Background of the Case Study

1.0. Introduction

This is the chapter that expects to provide a basic idea about the entire study. The first section is going to discuss about the background of the study, the way of identifying the problem for the study and the significance of the study while the last section expresses the scientific way of getting the solution for the question and the sequence of arranging all the chapters throughout the study.

    1. Kelanka Group

In 1988, the group of Kelanka has commenced in Ehaliyagoda by the cooperation of two siblings who named as Mr.Rehena de Silva &Mr.Kapila de Silva. They are able to maintain a profitable relationship with more than 20,000 loyalty customer base by utilizing their 30 years’ industry expertise while possessing Rs.500mn annual revenue. Currently both of owners have maintained separate ownership of six showrooms. From among them, Mr.Kapila serves as the Managing Director by taking the ownership of the largest footwear showroom in Sri Lanaka which locates in Negambo while other two entities are operating in Horana&Awissawella .

1.1.1. Vision

To be the most preferred & admired retailer in the industry while being socially responsible”

1.1.2. Mission

To setting up a remarkable chain of shoe shopping malls where customer satisfactions are met beyond their expectations

1.1.3. Product Range

The variety of the product collection can be depicted as follows,

Figure.1.1. Product Classification

Source: Developed by the Student

    1. Problem Statement

The given sales target for the first six months in 2017 is not achieved by Negambo Show Room which is one-fold half from the expected levels. These actual figures have already proved that the company will unable to achieve the predicted yearly income Rs.200mn at the end of 2017. These unsatisfactory aspects of the performance have declared clearly by Monthly Budget Review Report which is shown as below,

Table.1.1. Monthly Income Review of Kelanka Group by first six months of 2017

Estimated Sales (Rs)15mn9.8mn10.28mn17mn14mn
Actual Sales (Rs)10.7mn7.7mn8.17mn10mn9mn
Difference (%)-28%-21%-20%-40%-32%

Source: Monthly Budget Review Report of Kelanka Group

Table.1.2. Monthly Expenditure Review of Kelanka Group by first six months of 2017

Estimated Sales (Rs)9.8mn6.8mn7.1mn4.8mn2.9mn3.2mn
Actual Sales (Rs)9.7mn6.7mn6.97mn4.7mn3.0mn3.29mn
Difference (Rs)0.6mn0.16mn0.13mn0.1mn0.1mn0.07mn


-1%– 2%-1%-2%3%2.1%

Source: Monthly Budget Review Report of Kelanka Group

There isn’t a considerable level of variance in between expected & actual expenditure figures by last six months when comparing to the variance of sales income. These formal figure have given a clue that the problem is in the level of sales quantity.

Not only the formal sources but also some other informal sources which are taken by talking with other showroom managers, employees of Negambo show room, customers have proven that, there is a problem in below areas,

  • Difficulties to influence the consumers to make a purchase even a satisfactory level of consumers visit the showrooms
  • No repeated consumers even they have “Kelanka Hitha Mithuru Loyalty Card”.
  • Turnover of front level sales employees
  • Weakness of managing routine activities


Body of the Analysis

KelankaNegambo Showroom is the largest footwear retail shop in Sri Lanka which built by three floors with larger variety of shoe collection. And also this is acted like the life blood of Kelanka Group by being the larger showroom than Awissawella&Horana. The situation of decreasing the sales is unique, poorly defined (financial data & informal causes are not sufficient to reveal the root cause correctly). But it directly impacts to the entire consequences of the organization. The steps of the decision making process are going to use for solving the problem correctly like below,

2.1. Recognition of the Decision Requirement

The data of periodical financial budget review report & informal talks with the relevant people have already shown the problem of decreasing the sales in Negambo showroom.

2.2. Diagnosis & Analysis of the Causes

The decision situation was refined by analysing the underlined causal factors which effects on decreasing the sales by giving the answers for the question series of Kepner and Tregoe.

Table.2.1. Analysing the Underlined Causal Factors of Decreasing the Sales

Question SeriesSolutions
  1. What is the state of disequilibrium affecting us?
Decreasing the sales volume by last six months than the expected level.
  1. When did it occur?
From February to the end of June
  1. Where did it occur?
Negambo Showroom
  1. How did it occur?
Sales volume decreased, Tea & Meal cost increased
  1. To whom did it occur?
Impact effect on entire Kelanka Group
  1. What is the urgency of the problem?
Decreasing the sales of the largest showroom is directly caused to the profit of the entire organization.
  1. What is the interconnectedness of events?
  • Decreasing Consumer Interest
  • Management Weaknesses
  • Unsatisfactory Employees
  • Unsatisfactory performance
  1. What result came from which activity?
Weak performances lead to loss yearly targeted profit rate to achieve organizational desired objectives eventually the goal

Source: Developed by the Student by basing on the Question Series of Kepner and Tregoe.

