Challenges Facing UK Fashions Pvt. Ltd. In Setting Up And Running The New Venture

Major Threats of UK Fashions

UK Fashions Pvt. Ltd. is a start-up company and the primary product of the company is trendy clothing and fashion accessories for both men and women. The vision of the organization is to provide their customers with fashionable clothing so that they can influence large number of peoples keeping in mind the recent changes in the clothing industry and fashion of the people.  After the successful inauguration, being one of the startup companies and new ventures UK Fashions Pvt. Ltd faced several challenges in the field of survivorship in the competitive market (Blackburn et al. 2013). The problem faced include, economic, social, political and environmental problems. Other strategic challenges faced by the company are gap in customer relationship planning, distribution planning and problem with staffing and recruitment (Blank 2012).

This report discusses and analyzes all these problems, which are creating a huge hurdle in the front of surplus success of UK Fashions Pvt. Ltd. The report also highlights the necessary steps or the revised strategic planning that must be undertaken to overcome such challenges.

Fashion industry is a trending industry (Nobbs et al. 2012) but it has its share of challenges and UK Fashions Private Limited is not different in this ground. The major threat that is faced by this company during it’s the initial days is economic downturn. The economic downturn affects the overall purchasing and the spending power of the customer base. The unstable economical conditions decreased the overall profit or the annual turnover the company. Since it is a startup business, the level of profit margin was obviously very low and further decrease in the profit level cast a huge impact on the capital investment of the company. Another burning threat that has confronted UK Fashions Pvt. Ltd. is the increase in the density of the market competitors. Launch of several new clothing stores in this nearby radius have challenged their customer base and have drowned them into the ocean of competitors.

UK Fashions being a start up venture is likely to be exposed to several different kinds of external drivers of change. The political factors faced by UK Fashions are changes in the government policies, revision in the taxation system and finally the deregulation or the attitudes of political parties on the government policies (McCormick 2013). These socio-political issues hampered the customer relationship, pricing system and the freight charges.

The increase in the threshold of the annual income of the average households witnessed increase in the sales number. However, the employment rate is poor and thus preventing the young stars who have recently graduated in investing more in the fashion industry (Maneepong and Walsh 2013). This lead to a huge crisis on the company as the average spent per customer is rising but the number of customers are decreasing at a steady rate. Nevertheless, the European Commission has recently declared that fashion industry will bloom in the next upcoming years with a huge growth in the women apparel market (Goworek et al. 2012). On the other hand, raw materials, like warns, cotton, oil is becoming scare and these have lead in a steep surge in the production cost. Moreover, there is also a decrease in the number of skilled yet experience fashion designers and those who are available are far more expensive. All these have further escalated the cost of production. In the absence of the skilled labors, the exclusiveness of the design faced a huge down fall, repelling the customers towards the stalwarts in the fashion market (McGrath 2013).

PESTLE Analysis: Macro-analysis of the Challenges

Fashion industry is one of the few industries in the competitive domain, which are mostly affected by the imbalance of the socio-cultural trends. Furthermore, it has been witnessed for quite a long time that the overall world population is aging. In a scenario where there is such a sound demographic imbalance, UK Fashions Pvt. Ltd. faced customer related challenge. Their principal collections of apparels are mostly targeted towards the age group of 18-30 people. UK Fashions is a teenage-oriented apparel firm; it faced a dearth in the customer and sales ratio. Moreover, there is a further increase in the in the demand of branded products. People in order to stay updated with the latest trends are inclining towards reputed brands (Wolny and Mueller 2013) and startups like UK Fashions faced scarcity of customers and decline in the sales numbers.

The blooming fashion industry has always been a center of the technological changes. These kinds of changes have eventually influenced the pricing and the manufacturing cost of the company. Current generation is always active on the social media and thus is always exposed to different kinds of branded products and other fashionable accessories (Kim and Ko 2012). They are becoming more inclined towards the brands, fashion style of the movie stars and the emerging trends. The start-up business with a manufacturing unit, UK Fashions Pvt. Ltd. is thus experiencing a huge set back in front of those stalwarts. Media is another threat as it gives constant feeds about the latest trends and thus imposing a threat towards such start-up business. With the advancement in the field of weaving technology, the overall cost of the manufacturing process is experiencing a steep rise. The machines are advanced, produce instant and accurate results, but their cost of handling is high and all these have summed up to the manufacturing cost of the company.

