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Graduate Diploma
in Purchasing and Supply
Leading and Influencing in Purchasing
LEVEL 6
L6-01/May08
DATE: Monday 19 May 2008
TIME: 13.30 to 16.30
DURATION: 3 hours
Instructions for Candidates:
This examination is in TWO sections.
Section A
Has TWO compulsory questions, worth 25 marks each.
Section B
Has FOUR questions; answer TWO. Each question is worth 25 marks.
1. Do not open this question paper until instructed by the invigilator.
2. All answers must be written in the answer booklet provided.
3. All rough work and notes should also be written in the
answer booklet.
QP - 01
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SECTION A
You are strongly advised to read carefully and analyse the information in the case study
before attempting to answer questions 1 and 2.
TIMBERLAND®
The Timberland® story began in 1918 in a small shoe company in Boston,
Massachusetts, where its founder, Nathan Swartz, began his boot-making career as an
apprentice stitcher. He learned how to cut leather, stitch seams, and attach soles to craft
fine leather boots. Later, in the early 1950s, he bought The Abington Shoe Company and
invited his family to work there too. Together they made shoes for other leading
manufacturers for nearly ten years.
During the 1960s, the Swartz family introduced injection moulding technology to the
footwear industry. This allowed them to fuse a rugged sole to the leather upper, thus
creating the first truly waterproof boot – an ideal quality product to support the outdoor
life. The boots were manufactured in a distinctive yellow colouring and were then
marketed with the slogan: “Fine leather boots that cost plenty and should”. Despite the
premium price, they proved immensely popular.
The success was so great that in 1973, the company changed its name to Timberland®,
after the brand name of its original waterproof leather boot. By the end of the 1970s,
Timberland® had added casual and boat shoes to its footwear range; during the 1980s
it expanded internationally under the leadership of Nathan Swartz’s son, Sidney. By the
end of the 1980s, Timberland® was recognised as a leading outdoor ‘lifestyle’ brand and
had added clothing and women’s footwear to its product range.
In 1989, Timberland® became a founding sponsor of City Year, the Boston-based “Urban
Peace Corps” that brings together young people from diverse backgrounds for a year
of full-time community service. Further community projects were introduced as the
company grew during the 1990s, and it also added other product lines such as
backpacks, watches, and children’s footwear.
The community projects complemented the company’s lifestyle image. However, when
Jeffrey Swartz stepped up in 1998 to lead the company that his grandfather had started,
he initiated a major change programme to turn Timberland® into a 21st century
exemplar for corporate social responsibility (CSR) around the world. He passionately
believed that every corporation had a duty to act with social responsibility in all their
business activities, and that this should not be simply restricted to a marketing initiative.
Throughout the early part of the 21st century Jeffrey Swartz re-focused the Timberland®
brand on sustainability and social responsibility and yet further CSR projects and
initiatives were launched. Some of examples of these include:
•
•
•
•
the new tree that Timberland® promises to plant for every pair of boots sold in
its Regent Street store in London
its commitment to the ‘Path of Service’ programme, which gives all employees
40 hours of paid leave to serve in their communities
giving 30 employees a year over two weeks off to aid with disaster relief
generating over 53,000 volunteer hours in a day from 9,000 of its staff aiding over
170 charitable projects around the globe during Timberland®’s latest ‘Earth Day’.
However, despite this breadth of environmental and community-based service during
2005, with Timberland® now operating as a $2 billion global textile manufacturer, sales
began to show signs of decline and its share price slipped, despite the buoyant stock
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market of the time. By 2006, earnings per share were down nearly 30% on the previous
year and it was reported that Goldman Sachs had been hired to provide financial advice
on a potential takeover of the ailing company.
At the time, however, Jeffrey Swartz would not comment on these proposals, but said
that he remained committed to his vision to reposition the brand as the leading voice
in a new debate on social responsibility in corporate America. To some, these
comments may have seemed unrelated to the financial performance of the company,
but to Jeffrey Swartz this would have been missing the point.
Jeffrey Swartz believed it was time to push the CSR debate harder. In a year, 30 million
people will buy something from the Timberland® product range, and according to Jeffrey
Swartz, they should all know how the product has been made and, moreover, they should
also be interested. As such, Timberland® introduced a Green Index on all of its products
to indicate to shoppers how eco-friendly Timberland®’s products are. Given that
Timberland®’s boots require high-grade leather from cattle that are a major contributor of
greenhouse gases, this is not necessarily great publicity for the products. Graded from
nought (the best) to ten (worst), its traditional, yellow waterproof boot has a Green Index
of six and Timberland® is yet to manufacture a product that scores nought on the scale.
Understandably, some critics believe this level of honesty to be marketing folly.
Yet, despite all these ethical initiatives, Jeffrey Swartz acknowledges he has one major
challenge. 40% of Timberland®’s products are manufactured in China where its workers
have limited political freedom and working conditions can be poor. Although justified on
financial grounds, Jeffrey Swartz indicated that he would prefer not to manufacture in
China. He said “….If you ask me to justify being in China, I cannot. …Come right now and
see some of the working experience that some of these people have and it is indefensible.”
To counteract this potential hypocrisy, Jeffrey Swartz has initiated a code of conduct in
his factories, including a maximum 60-hour working week for Chinese factory
operatives. However, some staff complained about this, claiming that Timberland® has
restricted their ability to earn for their families. Jeffrey Swartz is left with a dilemma,
recognising that companies have to do what they can and be open about it. “They also
have a duty to do the best they can for their shareholders,” says Swartz.
The issue for Timberland® is that it is now struggling to deliver on this last aspect. Some
claim the problem is a ‘fashion’ issue, while others blame the change in global weather
systems no longer creating the demand for waterproof ankle-boots. Others have
pointed to the new European Union import rules, which have added a levy of between
4% and 16% on all shoe imports from Vietnam and China.
While all these economic factors have undoubtedly made a contribution, there are yet
others who believe Timberland®’s issues lie at the top. They claim that Jeffrey Swartz’s
crusade for sustainability has caused him to lose focus on what it takes to succeed in
today’s modern global economy.
Sources: The Sunday Times (2006) and information within www.Timberland.com at the time of writing.
The information included within this case study is based on real life organisations and people.
However, the details are for assessment purposes only and do not necessarily reflect the
respective positions of the organisations or individuals concerned.
PLEASE TURN OVER
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QUESTIONS
Questions 1 and 2 relate to the case study and should be answered in the context of the
information provided.
Q1 Evaluate the business impact of Jeffrey Swartz’s vision for sustainability and his
agenda for CSR at Timberland®.
(25 marks)
Q2 Analyse the influence that Jeffrey Swartz’s vision and his repositioning of the
Timberland® brand may have had on the leadership of purchasing at Timberland®.
(25 marks)
SECTION B
Answer TWO questions from section B.
You are strongly advised to read carefully all the questions in section B before selecting
TWO questions to answer.
Q3 As an external consultant to an organisation of your choice, prepare an informal
report to evaluate the potential for conflict within a purchasing team and propose
how consensus on working together can be developed.
(25 marks)
Q4 Assess how the different sources of power are legitimate and acceptable when
leading and influencing areas of the supply chain.
(25 marks)
Q5 Propose ways in which a leader can manage continuity of performance while
implementing major change. Use appropriate examples to illustrate your response.
(25 marks)
Q6 Propose and justify ways of developing purchasing staff, with a view to increasing
their productivity and effectiveness.
(25 marks)
END OF QUESTION PAPER
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