How should management and leadership address each type of business? Describe the organizational structure of 1 traditional and 1 online retailer, identifying a management or leadership challenge for each type of retailer. Are the challenges basically the same or different? In what ways are they the same, or how are they different?
The Internet has created new ways to do business for organizations with much less capital planning as opposed to the high capital needs of traditional brick and mortar organizations. Based on this, answer the following questions:
- How should management and leadership address each type of business?
- Describe the organizational structure of 1 traditional and 1 online retailer, identifying a management or leadership challenge for each type of retailer.
- Are the challenges basically the same or different? In what ways are they the same, or how are they different?
1.
Traditional and online businesses have their own management structure and business objectives to cater to.
a) When it comes to traditional stores, they require the capital intensive businesses requiring expenditure in the land, building, rent, maintenance, staff, utilities etc.
Here the managers and the leadership focuses on areas where the shop resides, proper connectivity via road and metros so that customers can visit conveniently, suppliers and vendors who are nearby reducing transportation cost, suppliers who offer low-cost raw materials, finding skilled labourers who offer distinguished and customized products, etc.
b) Online business has less CAPEX but more OPEX costs. They have to maintain an effective channel of communication for customers and vendors, logistics, supply chain management and maintain an IT infrastructure connecting buyers to the customers.
Here, the managers focus on running the websites 24X7, inventory management, logistic management, supplier management, number of returns and defected product, customer reviews, online marketing etc.
2.
a) The organisational structure of the traditional business is hierarchical and centralized, where the information flow is mostly one way. There are no formal department boundaries differentiating various operations- People from sales can sit on billing desks in case of unavailability of the staff. The structure thrives on building trust among the staff members and between the manager and the staff. Due to the small scale of operations, the store generally has a head (founder of the store) and few staff members driving the sales activity. The relationship with the suppliers is also informal, based on generations of collaboration and trust.
The challenge faced by them is due to the big retail giants like Reliance Industries, Big Bazar, Amazon, Flipkart, etc. they are facing huge competition. They offer products at a reduced price with home delivery services, attacking their customer base.
b) The online business is however very structured in its operation. There are well-defined departments, like finance, marketing, customer support services, Infrastructure Department etc. It is a decentralised structure where each unit has its own goals and objectives, geographically spread and connected by an enterprise resource planning model.
Online business has various challenges due to its diverse business. The most important is the price as they thrive on small margins and the increasing cyberattacks that lead to huge monetary loss.
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