The external location will have an impact on how the store performs. There could be ‘n’ number of reasons on why the Southern stores are not performing. Making some assumptions, 1) the place where the store is not situated might not have people who are active sports enthusiasts, 2) the place might not have much tourists, 3) there might be more competitive sports shops in the area, 4) the marketing strategy of Openhium might not be efficient etc. In the assumptions consider assumption 1, 2 and 3, these are assumptions that are completely external to the company (but it is still internal to the sports industry). If marketing alone was a problem as in the case of Dunedin, then marketing can be improved in order to increase sales.
However, this is clearly not the case because despite aggressive marketing strategies other stores in the Southern area, other than Dunedin are still reporting losses. Recommendation in this context: When considering the process for change, it is recommended that the company acknowledge that there are external factors which will affect their productivity. It is not only internal factors like leadership which would affect the company productivity, external factors such as the market, the location and more could also affect productivity. Company should undertake a detailed analysis of these external factors before moving on with expansion.
Step 3) The company cannot run away from its problems. If analysis from step 2 seems to indicate that external issues are not the reasons for the problems, then it means the company has internal issues. In which case the approach of John Stokes is better than that of the CEO. When problems are internal to the organization then the problems that are happening in the southern branches are problems that could also occur elsewhere when Openhium expands into Australia or other countries. So if the company does not find a way to rectify its issues in its current existing local branches then it would be expanding with the same problems. What is now an issue in the local branch will sooner become an issue in the international branches, with increased magnitude and less locus of control. On the other hand, if Openhium is able to adapt and show success in the current nonproductive branches, then it will be able to replicate a similar evolution strategy when it expands. This should also be considered by the business.