Team members: Team Roles & Rules

1. Camilo Fernandez - Official Writer
2. Robert Noßke
3. Dirk Andreae Nehlsen
4. Alvaro Arias - Substitute Writer (Bench-warmer)
5. Pamela Wever
6. Johann Reich

A. Purpose:
Mango believes that it needs to build in customer service in other to differentiate from competitors and to gain a sustainable competitive advantage. Our goal for this project is to asses Mango's current situation focusing on customer service and corporate culture implementation. Knowing the current situation and having in mind the desired goals of Mango we will then suggest the management process required to achieve this change.

B. Procedure:
In order to assess Mango's current situation we used a three-pronged approach. First we did some preliminary research regarding Mango as a company and it's corporate culture, values, strategy and goals, then we interviewed a manager from Mango (our teacher Jordi Assens) and finally we performed three store visits (using Pamela's expertise in the field of fashion procurement).

C. Company Information:

Dedicated to design, manufacture and marketing of clothing garments and accessories for women. Over 6.500 employees, 1.650 in Barcelona. Average age of 30, 82% female. The central office houses the company’s own structure made up of the areas of design, production control, store distribution, store architecture and interior design, image and advertising as well as administration and logistics. More than 1000 stores in 89 countries, 5 continents. New entries: China, Italy and Australia. All stores located in prime positions, whether in the main shopping centres or in premises located in city centres. Stores are of a sufficient size to display our collections. In this way, the criteria for interior design, image and product display that we have established can be maintained in order to create a pleasant atmosphere that offers our customers an enjoyable shopping experience. Keys to success: CONCEPT, TEAM, and LOGISTICS SYSTEM.

Concept: Our concept is what marks us out. The MANGO concept springs from the alliance between a product of our own design, quality, and a brand image which is both coherent and unified. Dressing the urban and modern woman, meeting her daily needs, is the formula which we have analysed, adapted and applied to each country we operate in: this has been, and continues to be, one of the keys to our commercial success and our international prestige. Team:

MANGO’s great wealth is in its people. The secret lies most of all in our faith in a team of motivated, flexible professionals, who can both foster and adapt to change, and who can contribute new ideas which achieve our aim: to bring MANGO to the greatest possible number of women..

Logistics System:

MANGO has its own logistics system which has been progressively developing since our first shop opened, in 1984, up to the present day, with MANGO established as the second-largest exporting company in the Spanish textile sector. Some three years ago, MANGO finalised a logistics system stamped with its own personality, acquiring and adapting the latest technology, making it possible to classify and distribute 30,000 garments an hour. In order to achieve a full implementation of its system, MANGO decided to establish a sale-or-return system with its franchisees. The SLM (MANGO LOGISTICS SYSTEM) is based on speed, information and technology. Its aim is to ensure that each sales outlet (over 950 shops around the world at the end of 2006) has, at any given moment, the stock it requires to meet turnaround speed and sales forecasts. We guarantee continual renewal of merchandise, and production at the pace set by market demands, not only in variety but also in volume.

Extracts from: http://www.company.mango.com/e/index.htm

Employee recruitment criteria:
The team combines enthusiasm, creativity and continuous training with the following values that govern the company: humility, harmony and affection. People are central. Daily continuous development: leading by example and with a positive attitude, improving permanent training and creating a climate for the contribution of ideas. As a result, we promote a climate of confidence and dialogue through teamwork and learning from our mistakes at all times. Our company is characterised by a pleasant and family orientated atmosphere. Qualities of the mango team: youthfulness, a fighting and enterprising spirit and the sharing of responsibilities.
Hierarchical barriers are kept to a minimum in the company structure promoting, among other things, a more direct and respectful treatment between all collaborators. To continuously improve, special attention is paid to continuous training for every position, in order to keep up to date with every innovation in each specialist field. This is essential to keep moving towards success and to create the image of an innovative, daring and creative company.
Desired customer service Level:


D. The Interview:
For the list of questions we prepared for the interview please refer to Annex 1.
From this manager's point of view:

• Mission: Dress modern, young, urban women with fashion.
• Vision: one shop in every city of the world
• Strategy: same as industry [Zara referred]