The climate change and the global warming pose a serious threat to the UK Fashions Pvt. Ltd. (Okereke et al. 2012). Several other natural calamities like draught, flood have lead a huge deceleration in the production of cotton and other maintenance procedures and preservation facilities. The fabric colours used also imposed enormous threat to the environment. The organization faced an urgent need to detoxify all those threats for the betterment of the humanity and now this was a huge challenge. All these reasons further increase the cost of the company (Wolny and Mueller 2013). People are also following the motion of “go green” and are vouching on cotton clothes so the collection list is becoming restricted.

Dynamic Threats of the Company
Environmental Threats	Increase in the demand of the existing stakeholders to reduce the use of carbon footprints Huge environmental impact on the supply chain Natural calamities
Economic Threats	Higher annual income to only one section of people Higher rate of unemployment Higher cost of the raw materials
Social Threats	Increase level of health conscious and eco-friendly people Huge section of aging population Emergence of trend followers Low sustainability of the existing trends Increase popularity of online shopping Increase concerns about the child labors
Technological Threats	Advancement in the field of technology Increase popularity of E-commerce websites Advanced yet complicated machines

 

Table 1: Possible Challenges Faced by the Company

Source: Created by the Author

The major building block of Clothing Company is their approach towards the customer relationship. UK Fashion Pvt. Ltd. believes that customers are their lifelines. The customer care model implemented by the UK Fashion follows quality over quantity and implementation of a fair price rate. While doing this, they failed to generate an interactive relation with their customers. There is no customer care unit or feedback recording tools. What the customers felt or wanted is not communicated to the owners and this communication gap generated a substantial amount of loss of the target customer base (AM and AL 2012).

Customer Relationships

Company follows a direct and an indirect distribution channels. In the field of direct distribution channel, the freight charges are taking a toll on the price of the product (Verbeke 2013). Moreover, since they are aiming to distribute their products throughout UK, they are further facing challenges to deliver their products in the remote areas.  In case of indirect distribution, the challenges faced by the company are the quantity. As most of the retailers demand products in bulk (Macchion 2015), UK Fashions Pvt. Ltd. is failing to meet the gamut target and hence loosing most of their retailers.

UK fashion being a start-up company has kept their prices marginally low in order to drag more and more customers’ base via providing them with a lucrative deal. Low price of the products and marginally low or rather say zero profit to the organization has done no good to the company in terms of financial stability (Blackburn and Wainwright 2013). It might have succeeded in winning the hearts of huge customers but what most alarming is the financial brochure. It is poor and marginally low. Moreover, while keeping their prices comparatively lower, they have been at times looked down upon the elite customers who judge the products on the base of the Maximum Retail Price (MRP) (Pal 2017).

UK Fashions Pvt. Ltd. followed a unique promotional strategy. They remind their customers about the new arrivals and collection through promotional advertisements in the popular TV channels, esteemed magazines and celebrated journals. They had chosen these mediums because they are quite easily recognize by the public and that too frequently. All these mediums have gained them earn popularity but the cost of promotions in such esteemed mediums has taken a toll on the capital investment of the organization. This is the problem with the start-up organization because in order to gain popularity among the market competitors they need some kind of brand support, which came from media (Johnston and Bate 2013). Had they been a known face then publishing advertisement on their official portals and posting feeds in the social media would be more than enough for the company to sum up their promotional process. This would have lowered down their cost of promotion. The company also developed outdoor advertisements such as billboards, hoardings and brochures and these have further escalated their cost (Wolny and Mueller 2013). The extra wholesale discount and other strategies like “buy one get one free” have increased their sales but have done no good to their profit margin.