2.2.1. Decreasing the Consumer Interests

There are 15 employees in Negambo showroom including the manager. All the employees are in the age group of 25-40 years & most of them are only passed G.C.E.Ordinaery level exam while not possessing ample experience regarding the field. The human resource policy of the organization is hiring employees at low cost by ignoring the implicit cost of cheap HRM & making them fluent through training & skill development activities. Retailing shoes is a service activity which requires higher level of contribution from the front line officers. Because they are the people who actually engaging with the consumers. In relation to that, a considerable level of improper behaviour could be seen in especially sales officers in Negambo showroom like below,

  • No greeting to the customers

The consumers are not treated well by the employees even not saying “Good Morning, Good Evening” & not say “Thank You” at the end of the service.

  • Misinterpretation of consumer needs

The consumption of Leather products is decreasing at the world as trend of animal rescuing. The majority of the consumers in Negambo is Christians including larger composition of foreign consumers. They expect Non Leather products but our sales people are going to sell leather products to them without identifying the requirement of the consumers correctly.

  • No team work only strives to attain individual sales target.

A KPI system has combined with the salary scheme of Kelanka Group with the intention of enhancing the individual target achievement. The performance of KPI has measured periodically like three times per month. Therefore, it’s hard to find a team work among the employees. Not only in Negambo but also Avissawella & Horana respectively.

2.2.2. Management Weaknesses

The manager is newly appointed who has only two to three-year executive experience after completing his bachelors. He normally acted as an individual performer rather than trying to do the things by others. It means he always tries to engage with all the bit & piece of activities in the showroom by forgetting his management role. Therefore, he doesn’t have an ample time to do other things like leading & controlling subordinates like Lisa Drakeman has done when she moving to the CEO position from the teaching religion. (Daft, 2010). Eventually, the occurring of unhappy employees & ignoring the competition are forced moreover by the low quality in the management. The role of this manager position can be placed to below diagram,

Figure.2.1. Various Combination of Managerial Effectiveness & Managerial Efficiency

Not reaching goals & not wasting resources

Reaching goals & not wasting resources

Reaching goals &wasting resources



Not reaching goals & wasting resources


Goal Accomplishment



Source: Modern Management Concepts & Skills, 11th Edition, Samuel C.Certo&S.TervisCerto

The management position can be placed in to the position of “Inefficient +Ineffective =Non Productive Category”. Further means, the manager is more inefficient because in this situation organizational resources refer not only to raw materials but also related discouraging the usage of human effort while aiding little progress toward organizational goals.

And also his efforts are not aimed at managing people in the organization, such activities include providing support & encouragement to others while empowering them to solve the problem. All these signs symbolize he is less talented in people related activities even being fluent in task & change related activities respectively.


Alternative Solution

Identification of alternative solution to fulfil the need of decreasing the sales by correcting the underlined causal factors of management weakness & lower rate of consumer interest is going to clarify through this section. It is not an easy task like finding options to programmed decision which means they are not available within the existing organizational system. Because of the uncertainty & lack of information availability there are only three alternatives which can be considered to find the optimal solution.

3.1. Alternative Options for the Weaknesses of the Management

The career is generally viewed as evolving through a series of stages. These evolutionary stages are shown in figure 3.1.

Figure.3.1. The relationship among career stages, life stages & performance

Source: Modern Management Concepts & Skills, 11th Edition, Samuel C.Certo&S.TervisCerto

As likely mentioned at the first chapters, the manager is just only 32 years’ old who is a first class business management degree holder for recognized university in Sri Lanka. All means that he is in the exploration stage where at the beginning of career is characterized by self-analysis. The most productive management can be seen at the stages of establishment & maintenance which begins at the year range of 55 to 60.

A study regarding new management position by Linda Hill, professor in Harvard University has revealed that, becoming manager is the transformation from “Individual Identity to Manager Identity” rather than learning a new set of skills.(Daft, 2010).

According to that, the manager of Negambo showroom is a recently converted product to the management position from his two years’ executive role. That’s why he always strives to get things done through own effort & develops the habit of relaying on self rather than others. In contrast he must know, the way is as a manger, gets things done through other people by delegating to others & developing their ability.