Functional Areas: Management is divided in the following functional groups Human Resources, Product Selection, Distribution, Sales & Marketing, Store Management Department and Design. Communications between franchises and corporate headquarters are mainly done via email. Promotion and Advertisement is also managed centrally in corporate HQ.
Marketing:
Mango considers itself as part of the fashion industry, having a strategy of expansion by franchising. It considers it's competitors being all other fashion retailers namely Inditex (Zara, Bershka, Pull & Bear, Massimo Dutti), H&M, Desigual, El Corte Ingles, and others. We weren't given any information about market share or product segmentation. The key success factors or Mango as seen as being its fashion, trends, manufacturing process and their customer service. They see themselves badly positioned in Spain but performing better abroad. Mango's strategy is to differentiate from competitors withing their industry by offering a superior customer service, giving fashion advice to their customers to assist them with their purchase.
Operations:
Mango's value chain starts with the design of the garments in Spain. Manufacturing is outsourced to factories in Morrocco and Asia. Distribution is perform via maritime shipping. And retail to final customers is done through and only through the stores of the Mango chain which are mainly franchises. Most companies in the industry have similar value chains. The most important key success factor from an operational point of view for Mango is to forecast correctly what customers will want six months ahead, since that is the lead time they have from placing an order to having the garment delivered to the store. Mango has for long targeted young urban women, however now its wants to start targeting young urban men as well. Besides these descriptions they do not do any further segmentation. In terms of employee compensation, commission on sales depends on the type of contracts but there are always minimum selling goals which attendants require to fulfill.
Human Resources:
The organizational structure of mango is very flat, on the other hand decision making is centralized. Individual store managers cannot take independent decisions they need to follow the standards imposed by the mother company. Mango's KPI looked for in employees use a competence model. There are career paths within the organization which allow for promotions from within the organization. At the corporate level 88% of employees are men and the remaining 12% are female. The company's managers were initially recruited from inside the organization but now they are also recruited from outside. At the store level employees stay for an average period of 4 months that means a 300% yearly turnover. Mango pays salaries to its attendants that are higher than industry average, due to the fact that it faces fierce competition for attendants from other fashion retailers. El Corte Ingles usually recruits the best performers, the salaries and conditions they offer cannot be matched by Mango. Compensation in Mango is mainly based on their internal competence model.
Store level employees receive no training ongoing training due to their short stay in the company and they are paid a fixed salary which increases in proportion to the store's sales.


F. Store Visits:
See attachments.

E. Preliminary Conclusions:
First and foremost and with all due respect there are some inconsistencies between the information gathered from the Mango website and the Interview to the Manager which shows a certain degree of disconnection between the managers and the company.
From the information gathered so far some valuable thoughts can be extracted.

• Expansion & Growth: Mango as a company is growing fast both in revenue and in profit, it is expanding geographically into new markets, growing organically in existing markets, and also expanding to new products in current and new markets. However there is a lack of market share information which makes it difficult to evaluate whether Mango is performing better than their rivals in Spain and other mature markets.
  • Mango expands exclusively through franchises, this method allows them for high returns on investment and rapid expansion without a large financial leverage. However this method also limits control and creates a divergence specially in human resources. (Nos so much in products because they are centrally handled). The franchise method creates inconsistencies in recruitment and customer service, and for a company in which customer service is supposed to be their main attribute this is an important factor to consider.
    

Expansion:	Existing Markets	New Markets
Existing Products	Women apparel in Spain, US, Western Europe.	Women apparel in China, Australia, etc.
New Products	Men apparel in Spain, US, Western Europe.	Men apparel in China, Australia, etc.

• Marketing & Differentiation:
  
  • Advertisement: Mango advertises extensively especially in billboards and magazines and has campaigns with celebrities, currently Penelope Cruz is their flag-carrier. Mango tries to focus advertisement on the uniqueness of their designs and the modern urban qualities of their fashion.
    
