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Unique strengths and weaknesses
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BUSINESS MODEL
The business model of an organization is its means of earning revenues and recovering costs. It is the mode of value creation, value delivery and value capture followed by the organization. Its essence is the value proposition to consumers that allows the company to make money from its business.
The Fast Retailing Group is a holding company with specialty retailer UNIQLO as its mainstay operation. The SPA business model (Specialty Store Retailer of Private Label Apparel) of core UNIQLO operations is the key to its rapid growth and profitability, integrating and controlling all stages of the supply process, from product planning, through design and manufacture, inventory control and production adjustment, to distribution, marketing and final sales. UNIQLO’s business model enables it to balance relatively low price of its products with high quality. This relative product value is unparalleled even by the world’s leading apparel retailers, offering world-class quality clothing in world-class quality stores.
By continuously refining its SPA model, UNIQLO differentiates itself with its unique, original products and low costs. Its consolidated supply chain facilitates quick alteration in production, rapid response to changes in the sales environment, and minimizes store-operation costs. UNIQLO’s business model also upturned the trend with large-scale stores in the apparel industry. Typically, with increase in sales floor area, sales and profitability per square meter decreases. However, UNIQLO is able to promote sales and reduce costs with its rich product mix, particularly for women.
Rivals like Zara and H&M offer latest fashions to the masses, entailing multiple ordering of new lines to match the ongoing ‘fast-fash...
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...REAMS: The Company’s sales revenue results from sale of merchandise to customers. Marginal revenue also comes from leasing of real estate.
KEY RESOURCES: Management, Infrastructure (financial resources, Group know-how, etc.), Personnel, Foreign (avail of manufacturing capacity and marketing capabilities through strategic alliances).
KEY ACTIVITIES: M&A activities, CSR activities, Overseas activities, Monitoring activities, UNIQLO Japan.
KEY PARTNERSHIPS:
• Partner factories in China,
• Partnerships with material manufacturers,
• Strategic partnership between TORAY and UNIQLO since June 2006, resulting in successful product innovation, HEATTECH,
• Feb 2011: Global Partnership Agreement with UNHCR
COST STRUCTURE: Purchasing costs, Store-operation costs (personnel costs and rent), Promotional costs, Procurement costs, Acquisition costs, Costs of opening new stores.
has week chance to compute with rest of retailers which have strong tie with the society.
Increase Sales thru product offerings of appliances, Sephora beauty products, and Plus size boutiques. Facilities to be refreshed in 350 locations and rollout same day pick up on internet sales. General Merchandise sales improvement by 10 to 20 bps thru private brand penetration, supply chain improvements, pricing and clearance options. Expense reduction will result by controlling costs, marketing, process improvements and promoting private label credit card usage. The ultimate goal is to reach $1billion in EBITDA by end of year January
Respondent Abercrombie & Fitch Stores, Inc., operates several lines of clothing stores, each with its own “style.” Consistent with the image Abercrombie seeks to project for each store, the company imposes
Offering special products is marked under strengths and opportunity; however, long term sustainability must ease the weaknesses and threats posed by competitors and external markets forces. However, they are several other strengths of this company that outweigh the weaknesses but can easily be threatened. Lululemon has a great brand equity and knowledge in the market which has helped them development a customer loyalty. While Lululemon’s strengths is challenging, limiting their products to a special market, with higher than normal prices opens the markets for competitors. Lululemon has several weaknesses, they only offer a specialty product and it mostly aimed to attract woman. The company’s profitability has decreased over the recent years, showing the necessity for Lululemon to sustain its economic growth through product diversification and geographical expansion. Many of their competitors have grown, mostly likely due to their global growth and divarication. If Lululemon would expand their market growth this would open up so much more opportunity for this company to grow. One of their weaknesses is there is the dependence on suppliers. This opens a great opportunity for Lululemon, right now they are heavily relying on suppliers around the world and they do not have their own manufacturing facilities. This is causing the company to spend more money of vendors to
I chose to research two very different apparel retail stores. The GAP, Inc. and Nordstrom, Inc. are very interesting companies to me because they deal with something that is very important to me and a lot of people, clothes. Everyone buys and wears clothes, and these are two companies who have succeeded in this venture. They both started out with the same intentions, to sell apparel through specialty stores, but at this point Nordstrom’s has been more successful.
