Create a scenario of a hypothetical company whose situation was similar to that of The Gucci Group. Include company’s name, its industry type, and management structure.
Then explain what could happen if the CEO, the mastermind behind the success of the company decides to leave the organization.
Remember to include the following points:
- Its implication on company’s product.
- Fluctuation in company’s stock price.
- Expected outcome in terms of profit and loss.
Click here to read about The Gucci Group.
Submit a Microsoft Word document of the following specifications:
- Font: Arial, Size 12, double space
- Length: 3–4 pages
- Citation Style: APA
A Competitive Edge of Understanding
When Your Competitive Advantage Walks Out the Door: Gucci
On September 10, 2001, French retailer Pinault Printemps Redoute
(PPR) agreed to acquire Gucci Group
based fashion house and luxury goods maker. On November 4, 2003, the managers and
shareholders of the two companies were stunned to learn that Chairman Domenico De Sole and Vice
Chairman Tom Ford would be le
aving Gucci in April, 2004.
The duo has masterminded Gucci’s transformation from a near
bankrupt family firm with an over
brand into one of the world’s hottest fashion houses. As creative director, Tom Ford had established Gucci as
a style leader
and hired young designers such as Stella McCartney and Alexander McQueen. De Sole’s
astute leadership had instituted careful planning and financial discipline, and built Gucci’s global presence
especially in Asia.
How great a blow was De Sole and Ford’s
departure to the parent PPR? In principle, a new CEO and new
head of design could be hired. In practice, talent of the ilk of De Sole and Ford was rare
combination of designer and CEO who could collaborate around a shared vision.
The stock mar
ket’s reaction was ominous. On November 3, 2003, Gucci’s share price was $86.10; on
November 6 it had fallen to $84.60. However, in the absence of PPR’s guarantee to acquire Gucci’s shares at
$85.52, analysts estimated that Gucci would be trading at around
$74. The implication was that Gucci was
worth $1.2 billion less without De Sole and Ford than with them.
Adapted from articles in the
during November 5
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