Investment Sector	Revised Plan
Manufacturing Cost	+20%
Promotional Cost	– 40%
Employee’s Salary	NA
Distribution Cost	-10%

 

Table 2: Financial Plan

(Source: As created by the Author)

The major hurdle faced is the dishonesty of the applicant. In the tremendous desperation to land up to any kind of job, many people lie about their skills and expertise. This dishonesty among the applicant is another major challenge face by UK Fashions. They have recruited false positive people who have zero or rather say poor knowledge and experience about the field fashion clothing. These have not only wasted their own time but also have surfaced a huge loss in their resources (Ackermann and Audretsch 2013). Moreover, since all the members are new, there were no mental bonding between them and they failed to deliver as a team during the pick seasons.

The company needs to follow a particular Fast Fashion Model in order to overcome these challenges.

Challenges Faced	Possible strategies to overcome
Political Factors	One cannot ignore these issues but there must always remain a avenue of plan B.
Economic Factors	Maintaining own wet lab for the production of cotton and warns to cut down the cost of buying the raw materials
Social Factors	Increase collection for all section of people and to change the trend and style on the basis of demand
Technological Factors	One cannot ignore these. Need to buy new machines and avail latest technology to survive in the market.
Environmental Factors	Non-negotiable

 

Table 3: Fast Fashion Model

(Source: As created by the Author)

Conclusion

Thus from the above discussion it can be concluded that  UK Fashions Pvt. Ltd. is facing a huge problems being a startup business but all the threats are not detrimental. The milestones are considered as the success objectives of any business venture. The milestones of UK Fashions Pvt. Ltd. in order to overcome the challenges are to create brand difference and penetrate into the retail market of UK. This can only be achieved via revising their investment strategy, proper planning of thae pricing of the products and tactful handling of the social, political and environmental threats.

UK Fashions is much more concerned about their elite customers and hence in order to drag them into their trusted customer’s list they need to work upon their designs and collection. They also need to increase their business operations in order to expand business activities.

References

AM, V. and AL, B., 2012. Customer relationship management. Cambridge University Press.

Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development, 20(1), pp.8-27.

Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development, 20(1), pp.8-27.

Blank, S., 2012. The startup owner’s manual: The step-by-step guide for building a great company. BookBaby.

Goworek, H., Fisher, T., Cooper, T., Woodward, S. and Hiller, A., 2012. The sustainable clothing market: an evaluation of potential strategies for UK retailers. International journal of retail & distribution management, 40(12), pp.935-955.

Johnston, R.E. and Bate, J.D., 2013. The power of strategy innovation: a new way of linking creativity and strategic planning to discover great business opportunities. 20(1), pp.8-27

Kim, A.J. and Ko, E., 2012. Do social media marketing activities enhance customer equity? An empirical study of luxury fashion brand. Journal of Business Research, 65(10), pp.1480-1486.

Macchion, L., Moretto, A., Caniato, F., Caridi, M., Danese, P. and Vinelli, A., 2015. Production and supply network strategies within the fashion industry. International Journal of Production Economics, 163, pp.173-188.

Maneepong, C. and Walsh, J.C., 2013. A new generation of Bangkok Street vendors: Economic crisis as opportunity and threat. Cities, 34, pp.37-43.

McGrath, R.G., 2013. The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.

Nobbs, K., Moore, C.M. and Sheridan, M., 2012. The flagship format within the luxury fashion market. International Journal of Retail & Distribution Management, 40(12), pp.920-934.

Okereke, C., Wittneben, B. and Bowen, F., 2012. Climate change: Challenging business, transforming politics. Business & Society, 51(1), pp.7-30.

Pal, R., 2017. Sustainable Design and Business Models in Textile and Fashion Industry. In Sustainability in the Textile Industry (pp. 109-138). Springer Singapore.

Verbeke, A., 2013. International business strategy. Cambridge University Press.

Wolny, J. and Mueller, C., 2013. Analysis of fashion consumers’ motives to engage in electronic word-of-mouth communication through social media platforms. Journal of Marketing Management, 29(5-6), pp.562-583.