board’s Chairman, recognise that
something has to be done, but being now retired, they are prepared to
take a back seat and let the ‘younger generation’ take over. Their main
concern is still, however, the future of Oakes Boot and Shoe Company

Katie and Richard can see their plans for the future of Oakes Shoes being
rejected unless they can convince the board of the viability of their plans.
They also believe that if the firm is to grow it would need to collaborate
with the local training and educational institutions. Oakes Shoes will need
to recruit suitably qualified employees to work in their new distribution
centre and they would greatly benefit from collaborating with the
marketing department of the University’s Business School The marketing
of their new product ranges will require a much more sophisticated
marketing mix which would then need the adoption of complex
synchronisation of sales and production targets. The Marketing
department could also establish new courses on web-design and web
based applications. These courses would be sponsored by Oakes Shoes
and could provide a steady supply of talented web-designers. Such
collaboration would also enhance their Employer Brand within the town
and the local region.

Richard feels quite isolated as he is the most involved with the new plans
and he realises that this is going to be difficult. No one has yet actually
opposed his and Katie’s plans but they still have no positive supporters.
He thinks this is because the rest of the board simply can not see that it is
no longer safe to do nothing. Companies must either change or die. He
also now understands that being the youngest member of the board is a
big disadvantage and he strongly believes that he needs an outsider to
write a report that will enable him to influence some members of the
board.

The report could also be an opportunity to consider the introduction of

new appropriate HR processes and procedures that would enable the firm
to enhance the adaptability and flexibility of all employees at all levels as
the company moves into new and unfamiliar business environments.

New competencies and skills will also be needed to be acquired by

employees to meet these new challenges. It would help, he thinks, if the
report could also indicate what sort of competencies would be required
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and how they could be integrated into a new approach to leadership that
will possibly be required in these uncertain times. Again, the Business
School might be able to provide valuable assistance.

If he could have access to this sort information, Richard thinks he would

be able to gain a clear majority vote of approval for his and Katie’s plans
for the future of the company.

He has written to you in your capacity as an experienced People

Management consultant with a large portfolio of UK and International
clients. You first met Richard when he and you were working for the same
company in Spain. Since then you have also met Katie when you were
involved with the local Middletown University Business School in setting
up their new MBA Programme. In your capacity as a consultant acting for
the Business School you also meet senior members of the Business and
Education community.

Richard writes that he would like you to write a report for him that would
outline the organisational problems within the firm that must be
addressed and any external opposition from within the local community.
Richard also would like you to comment positively on the impact that your
proposed changes would have on the future of the firm and the local
economy of Middletown.

With the knowledge that you now have of Oakes Boot and Shoe Company,
Richard’s commercial ability and the commercial training and
development facilities in Middletown, you quickly accept Richard’s request

On receiving your acceptance letter, Richard begins to think more

positively about the outcome. ’You never know’ he thinks to himself ‘ I do
believe that we may even be able get Michael Smith and Edward Newman
to support these plans.’

He awaits your report with cautious optimism.

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TASKS All the following must be addressed in the order as printed.

Question:1 [To count 40% of total marks]

You have been recruited as a consultant to produce a written report that...

accompanied by an action plan for Richard to use to help him to convince
the Board and which he could put to the Board to gain local support.

You should address the following issues, that if properly understood would
enable Richard and Katie to win the boards support for their business
proposals.

A A detailed analysis of the main benefits that the successful

introduction of Katie’s and Richard’s plans for Oakes Shoes would bring to
the business and educational community of Middletown

B Identification of those People Processes or HR systems which might

prevent the successful implementation of the plans and suggestions as to
how they might be changed and improved

C An analysis of the impact that opposition plans could have. What

groups within the firm and the community might support the opposition
and why.

Question 2. [To count 20%of total marks]

You must identify a ‘change agent’ who would be able to identify

supportive members of the company and the local community

Question 3. [To count 40% of total marks]

An action plan is also required from you that will demonstrate the
activities that could be used to gain support from within the firm and the
community. To do this you will have to demonstrate to all the people
involved that Katie’s and Richard’s plans will be able guide this
organisation and its leaders as smoothly as possible towards its future
goals. If you are able to achieve this, then your change agent will be able
to gain support from the relevant members of the Board to ensure that
Richard and Katie’s plans obtain the Board’s final approval.

In constructing such a plan, be mindful of the potential conflicts of interest

amongst board members, the value of identifying the most appropriate
Change Agent and the significance of developing a coherent approach to
leadership at all levels within the firm.

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Question 1 Indicative answer

A The obvious choice of main advantage would be the employment of

young technically qualified people to help with the on-line marketing and
selling of the products and the recruitment from within the town of
customer focussed part-time employees. These could be recruited from
the local University and from within the town. The company could then
set up its own training scheme with the local college for example.
Candidates should also consider the disadvantages for the town if the
company went into receivership.

B Candidates should start be analysing the strengths and weakness of

the existing processes that would exist to deal with the traditional skill
based organisation with its hierarchical authority system. This could also
also include the connection with the trade union. Other employment
practices that would impede any movement towards a more flexible
employment system

C These areas of resistance could also be linked to other institutions in

the town. They could be extended to an analysis of the availability of
alternative sources for recruiting other employees.

Question 2 Indicative answer

The choice of the change agent is extremely important as the

occupation and community standing of the ‘change agent ’ will be an
important factor when trying gain credibility within the firm and the
community.

Here candidates can utilise the evidence provided in the case and also
draw on their own experience and knowledge of the issues that will be
chosen. Candidates must justify their decisions.

Question3 Indicative answer

This should be a sophisticated document that links immediate concerns

but also identifies consequences for longer term outcomes.

Where problems are raised because of difficulty of implementation

candidates should be able to suggest alternative courses of action of
different scenarios. A discussion of leadership issues could legitimately be
introduced at this stage although it is normally considered to be part of
an action plan.

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