  • Pricing: Mango is priced slightly above competitors H&M, Bershka, and Zara and slightly below Desigual. All these fashion retailers are part of the affordable fashion segment, and do not compete with the top end high priced Dolce & Gabanna, Burberry, Armani, Hugo Boss, Dior, Chanel, Louis Vuitton etc...
  • Customer Service: Within the affordable fashion segment Mango praises itself for being the most service oriented. The company tries to foster excellent customer service amongst their shop attendants to increase customer retention and attract new customers. Mango store attendants should be able to offer fashion advice and be able to answer all questions asked by the customers. Although this appears to be to some extent true, and although Mango does seem to have a friendlier service than its closest competitors, this does not appear to have the desired effect on customers. The majority of customers believes that Zara offers a better customer service than Mango, and withing Spain Mango is not achieving to differentiate in terms of service.
    

G. Store Visits:

Affordable fashion
	NOW STRONG / WEAK POINTS	CHANGE	UTOPIA
Mission	Dress modern, young, urban women with fashion. Broad and inclusive, focus on those that care most about fashion. It is exclusive but tries to satisfy the needs of a very diverse target.	Include men in marketing efforts, since expansion to that new market is desired.	Dress modern, young, urban women and men with fashion.
Vision	To have a store in every city of the World. Ambitious, easy to understand. Not all cities are the same, many stores in fewer cities might be better than less stores in more cities. The goal should be to reach the maximum amount of young urban women who can afford Mango.	Align vision with more realistic requirements to reach the largest customer base possible.	To be accessible to all young, urban women and men in the world.
Strategy	Build a strong brand equity and differentiate from rivals by offering a superior, comprehensive customer service. It attempts to gain a competitive advantage that is hard to replicate. Besides that we haven't found any clear description of a strategy Surveys show that Mango's customer service is not one of the best in the industry. Customer service appears to be less important than good designs and low prices.	We belief this strategy is a good differentiation method but the execution of it is not yet showing all rewards.	Achieve a superior customer service to retain loyal customers and attract new customers.
Objectives (HR)	The current objective is to improve customer service: Improve quality of service provided by shop attendants. Try to retain the best attendants as long as possible. Appeal to a loyal customer base by achieving superior customer service. These actions would help for Mango's growth and sustainability in their current markets.	Current objectives are aligned with the differentiation strategy of mango. However improvement cannot be easily measured. Mango should establish a set of quantifiable targets in order to improve its customer service.	Measurable progress: Attendant turnover rate. Sales per attendant. Number of different items sold to the same customer. Visits per customer (using maybe customer card system, or by requiring customers to leave their names in every purchase)
Results	The current strategy and objectives have shown good economic results specially outside of Spain. However Mango still lays behind competitors such as Zara and H&M in terms of sales and in terms of customer service perception, this is contradictory since of all players in the sector Mango appears to be the one that is most focused on customer service. Good financial results boost investor confidence and allow the company to continue a healthy growth. Having a customer service perception lower than Zara is a big blow to Mango since the company considers that to be its main asset.	Establish higher control over franchises, if possible start an acquisition initiative specially in the stores present in mature markets. Start an initiative that allows for a longer retention of store attendants by adapting to the Y generation's working needs.	Be recognized as the #1 fashion store in terms of customer service not only in Spain but also in most other markets in which mango is present.
Competitive advantages	Mango claims it's concept, team and supply chain are their competitive advantages. However Zara has a better supply chain, and both Zara and H&M have a very similar concept. It is true that Mango excels several aspects. Their most important assets are their concept and their HQ team. Supply chain is not as good as Zara's, the team is very centralized in Mango's HQs, and the concept is not seen as very different to Zara or H&M.	Mango should still try to optimize its supply chain but not consider it a main competitive advantage. Strong marketing should be done to promote the uniqueness of their concept, they are not only trend followers as Zara but also trend setters. Mango needs to expand the reach of its "team".	Supply chain is key but not unique. Concept is unique, should be enhanced by marketing. The team should go beyond HQ and have a presence in the stores, specially evaluating customer service and helping to improve it and in that way developing a new competitive advantage.
Structure	Corporate HQ contains all functional departments. The stores are mostly franchised and owned by third parties. Store HR functions are managed at the store level, hence there are no true common recruitment or customer service standards. Centralization allows for more cohesive decision taking, cost reduction and better control at the corporate level. Centralization causes lack of control at the store level and non-homogeneous HR practices across the store network.	Exert a larger control over franchises. Create recruitment and customer service standards that are measurable. Evaluate the performance at the shop level.	Functional departments have a broader reach. Stores are better controlled and closer to the organization. Shop level HR follows company-wide standards.