Negambo showroom is not only the largest showroom in Kelanka Group but also the largest footwear collection in Sri Lanka which need more skill full management that sharpened by years of experiences. Having first class degree holder doesn’t enough to handle this kind of situation because the knowledge of degree must be polished by the experience. The best solution for the weak management problem can be selected through below three available solutions,

1. Hired qualified senior manager who has broad range of experience at higher cost

2. Giving full training & development to the existing manager to enhance his skills & capabilities furthermore.

3. Taking a support from a management consultancy at higher cost

A survey of the consumer behaviour in Kelanka Group which done by the marketing department has revealed that 68% of the consumers left the organization because of the weakness in the workforce. The HR policy of the entity is hiring people at low cost & enhancing them through the training & development. As a still growing small business organization actually they don’t prefer to spend much cost for hiring people. They have used this policy by ignoring the implicit cost of low cost hiring people which means, most of uneducated, unexperienced employee leave the firm easily by making the loss of entire cost which spent for training them.

In Sri Lankan context more than 50% of GDP is denoted by the services. And also the concept of intangibalizing of tangible products has a must thing to a retail organization like Kelanka to take the competitive advantage to protect & enhancing the market share. All means, that the front level employees are the emissaries who are taken the promise of the company at the moment of truth. If the functional quality of the service is failed there is no worth of the technical quality of the product. Once Richard Branson the founder of Virgin Group says that, “I’m not caring the customers just only look after my employees, as a result of that they will take care of the end customers”. Along with that, one of below mentioned alternatives can be used to make a productive loyalty employee base,

1. Train the sales officers to react properly to the consumer requirements

2. Establish targets to the teams instead of assigning individual targets

3. Hire quality & experienced employees to the front level positions.

3.2. Selecting the Most Beneficial Alternative

The decision makers of the organization can select the most beneficial solution after evaluating carefully. The evaluation should consist of three steps like,

  1. List as accurately as possible, the potential effects of each alternative as if the alternative had already been chosen & implemented
  2. Assign probability factorto each of the potential effect that is indicate how probable the occurrence of the effect would be if the alternative were implemented.
  3. Keeping organizational goals in mind

After that, the comparison between each alternative’s expected effects & the respective probabilities of those effects. After that the manager will know which alternative seems most advantageous to the organization.

There are two most widely used decision making tools which can be used in a risky situation. Such as, “Probability Theory & Decision Tree”. Below table, has shown the way of using probability theory to select the best option among other three,

A = Hiring qualified experienced manager at higher cost

B= Giving a full training to the existing manager

C=Taking the consultancy form outsource organization

Expected sales & cost proportion are shown by table 3.1.

Table.3.1. Probability Theory for the Selection of Best Solution



Cost (Rs)Profit (Rs)Probability of the ProfitExpected Value of Alternative

Source: Modern Management Concepts & Skills, 11th Edition, Samuel C.Certo&S.TervisCerto

Expected Value = Expected Income X Probability of Producing this Income

At the very first time, all the alternatives seem feasible. But when considering the expected value of the options, “C” is the best one which has the highest expected value. It means taking the consultancy from outsource organization while keeping existing manager in same position will be the best solution for the problem.

3.3. Implementing the Chosen Alternative

The next step is to put the chosen alternative into action. Decisions must be supported by appropriate action if they are to have a chance of success.

    1. Gathering Problem Related Feedback

After the chosen alternative has been implemented, decision makers must gather feedback to determine the effect of the implemented alternative on the identified problem. If the identified problem is not being solved, managers need to seek out & implement some other alternative.


Conclusion & Recommendation

4.1. Conclusion

The ultimate corollary of the case analysis was doneby utilizing the knowledge of managerial decision making & modern management concepts. Kelanka Group is a leading foot wear retailer which only behind DSI. The essence of the company is merely depending on Negambo showroom which is the largest footwear showroom in Sri Lanka. Contemporary issue is the decreasing of the sales without variance in the expenditure. After analysing the underlined casual factors reveal that the root cause is the weak aspects of the management which is rolled by a new manager.

Becoming a manager is not a positive forward looking career because of it holds many challenges like increased workload, challenge of supervising former peers, responsibility of other people & etc. Three possible solutions could be developed for the selection steps. The theory of probability is discussed shortly to select the best solution.

4.2. Recommendation

Through this section, I expect to denote some suggestions which explores the way of adopting to the new work place as a freshly outed manager,

  • Give up command & control mind set to focus on coaching & providing guidance, creating organizations that are fast flexible, innovative & relationship oriented.
  • Today, people are working at scattered locations, managers can’t continually monitor the behaviour of them. Therefore, it is better to set clear expectations, guide people toward goal accomplishment through vision, values & regular communication, & develop a level of trust in employees’ commitment to getting job done.
  • “Team Building Skill” is better than managing a department of employees.

(Daft, 2010)