Managerial Decision Making Research and Analysis

Managerial Decision Making Research and Analysis

BUS Managerial Economics

Managerial Decision Making Research and Analysis

        The purpose of this research is to evaluate and analyze Victoria’s Secret from a managerial perspective in the decision making process of their organization. Victoria’s Secret is currently the leading specialty retailer of women’s intimate apparel and other apparel with fashion-inspired collections, prestige fragrances and cosmetics, celebrated supermodels and a world-famous runway show. It is also the largest subsidiary of the Limited Brands family. The reason behind many of the successes the stores have had comes from smart managerial decisions strategies. Above all of the decision making strategies even made, one of the first ones is the reason why Victoria’s Secret is still in existence today. Its brand recognition and reputation for the quality products in which the retailer offer help to aid in the longevity in the retail industry. The Limited Brands family believes is these words: “Driven by Passion. Guided by Values.”  They have a belief that the customers rule, passion leads to success, inclusion makes us stronger, and it matters how we play the game. (LB, 2015).

In the year of 1977, businessman Roy Raymond wanted to purchase some lingerie for his wife out of a department store but he did not feel very comfortable at all trying to make that purchase. He was faced with articles, which he described, were not too pleasant on the eyes. The descriptions were “racks of terry-cloth robes and ugly floral-print nylon nightgowns.” (Time, 2015). Somehow, there was a feeling of him not being welcomed into that particular section of the store from the saleswoman. He felt more as if he was an intruder more so than a potential customer. That experience in the department store sparked the fire in Raymond which led to his eight years research into women’s lingerie. Apparently, he felt like other men were getting the same reactions from the salespeople as he was. Therefore, his aim was to create the ideal environment comfortable for male customers to shop and make purchases for their wives. The next thing he decided to do was get a loan in the amount of $80,000 to open such store. (Time, 2015).

Since all of this inspiration was started basically because of his wife, you would be led to believe that her name was Victoria. Strangely enough, it was not her name at all. Raymond came up with the name Victoria after the Queen Victoria or more like the” Victorian-inspired style with a sense of class and dignity.” The Secret is for the doubling up on the sense of intimacy for shoppers. (Time, 2015). Customer actually believed there was a real Victoria. They believed it so much to where they would mail things in such as romantic poetry and gift certificates. Raymond apparently enjoyed the attention the customers were giving “Victoria” since is said, “It keeps the image alive.” (Time, 2015).

When the first Victoria’s Secret store was opened in Palo Alto, California, after the first year the store made $500,000. The gross earnings made it possible for the financing of the new additions. Shortly after the end of the first year, Raymond made the decision to start a mail–order catalog plus open three more stores to add to the growing specialty store. The addition stores were opened in San Francisco, California. (Barr, 2013).

By 1982, five years after the initial opening of the stores, the company had sales that was bringing in more than $4 million. Although, the sales were bringing in the money, according to experts Michael J. Silverstein and Neil Fiske there was still something about Raymond’s business and management formula that was not working properly like it should. (Barr, 2013).          

In the early years of Victoria’s Secret in 1982, there was a major managerial decision that needed to be decided and made. That decision was when the founder, Roy Raymond, of Victoria Secret saw that the company was headed for bankruptcy after being unprofitable selling lingerie to male customer. Once he observed the spiral down effect of the sells, he decided to sell Victoria’s Secret and the catalog to Leslie Wexner. Wexner is the creator of the Limited Brands which made the purchase of the retail specialty store for $1million. Once the sell was completed, the transformation of what is currently known as the specialty store we all know and love was born. Unfortunately, in 1993 Raymond divorced and later jumped to his death off of the Golden Gate Bridge. (Time, 2015).

Currently, the company is doing very well in sales. Each year there seems to be a steady increase in the revenue.  Here are some charts to show the progress of how things are going. The last annually recorded revenue amount was on January 31, 2012 for $11,454 in millions. (Google, 2015).

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Throughout the life of the specialty brand, there has then and continues to be a risk as well as an uncertainty with the company’s advertising of such a risqué line of unmentionables on mainstream television and on the internet. Victoria’s Secret has always tried to be successful in balancing and catering to its female customers, at the same time, they were also building excitement in male onlookers to the brand alike. The male onlooker has become a very important part of the sales generated in the company as well. A popular day male customer’s make the most purchases for is on Valentine’s Day for presents. However, some years ago, Victoria’s Secret bought space to air an ad during the Super Bowl. In addition to the ads, they offer one of the most racy annual fashion shows to air on national television. Once these ads air, there is always a risk of backlash from the audience and customers that could end up costing the company lots of money if its felt they have gone too far in advertising. (Quick, 1999).

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