Systems, Process and Technology	Mango's Barcelona Headquarters contain all functional departments: Human Resources, Product Selection, Distribution, Sales & Marketing, Store Management Department, and Design. All production of garments is outsourced to Morocco or Asia. Stores are administered by third parties under franchise agreement. All these interactions are coordinated with a sophisticated IT system. For pros and cons see previous.	As in any other industry consistent investments in IT should be made in order to allow for better company-wide control and coordination.	Mango HQ should receive real time information from all their stores and from their suppliers in order to better manage decision taking.
Culture
SYMBOLIC SYSTEM
Values	Three Corporate values: Harmony: the opposite is conflict Humility: the opposite is self-importance, arrogance, pride Affection: the opposite is rancor, hate The corporate values of Mango show a true commitment to community and to human relationships. For the hectic affordable fashion industry these values appear to be too passive. There should be a company value that fosters a more proactive attitude towards customer service commitment.	The company should start the inclusion of additional corporate values to have a better alignment with the industry requirements. They need to take the step from a Family company to a Market oriented corporation without losing their core principles.	Harmony, Humility and Affection should be accompanied by proactive values such as Diligence, Commitment, and others that will enhance the experience of all stakeholders such as Enjoyment, Zest & Flavour and joie de vivre.
Beliefs	There are several ongoing beliefs about Mango and the fashion industry in General: Mango's customer service is seen as below standard. Mango is seen as overpriced for fast fashion. The sales attendant position is unattractive to young women and is mainly done due to necessity and for only short terms.	This could all be fixed by caring only about the 3rd point. The experience of the sales attendants should be enhanced and made more enjoyable and fun. The new Y generation does not look only for money but also for fun and comfort in their jobs.	Create customized employment packages that better fit the needs of the attendants. Give incentives related to sales figures. Create a feeling of belonging by the attendants by promoting common activities and enhancing the relationship between attendants.
Rituals	They should sacrifice guinea pigs every Saturday. :P	Implement this during Halloween.	This would give him the very necessary support of the hidden sects.
BEHAVIOURAL SYSTEM
Management Style	Flat, non-hierarchical. Non-bureaucratic. Family environment. Centralized. *See comments for "Structure" This style might not longer be fit for an organization as large as Mango, there is a risk of lack of control at the store level.	The management style needs to evolve, be more decentralized and adapt to the new requirements of such an extensive corporation.	A low hierarchy structure, with regional managers for stores that has better shaped standards and in which there is constant collaboration within the company would better fir Mango's future needs.
Decision making	Centralized in terms of general decisions such as advertisement, design, etc. Decentralized at the store level due to the extensive franchising. Coordinated decision making avoids brand-equity and gives a certain uniformity to store design and product offering. Fiefdom at the store-level creates divergent HR practices for store attendants which has a negative effect on customer service standards.	Again, decentralize control, enhance control at the store level and increase collaboration within the organization.	Decisions in terms of garment assortment and store design should start to be done in collaboration with the local stores to adapt to different cultures in the World. There should be a larger control and better standardization in terms of store-level HR practices and customer service.
Reward and punishment	It was unclear from the interview and other research of whether sales attendants are paid sales commissions.	Punishment should be avoided. Attendants should be rewarded partly on performance and also on displaying competencies that match with the company's customer service goals..	Sales should have an impact on rewards, alignment to companies required competencies also. Examples: Diligence, Zest, Humility. Evaluated by 360º assessment.
HR SYSTEMS
Competences	Competence model based on the evaluation of the following competencies: Result-based competencies: personal Competencies of the Store team: team-work Specific: creativity. Management competencies. The competency model is very complete and covers several important areas. What is missing is an important link to compensation, it is also unknown whether the interviews are held with the same standards in all Mango stores throughout the world.	Competencies should be directly linked to a bonus compensation. Competency rating should not only be done by the direct supervisor but also by peers and subordinates, it should be 360º. Competency evaluation should be performed in every single mango store in the World and not only in those closer to headquarters.	Competences should stay as they were before, but their evaluation should be performed more often, in a 360º fashion and the results should have an impact on bonus compensation. The competency evaluation system should reach all Mango stores.
