L L Bean: Corporate Strategy

L.L. Bean: Past Success

For many years, L.L. Bean has proven itself as an increasingly successful company relative to its core competitors within its outdoor clothing and recreation equipment industry. The success has driven the company to its current position as the “largest mail order company in the specialty outdoor business.” Leon Leonwood Bean drove his company towards success and maintained this status through innovation and his progressive attitude within his community.

Throughout its history, various critical factors have contributed to the success of L.L. Bean. Leon Leonwood Bean created a strong corporate foundation which has been strategically expanded since his passing. Presently, the company has achieved strong brand equity with an identifiable and relatable heritage that helps retain and maintain existing and prospective customers. Success can be attributed to the company’s core value, which is to treat each customer with respect. For this reason, the company has strived to maintain excellent customer service (i.e. fast and accurate), competitive prices and delivery time. These values have resulted in high customer loyalty and satisfaction, high employee morale, and an overall positive reputation as a provider of high quality products.

External or environmental factors have created great opportunities for the company, many of which were projected by and capitalized on through LL Bean’s management team. For example, customer demographic and psychographic (e.g. more women in the workforce and rising age of population) have become major contributing factors to the success of mail-order sales (i.e. L.L. Bean’s primary distribution channel).

Just as LL Bean treats its customers “as human beings,” the company also values its employees and generates high morale through various strategies. For example, the working environment is “relaxed and congenial,” employees are paid substantially above-average wages, receive attractive benefits, and face few barriers among ranks. Therefore, strong employee morale has had an immense impact on the financial profitability and overall positive image created and maintained by the company.

At present, L.L. Bean is experiencing alternate opportunities to achieve financial growth. From 1975 to 1980, the company’s business quadrupled. If management can capitalize on these present opportunities, continued growth can be achieved. Internal challenges exist that can potentially limit the success of L.L. Bean’s promising future. It is crucial that each option chosen and problem solved does not compromise the company’s “customer first” legacy. In addition, there is future uncertainty within the company that must be resolved to ensure the security of investors, reputation, and the ultimate longevity of the company. For the next 10 to 15 years, uncertainty regarding future ownership will become an issue. Because there is no L.L. Bean family member available to participate, the company must consider the interest from “suiters” in buying out the company.

Avenues for Growth: Recommendations

Option #1: Mail-Order Option

As the company’s specialty and largest source of income, L.L. Bean has acquired extensive knowledge in the mail-order distribution channel. These changes will require relatively less capital and enhance an already successful business model. If the company has already reached its limit on growth from mail order advertising and distribution, these options may yield less than optimal progress for the company. Because of this, it may be more advantageous to target potential customers from other advertising or distribution avenues (e.g. retail sales option)

Option #2: Retail Sales Option

If past trends predict future success, then increasing retail store flooring space is encouraged. It is understood that store sales (i.e. in the past) have increased following an increase in flooring space.

In regards to opening up new retail stores, the increasing demand and interest in expansion (department, specialty, mall, and retail distribution) increases L.L. Bean’s options and enables them to choose the option that best benefits the company. Finally, by opening new stores, an opportunity is available to reach customers who prefer interaction with the offerings they purchase. Expanding the number of retail stores and becoming successful will require strategic management re-organization. It would be unadvisable to expect one management team to direct both mail order and retail store functions. Therefore, both approaches would require different management teams, each comprised of unique skills and abilities. The success of L.L. Bean’s single store does not translate to similar successes at other store locations, and few companies have achieved success in both distribution channels (mail order + retail stores).

Option #3: Manufacturing Expansion Option

Expanding the capacity for manufacturing goods is another opportunity for growth by allowing the company to begin making products that were once outsourced to outside suppliers. In addition, L.L. Bean can begin selling and making revenue from other products that were once made for outside companies. Lastly, by increasing the manufacturing of their own products, it will become easier to maintain quality control within the factory.

Option #4: Specialty Growth Options

The specialty growth option considers the inclusion of premium and international sales. In comparison to mail order sales, providing this option generates sales that are relatively large and enable indirect advertising opportunities with limited costs. However, these premium sales are primarily “one shot deals” and fail to provide steady streams of income.

Similarly, generating sales through international distribution has potential for growth opportunities. At present, the progress in their current international market (i.e. Japan) has had positive results. Finally, the current inquiries from various countries (i.e. Australia, Canada, West Germany, Great Britain, and Scandinavian countries) has provided L.L. Bean with a variety of alternatives for expansion. In contrast, implementing the international sales option leaves little margin for error. In order to ensure success, the right decisions must be made regarding: strategy (e.g. constant international strategy or strategies tailored by region), distribution (sell through mail order, retail stores, or both), and what criteria to use in selecting distributors. Finally, because L.L. Bean has little experience with international sales success, the probability of unforeseen challenges is relatively high.

After reviewing the advantages and disadvantages of the proposed solutions, it is recommended that the mail order and retail sales option should be implemented.