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NOTE – ADDITIONAL READING, WEB LINKS:
Visit the websites of Ann Taylor and Ann Taylor LOFT. Do you see any difference in the
fashions?
http://www.anntaylor.com/
http://www.loft.com/
A new competitive strategy to compete in the high-end women’s clothing space was
announced by ANN in September 2007:
http://online.wsj.com/public/article/SB118972474680527004.html
Given the potential customer confusion over how Ann Taylor differentiates itself from
In 2009, Ann Taylor joined Banana Republic and others in discontinuing their size 16
clothes. Citing the extra cost of creating “larger size” fashions, AT will sell these items
only online. Is this a good move, considering nearly 70 percent of women are size 12 and
up, according to retail sources? See
http://www.crainsnewyork.com/article/20090508/FREE/905089980
On the other end, Ann Taylor and LOFT are one of the few specialty retailers who offer a
Is this a good strategy?
Regarding the redesign of the physical retail spaces for AT stores, the stated intent in
2012 was to retool the image of AT merchandise as consisting of “boring basics in an era
when people want to mix it up and accessorize.” As noted, AT needed to attract the right
customer: “Anne Elwell is the kind of shopper Ann Taylor wants to win over. The 42-
1. What has Kay Krill done to implement strategy, and what challenges remain?
Referencing Chapter 9: Strategic Control and Corporate Governance
Strategic control involves the process of monitoring and correcting a firm’s strategy and
performance. Strategic control focuses especially on the roles of informational and
ANN needs to make sure enough information of the right kind is available to monitor
activities – this is where things such as financial, quality control, and customer feedback
Chapter 9 emphasizes the importance of aligning both informational and behavioral
control systems with organizational strategy. The information gained from the internal
and external environment is reviewed against the firm’s strategy and goals to make sure
Both the informational and behavioral components of strategic control are necessary, but
not sufficient, conditions for success. What good is a well-conceived strategy that cannot
ANN appeared to have information controls in its inventory management, financial
systems, and customer feedback mechanisms. Retailers need to have this critical
information in time to make decisions about clothing designs and procurement for the
upcoming season (fall fashion decisions are made at the beginning of the year), and
For advanced students, assigned reading of Michael Porter’s 1996 HBR article “What is
strategy?” and his 2007 interview in Fast Company provides more clarity regarding the
issue of trade-offs, especially in retail. In the Fast Company interview, Porter says:
The essence of strategy is that you must set limits on what you’re trying to
accomplish. The company without a strategy is willing to try anything. If all
One can argue that ANN did not seem able to set limits. Only one specialty retailer in the
case, Limited Brands, appeared to have taken Porter’s advice to heart, divesting itself of
brands that had the potential for good performance (Abercrombie & Fitch, Lane Bryant),
In addition, this chapter discusses the importance of a strong, positive culture and reward
systems that rely more on achievement of jointly created and internalized goals and
As previously noted, the history of a revolving door at top management, the residue from
layoffs that happened in 2008 (not in the case) and the strategic restructuring and
(See an article from 2009 about how Krill received a raise while sales fell and employees
were laid off: http://www.crainsnewyork.com/article/20090403/FREE/904039971 )
Referencing Chapter 10: Creating Effective Organizational Designs
Strategy consists of analysis (setting goals, assessing the internal and external
environment of the firm), formulation (deciding which industries to compete in and how
to compete in those industries), and implementation, where organizational leaders
Chapter 10 stresses that organizational strategy has implications for a firm’s structure.
