Late in 2001, the founder and Chief Executive Officer (CEO) of Top-to-Toe, Joanne Dunne, announced the decision to open up distribution by using the device of house parties.
The house party involves salespeople making presentations of products in a person's home to which the host invites a number of friends and acquaintances who make orders at the end of the party.
A successful niche retailer of environmentally friendly toiletries and cosmetics, Top-to-Toe has expanded its market geographically using franchising to ensure local management knowledge and commitment. It has now come up against the strategic weakness of a niche strategy: how to grow once the niche is saturated. 2001 saw pre-tax profits fall by 26% to £5.1m.
Joanne Dunne now believes that home selling could provide Top-to-Toe with a significant new source of growth, thanks to its advantages of convenience, demonstration, product sampling and the networking of party-givers through their friends. This involves, in effect, a 're-invention' of the company.
Dunne also hit out at the financial institutions for their 'short-termism', demanding the highest profits in the shortest possible time and failing to recognise that companies need time for reflection and reinvention.
Top-to-Toe has come under pressure from city analysts in recent months for its failure to address the issue of falling profits. She says that the financial community ignores the human spirit and the fact that working should be about building positive and fulfilling relationships. There should be joy in the workplace and concern for the communities where raw materials are sourced and products manufactured - not just obsession with profits.
Joanne Dunne may be more outspoken than others but she is not alone in recognising that people are the greatest asset of the business. The quality of customer care is increasingly the basis for competitive advantage and effective customer care depends on skilled, empowered and motivated staff.
Perhaps joy in the workplace is not at odds with maximising profits after all.

Questions

Top-to-Toe’s strategy of expansion into home selling will involve managing and motivating a large team of part-time sales staff on a commission n-only salary. The company is also keen to address the pressure from investors and analysts. You are asked to:
(a) Prepare a report for Joanne Dunne indicating the managements issues that might arise from this expansion strategy and how these could be addressed.
(b) Using Top-to-Toe as one example, write a newspaper article outlining the importance of social responsibility in business, bearing in mind the pressures for short-term profits.