Career development	Career development is encouraged and most management positions are sourced internally. The competence model is used for identification of potential talent within the company and design career plans.	The high employee turnover at the lower levels should by decreased by offering employees career paths that fit with their lifestlyes and life goals.	Recruitment of university students that are interested in continuing a career in Mango should be fostered, for those candidates the shop assistant position could be seen as a trial period before they actually earn a higher hierarchy position. On the other hand those interested in direct contact with the customer should be encouraged to stay at the store level with bonus payment and employment flexibility based on their sales performance and their competency development.
Performance appraisal	Once a year a "Development Interview" is held between employees and their superiors. The aim of the interview is to provide a two-way feedback. The competencies are evaluated so that the employee can be aware of his/her strong and improvement areas.	Interview's are well designed but it seems here planing is not the problem, the problem is execution, if interviews are held once a year and employees only last 4 months at their position... Interviews should be performed more often, on a quarterly basis and there should be 360º evaluations and also more tangible sales evaluation to compensate the subjective bias of compentence assestment.	*See change box.
Compensation	Sales Assistants have a fixed salary and a variable part that is made up by personal sales and sales done by the store as a team. Franchises don't necesarily follow the same standards.	Compensation needs to be standardized! If competencies are so important, then compensation should be based con competency development.	Standardized compensation. Bonus pay based on: Competencies Individual Sales. Store Sales.
Communication	We don't know much about how communication is performed, in Mango's webpage the values and purpose of the company are communicated neatly but in a distant and very summarized fashion. Mango might be failing to communicate their values and purpose correctly to their stakeholders, we have seen that their customer have a perception of Mango different than the desired one. It would not be surprising that shop level employees don't get the clear message either and therefore lose a feeling of belonging.	Learn how to communicate properly to all stakeholders. Focus efforts on own employees, make sure they clearly understand what Mango stands for and that they feel included and share Mango's mission and Vision.	Communication of company values should not only be stated in a text in the webpage or be written in the formal induction manuals for employees. Communication should be felt throughout the organization it should be shown with images, movies, colors, behaviors... mango does talk the talk, it should now start to Walk the Walk. The best way to get the message through is through example.
Training and development	The competence model is used to design actions to be taken for improvement and training plans	Again, the corporate HR department should be responsible for training programs in all stores.	Training should be done continuously it should be standardized by corporate HR, it should be evaluated for progress periodically and it should include programs that allow the employee to escalate in the career ladder, in this way employee retention would be promoted.
Selection and induction	Selection is done independently by franchises and the induction methods vary depending on the franchise.	Develop standard procedures for selection and induction. Headquarters should create a team withing corporate HR that is responsible to ensure that each store specific HR process goes smoothly and is performed properly.	Selection should follow the same criteria in every single Mango store. Induction should also include rituals fit with the culture of the store location. This will allow for a better selection and afterwards for a better retention of employees.

H. Conclusions:

Annex 1.
Environment / Industry Related:

1. What business/industry segment(s) are you part of?
2. Who do you consider to be your direct competitors?
3. How do Mango's profit margin/inventory turnover compare to its closest competitors?
4. What is Mango's current market share in its major product segment? What is it's major product segment?
5. What do you think are the main Key Success Factors in your industry segment?
6. Is there a threat of new entrants or substitute products? If so, please specify.

Company Related:

1. Please describe Mango´s value chain.
2. Which stages of your product's value chain do you outsource? Why?
3. Where does Mango's most important competitive advantage lie?
4. How do you differentiate from your competitors?
5. Who are your target customers?
6. Will Mango grow vertically or horizontally in the medium to long term?
7. At what % yearly revenue increase is Mango planning to grow?
8. Do sale attendants have sales goals? How are the goals structured?

HR Related:

1. How many employees work in mango (per job type, hierarchy)?
2. How does your promotion system work? Is it completely internal?
3. What is the median age of your employees?
4. What is your employee turnover rate? What is the average time a saleswoman works with Mango?
5. How is your compensation scheme based? To what extent is it based on commissions?
6. What are the core values you want to transmit to your customers?
7. What values are you looking for in your recruits?
8. Do employees receive training? How long do they last?