UNIVERSITY OF ZIMBABWE FACULTY OF COMMERCE GRADUATE SCHOOL OF MANAGEMENT MASTERS OF BUSINESS ADMINISTRATION MBA 558: STRATEGIC MANAGEMENT

FINAL EXAMINATION DATE: DECEMBER 2010 INSTRUCTIONS TO CANDIDATES This examination is based on the attached case: Making It Big Answer ALL QUESTIONS NOTE: Marks will be awarded for clear, logical presentation, analysis and argument rather than simple description. Question 1 Evaluate Cynthia Riggs performance as chief strategist of Making It Big? [25 marks] Question 2 What are the chief business and economic characteristics of the plus-sized apparel market? [25 marks] Question 3 Which of the five generic competitive strategies is Making It Big pursuing? What are the chief elements of the strategy? [25 marks] Question 4 What recommendations would you make to Cynthia Riggs about improving Making It Bigs strategy? [25 marks] TIME: TWO (2) HOURS

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MAKING IT BIG
In Spring 2002, Cynthia Riggs, CEO and founder of Making It Big (MIB), a manufacturer of clothing for large and supersize women, had reached a critical decision point. Founded in 1984 MIB had managed to hurdle the early challenges of securing suppliers, defining its market, and managing cash flow. MIB had recently boosted sales from $1.89 million in 1997 to $2.48 million in 2000. But in 2001 revenues fell 5% , and 2002 sales were predicted to fall further. Employee morale was down and Cynthia felt burned out. After disappointing returns from the 2001 spring season, Cynthia invested in revamping the MIB catalogue, improving MIBs website, and expanding its mailing list. When sales from the 2002 fall catalogue started coming in lower than the previous year, and her general manager, Bridget, announced that she was leaving the firm, Cynthia was not sure where to turn. She had hoped to build a management team to help her expand the business, but the latest round of disappointments threatened to derail her plans and her business. Like many entrepreneurs, Cynthia never intended to own the company she made so successful. She had majored in Humanistic Psychology and had planned to go into social work. However, her plans changed and after graduation she found herself buying and selling vintage clothing, textiles, and collectibles at flea markets to make ends meet until she could find a real job. These activities went very well and in 1980 Cynthia purchased the name, inventory and location of Cheap Frills, a small retailer of used clothing. In 1982, on a trip up the California coast, Cynthia came across the product that would provide the impetus for her to start Making It Big. The product was drawstring Army surplus pants that were 100% cotton, inexpensive, and dyed in fashionable colours. A major benefit of this product was that it came in sizes that would fit plus- and super-sized women. These pants were a hit at womens fairs and music festivals. The success of this product in these venues convinced Cynthia that there was an unfilled niche for fashionable, affordable clothing for plus-and super-sized women. She began the market research for the product in 1982 and found that there were 2

virtually no suppliers who would be willing to produce the styles and quantities needed for a small firm at a competitive price. Therefore in 1984 Cynthia partnered with Janet Sturdy and founded Making It Big. Since the company could not find any suppliers willing to work with them, they made their own clothes. The company struggled in its early years but was able to sustain itself. In 1998 Cynthia bought out her partner because Cynthia saw that her commitment was greater than hers, as was my capacity to create this business.... I has wanted an equal partner and, other than financially, that wasnt Janet. By 2002, MIB sold merchandise directly to customers through its retail location (which accounted for 20% of total sales), through a 32-page, full colour catalogue and an award winning website that accounted for half of the companys mail-order sales. The plus-sized and extendedplus-sized markets (sizes 28-72+) were the fastest growing segment of womens apparel in the early 2000s and over one-third of plussized women shopped exclusively from companies that specialized in large-sized clothing. The rapid growth was credited to the growing obesity and aging of the Charming Shoppes, Inc., the third largest specialty apparel American population.

retailer in America, was the leader of plus-sized womens apparel and owned chains such as Fashion Bug, Added-Dimensions, Lane Bryant and Catherines Plus Sizes. Many prominent brands such as Liz Claiborne and Tommy Hilfiger had also begun adding plus sizes. Most retailers of plus sizes sold their products through catalogues and Internet sites, but industry experts believed that most retailers did not know how to sell to larger customers. Despite the favourable market trends, Cynthia was uncertain where to turn in 2002. Cynthia realized that MIB had never had a formal vision or mission and had, instead, relied on an emergent strategy. Riggs hoped that she might be able to find some help that would complement her skills and take MIB to the next level. However, she was not sure whether she needed to find a new partner, or keep looking for a few key people to help with marketing and strategic planning.