* Step 1: Situational Analysis
1. McGregor's department from its inception has laid a great emphasis on personal service of its clients. James McGregor, the current president doesn't want to destroy its old-world charm, which differentiates it from the other departmental stores. But at the same time he is worried that with an old-fashioned image, he will not be able to attract young customers and eventually would lead to over reliance on the middle aged and elderly clientele.
2. This year for McGregor's, the revenue from sales increased by 7.5% which is greater than the retail average of 4.9%. McGregor believes that by attracting young customers and selling special goods like glassware and foreign china, it is possible to further speedup turnover, achieve greater efficiency and greater profits.
3. In the late 1980s there had been a wave of mergers. The companies had become vulnerable to mergers because they ignored changing demographics and emerging forms of retailing, failed to control high expense structure and integrate operations.
In the backdrop of these mergers, McGregor believes that even though the company is doing well it needed to further improve its profitability, efficiency and turnover to prevent trouble.
4. McGregor plans to transform the store's image by recruiting younger salespeople. But despite offering competitive wages, he is unable to recruit younger staff. He believes that by modifying some of the hierarchical personnel practices he will be able to attract younger salespeople by offering extra incentives to them.
5. One of the hierarchical practices he is planning to change is the Employee's Discount scheme. In the current scheme, employees with a higher rank get a higher discount. According to this scheme, the newly recruited sales people are eligible only for a 10% discount. Also because of 33% discount offered to its senior executives,