The current business environment with the emphasis on the ability to complete locally and in the global markets companies must be able to respond to the rapidly changing conditions of the market. The companies must be capable of seeking and developing different strategies that will help them to maintain a competitive advantage in the market. Vanity Fair Corporation is a apparel and footwear company that started its operations in America in the year 1899. Currently the company has more than 30 different brands under its belt and they are organized into five different categories. These categories fall under;
The main aim of the following report is to provide a critical analysis of the external environment of the mentioned company to expand its business worldwide especially in China. The aim to expand its business in China is basically because of the upcoming Winter Olympics to be held in the country in the year 2020. The success of the business will rest on the formulation of an efficient strategic plan of the business. The use of different strategic models can be of great help to the growth of the business of the organization.
The sports apparels industry has been projected to generate annual revenue of $184.6 billion by the year 2020 growing at the rate of 4.5% during the forecast period. The growth of the industry has been mainly due to the growth of the market in the last couple of years that have made the organization one of the best in the business. The focus of some of the prominent companies operating in the particular segment has shifted towards opening retail stores in the emerging economies to expand their geographical base and increase the customer base of the organization. Some of the key findings in the Apparel market are listed below;
VF Corporation faces strong challenge from different international as well as regional giants in the apparels and footwear sector of the industry. The management of the organization has taken some efficient strategies to compete with the likes of Nike, Adidas and other different brands that produce almost the same type of products. The establishment of retail stores, acquiring a number of different small enterprises and signing up agreements and deals with other organizations has led the company to success.
Porter’s Five Forces concept provides guidance for scanning the issues that are specific to the industry where the mentioned company operates. The company has to provide the customers a competitive price for all the products it launches in the market and also has to make sure that the products have a considerable amount of difference with the other rival products (Eden and Ackermann 2013). There will be a huge demand for the products in the market where the initial investment is very low or substantial in amount. The products will see a huge growth rate once they enter into such markets.
Threat of Substitutes- The companies thrives on branding and this particular activity will help them to create a proper brand name of its own. VF Corporation has the critical task of attracting the customers by offering them the right value for the products. The management of the company must be innovative enough and in the process must implement different strategies and measures to counter the threat of substitutes. Another fear lies on the emergence of small companies which tries to imitate the technologies from the large companies and produce the products in a much cheaper price. This results in increased competition in the market as because the lowering of the prices of the products forces the large companies to reduce the prices in a similar manner to make sure that they retain their competitive advantage in the market.
Bargaining Power of Buyers- The bargaining power of buyers is a competitive threat to the organization if the product produced by the organization is easily available in the market. The power of the buyers increases automatically as a result of such a market condition resulting in the fall in the price of the product. The growth in the number of the different apparel companies in the market has resulted in the increase of competition. The management of VF Corporation has to amend the competitive strategies of the company every now and then to make sure that they are in lines with the latest trend.
Bargaining Power of Suppliers- VF Corporation produces quality sports and other merchandises for various purposes. There are some unique parts of the product which are supplied to them via the suppliers. The company totally lies at the mercy of the suppliers and thus an increase in the price of these parts by the suppliers will have to be obliged by the Company as they are left with no other options.
Rivalry in the Industry- There is a number of other companies in the market similar to VF Corporation that produces quite a number of same products like the ones produced by the aforesaid company. Wall Mart and some other retail stores has a number of different products like winter jackets but North Face which is a dedicated line of winter clothing of VF Corporation has a better brand image than all the other products in the market. The present level of competition will restricts the new companies to enter in the same segment. Therefore the advanced level of competitive advantage in the market helps the organization to minimize the rivalry in the industry.
Market penetration- The large number of orders by the existing consumers have been a source of great revenue for the organization. The varied range of products starting with the apparels and footwear and other sports accessories have helped them to earn a competitive advantage in the following industry. According to Eden and Ackermann (2013) winning back customers from the rival companies and industries is one of the major aims for each and every organization. On the other hand Peppard and Ward (2016) argues that converting the non users of the products to regular users is what decides the market penetration levels of the organization. Opening retail stores and reduction in the price of the different products can also be beneficial for VF Corporation.
Human Resources Management- VF Corporation has a well trained group of committed workforce that work together to bring success to the organization. The employees of the mentioned organization are taken well care of. Apart from receiving on par salaries they are awarded and recognized by the seniors of the company which makes them more dedicated towards the organization. However according to (Hill Jones Schilling 2014) rather than awarding the employees employee training programs are more essential for managing the human resources of the organization.
Procurement- According to Hill and Jones (2013) the tasks involved in the procurement of the raw materials like clothes, machines, well knit materials are essential for manufacturing different apparels and sports garments. The Asian market is a dream place for quality textiles. VF Corporation will no doubt have a large competitive advantage in the European market if they are able to expand their presence in the emerging Asian markets like China.
The analysis of the above models and theories has led to two different conclusions. The first one is accepting the strategy of the organization while the other being the negative standpoint which goes against the decision of the organization. However studies reveals that the management of the organization has done quite a commendable job which will surely guarantee the success of the organization in the coming future (Hill Jones Schilling 2014). The technological advancements and the use of different innovative ideas have helped the organization to become efficient in nature.
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STRENGTHS |
WEAKNESSES |
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· The mentioned brand has over 1000 different stores across the globe and has an employee strength of around 50,000 · The brands of the company namely vans and Timberland are perfect in nature · The diverse range of products is beneficial to the organization as because the items vary from sportswear, Jeanswear, Image Wear and many other clothing items. |
· The absence of brand awareness in emerging markets of Asia · The scope for market share is very much limited in nature |
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OPPORTUNITIES |
THREATS |
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· The emerging market of China offers great perspective to the expansion of the organization in Asia · The upcoming Winter Olympics of China in the year 2020 will serve as the ideal platform for promoting and selling their sports accessories and apparels in China. |
· The presence of other companies producing sports apparels offers huge challenge to the expansion plans of the company · The ever increasing growth in the price of the raw materials has been a cause of worry for the business organization · The economic condition of the Asian countries |
Table No 1- SWOT Table
Source- (Barney 2014)
As mentioned earlier in the project the mentioned apparels and footwear company is one of the global leaders in branded lifestyle products in the mentioned category. The management recently announced its decision to support for the superior returns of the profits of the organization to its stakeholders (Barney 2014). The model of the organization consists of different powerful brands of the hotel which are important to the success of the business organization. The management of the company provides a total of 20% on the sales of the products to the shareholders for the last five years. The different frameworks have helped to determine the strategic concepts of the business organization and its impact in the emerging Asian market especially China. The company has a projected target of $17.3 billion earning per share as revenues. The company has recently entered into the outdoor and action sports category as it is one of the fastest improving brands among all the other forms of sport. According to Steve Rendle, Vice President of VF Corporation the most important five year targets as decided by the organization are;
References
Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson Higher Ed.
Bettis, R.A., Ethiraj, S., Gambardella, A., Helfat, C. and Mitchell, W., 2016. Creating repeatable cumulative knowledge in strategic management. Strategic Management Journal, 37(2), pp.257-261.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.
Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
Hill, C.W. and Jones, G.R., 2013. Strategic management theory. South-Western/Cengage Learning.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a digital strategy. John Wiley & Sons.
Peteraf, M., Gamble, J. and Thompson Jr, A., 2014. Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy. pearson.
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