fleet_q - Colin Drury, Cost & Management Accounting: An...

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Fleet Ltd Lin Fitzgerald, University of Warwick Business School Background Fleet operates a chain of high street retail outlets selling clothing and household items. In 1995 this company was heading for a financial loss and was deemed to have lost strategic direction. The business formula that had proved successful in the 1980s and early 1990s was no longer proving effective. A new chief executive was appointed to turn the company around. He put into effect a threefold strategy. Firstly he removed levels in the hierarchy, secondly he decentralized the organization and thirdly he focused on the core competencies or skills of the business. These core skills were identified as essentially buying and selling, and from this analysis the philosophy of outsourcing was developed. The argument put forward was that the core activities have to be world class and that the organization must strive to achieve this. You also need world class support, i.e. non-core activities, but this is difficult, if not impossible to achieve in-house. This is because you need to use people who are working in the forefront, or the core, of that industry, and by definition your people are not in the forefront because it is a non-core activity. The corporate philosophy and its outsourcing implication was thus evolved in this organization with anything that was not buying and selling becoming a potential candidate for outsourcing. For example distribution has been outsourced and has been reduced in size from 250 staff to
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fleet_q - Colin Drury, Cost & Management Accounting: An...

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