Due to the good establishment of the business, it has huge market national. The company has therefore opened many retail shops and stores all over the country to ensure that their products are accessible to the customers. The entity provides a favorable environment, and many clients view the place as a fun shopping place to be. The retailer has targeted a big pool of customer because of the variety of products it sells. The stores products vary from kitchen goods, jewelry, and electronics clothes to hardware
The principles of marketing (The Times 100, n.d) are a range of processes concerned with finding out what consumers want, and providing it for them. This involves the ‘4ps’ of marketing; price, place, product and promotion. The product decision in any company involves dealing with goods that should be offered to a group of customers (Jobber & Ellis-Chadwick, 2012). Burberry maintains a product line with great width and scope in which their products fall into two main categories; fashion or continuity. Their fashion products are designed to be responsive to fashion trends and are introduced on a collection to collection basis (Burberry, n.d). Continuity products however have life cycles that are expected to last for a certain time period. Burberry also has 3 primary collections; womenswear, menswear and accessories, with the variety of products they can utilize their product mix greatly. Burberry also has...
It may be surprising to some to find out that Old Navy is owned by The Gap, Inc. It may be even more surprising to find out that not only does Gap own Old Navy, it owns Banana Republic and Intermix as well. Some may ask themselves why one corporation owns so many different clothing retail stores. The answer is very simple. Every retail store creates an identity for its customers. Everyone asks themselves before starting any day, “What am I going to wear today?” Our clothes are important to us, not just because they cover us and keep us warm, but because they allow us to express ourselves. Our wardrobes gives us identities. Through comparison with some of its sister brands and analysis of its ads and spatial design, it is clear to see that Old
The corporation should invest more money in research and innovation since this is what has helped them to make a product that rivals their competitors. At the same time, it is imperative for them to improve their machinery for cheap labor costs which will help the company increase its production allowing it to meet the demand in the market. By improving production leading to lower costs of making shoes, apparel, and equipment, Nike will achieve higher demand assuming a quality product is maintained in that process. They will stand a better chance of competing in the industry (Hill, 2009). The organization is already in a better position for meeting the demand, customer taste, and needs. The company should improve quality by focusing on developing lightweight products that are more durable compared to those offered by the competitors. Also, Nike can keep up their success by continuing to reinvent and improve their items and continue to meet the current demand by using new technology. It can also use the Internet to communicate with consumers (Hill, 2009). By developing new technology, Nike will allow the customers to suggest and design their shoes online. To achieve this goal, it is fundamental to enhance areas such as their website to make it more user-friendly. Finally, the company should pay attention to small startup organizations that enter the
Zott, C., Amit, R. And Massa, L. (2011) ‘The Business Model: Recent Developments and Future Research’, Journal of Management, vol.37, no.4 pp.1019-42 [Online]. Available at http://jom.sagepub.com/content/37/4/1019 [Accessed 24th November 2013]
Miuccia Prada once said that “What you wear is how you present yourself to the world, especially today, when human contacts are so quick. Fashion is instant language”. Miuccia Prada and the Prada brand have grown from humble beginnings making quality leather goods to a public traded company with a current market capitalization of over $26 billion (USD) . With the development of Prada as one of the world’s premier luxury brands it provides an excellent case study to examine how strategy paved the way for the success of the Prada brand. First, an examination of Prada’s strategic positioning against luxury brand rivals Louis Vuitton Hennessey Moet (LVHM) and Kering (Gucci). The acquisition history of Prada will be reviewed, where some preliminary conclusions can be made about what has been contributing factors to both the successes and failures. Then finally, an evaluation of what the future holds for Prada and the sustainability of its competitive advantage.
The business model that sets Zara apart from other clothing retailers is how rapidly the company changes stocks and releases new product lineups. The company averages 12-16 collections annually which equates to more than one lineup a month. Due to stock being limited and the rapid production Zara brings forth, their items are viewed as exclusive promoting further business. Their customers are happy knowing that their specific article of clothing is more “rare” due to only having an average of a two-week window to purchase the clothing. The company specifically targets current trends and has them in the store within 30 days. This maintains the brand’s uniqueness and relativity in fashion.
When the buzzword of business model was very active and reactive during the internet boom, many individuals did not understand the concept of the proper business model for the proper business (Magretta, 2002). When not utilizing the right type of model for the organization, the model will be misused and distorted (Magretta, 2002). Understanding the traditional organization and learning organization, will allow an organization to determine which time of organization they desire the most.
Zott, C. et al (2010) «The business model: theoretical roots, recent developments, and future research», Working Paper 862, June 2010, Navarra: IESE Business School – University of Navarra.
A business organization is an entity that inputs capital and resources, processes them and gets an output – products and services. Any business invests much capital into R’n’D and marketing for studying the customers’ opinion because it is a priority for any business to satisfy its customers. The more satisfied the customers are the better off the business is. Thus both parties are well off – customers get what they pay for – quality, brand etc, company generates brand identity, high revenues and profit. The bad story in the case is that any business experiences difficulties on the way, no matter how popular the product is or how well it sells.