Students should relate concepts from Chapter 10 such as the differences between various
structures and the effectiveness of each possible structure for ANN’s possible choices of
Structure identifies the executive, managerial, and administrative organization of a firm
and indicates responsibilities and hierarchical relationships. It also influences the flow of
An effective organizational design can encourage the flow of information and enhance
working relationships between functional departments and activities. However, achieving
the coordination and integration necessary to maximize the potential of an organization’s
One confusing thing about the ANN case is the lack of consistent structure at the top of
the organization. Since Krill was elevated to CEO of the corporation, it appeared that she
had had difficulty letting go of control of the LOFT division. With only a minor
Referencing Chapter 11: Strategic Leadership
See the concept of leadership, the process of transforming organizations from what they
are to what the leader would have them become. Leadership is proactive, goal oriented,
and focused on the creation and implementation of the creative vision. This definition
implies dissatisfaction with the status quo, a vision of what should be, and process for
bringing about change. Leaders are change agents whose success is measured by how
effectively they formulate and implement a strategic vision and mission. See Exhibit
11.1. This involves:
●Setting a direction
The interdependent nature of these three activities is self-evident. Consider an
organization with a great mission and a superb organizational structure, but a culture that
implicitly encourages shirking and unethical behavior. Often, failure of today’s
Leaders need to set the direction for the organization by continually scanning the
environment to develop knowledge of all stakeholders, and knowledge of salient
Krill had been proactive in the past, as witnessed by the success of LOFT. She was also
very clear about the direction both AT and LOFT should take regarding their separate
Leaders are responsible for designing the organization: a strategic leadership activity of
building structures, teams, systems, and organizational processes that facilitate the
Krill was not so effective at designing an organizational structure and management team
that could implement her strategic objectives. Krill had proposed many new initiatives.
Did ANN have the resources and capabilities necessary to succeed at all of these, at the
Leaders play a key role in changing, developing, and sustaining an organization’s culture.
An excellent and ethical organizational culture is an organizational culture focused on
In nurturing a culture dedicated to excellence and ethical behavior, managers and top
executives must accept personal responsibility for developing and strengthening
appropriate behavior; consistently demonstrate that such behavior is central to the vision
Difficulties in implementing the leader’s vision and strategies include a lack of
understanding of responsibility and accountability among managers, reward systems that
As previously discussed, Krill’s actions were suspect regarding her ability to institute
reward systems that effectively motivated, and her ability to appropriately delegate
decision-making to trusted subordinates. In the case, toward the end, there’s a telling
Did Krill truly understand how her actions might affect ANN’s ability to implement her
chosen strategies? At the end of the case she appears upbeat and positive about the future,
NOTE – ADDITIONAL READING, WEB LINKS:
Krill hinted at a new upscale strategy in 2007, with a further beauty business and
maternity line proposed for 2008:
See http://www.fool.com/investing/general/2007/09/17/ann-taylor-goes-for-gold.aspx
and
http://www.fool.com/investing/general/2007/08/13/quick-take-more-change-at-ann-
taylor.aspx
None of this actually materialized except the maternity line at LOFT. Was that because of
the economic downturn, or was Krill being unrealistic about ANN’s ability to tackle new
initiatives?
ANN has also had considerable turnover in management ranks in recent years. See this
report from 2012 about the “revolving door” in the executive suite at ANN, specifically
the leadership of AT vs LOFT. As this report says, “Over the years, Ms. Krill has become
disenchanted with the leaders of both brands, often taking over herself to right foundering
ships… She'd basically go back and forth between whichever concept was struggling, and
then the other one would end up struggling”:
http://www.crainsnewyork.com/article/20120415/SUB/304159981
Here is a profile of Kay Krill over the years: for instance, “In 2008, she launched a multi-
year turnaround that includes store closings, scaled-back headquarters staff and other
cost-saving programs.”
http://www.wwd.com/people-companies/people-profile/kay-krill-1591217
What does this say about ANN’s intangible resources and their capability to execute
strategy going forward? Will the move to Ascena create the needed synergies for future
profitability? There’s no word as of the publication of this note as to Krill’s fate –
whether she will remain at ANN or not.
Teaching Note References (and possible additional assigned readings)
Porter, M.E. 1996. “What is strategy?”, Harvard Business Review, 74(6): 61-78.
Porter, M.E. 2007. “Michael Porter’s Big Ideas”, Fast Company, 44, (December 19),
available at http://www.fastcompany.com/magazine/44/porter.html
Porter, M.E. 2008. “The five competitive forces that shape strategy”, Harvard Business
Review,86(1): 78-93.
