1. Introduction

1.1 Purpose

The purpose of this report is to analyze the business strategy of the largest women’s

apparel manufacturer Liz Claiborne and to find out whether the strategy will continue to

remain effective

1.2 Scope

While analyzing the company’s current strategies it is important to consider its goals,

strategies, administration and strategy implementation techniques.

1.3 Method

The information used in this report was collected from the case study sheet provided by

the course Teacher, browsing official website of the company and other related sites.

1.4 Limitation

The main limitation is details of company strategy are difficult to find out in the web-

sites.

1.5 Background

Like the world of digital communications, fashion industry is an environment of

continuous and unpredictable change. Fashions come and go. Trends develop and then

quickly disappear. Changing fashions exhibit all the characteristics of a complex dynamic

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system. Change is erratic and unpredictable. While recognizing the tradition of Liz

Claiborne, the changing industry dynamics must be considered.

2.1 Company Overview

Liz Claiborne, Inc. is one of America's leading apparel companies. Its products are sold

in department stores and specialty stores worldwide. The company designs and markets

fashion apparel and accessories for women; fashion apparel and furnishings for men; and

fragrances for men and women. According to the company's annual report, "Each

division of the company responds to a different set of lifestyle needs or preferences

among the millions of fashion consumers who are our customers." In addition to its

divisions, the company's brand name has been licensed to manufacturers and marketers of

women's shoes, bed and bath furnishings, optics, sunglasses, and men's suits.

2.2 History

In 1981 Liz Claiborne, Inc. became a publicly traded company on the New York Stock

Exchange under the symbol LIZ. With revenues of approximately $800 million in 1986,

the company appeared on the Fortune 500 list of the top companies in America.

In 1994 Paul Charron became the chief executive officer of Liz Claiborne, Inc. In the

same year, sales fell and profits dropped dramatically. Charron, a former navy officer,

was quoted by Nancy Rotenier in Forbes as saying: "The navy taught me how to operate

in a combat zone." Rotenier agreed, saying that "Liz Claiborne, Inc. was practically a

combat zone when the naval-officer-turned-marketing executive was brought in from VF

Corp. to run it in 1994." Extensive market research indicated that many of Liz Claiborne's

fashions had not kept up with current trends, so new styles were introduced, and new

products, such as watches and swimwear, were offered. An extensive advertising

campaign was launched using supermodel Niki Taylor, which helped the company

become one of the largest fashion apparel advertisers. The company used print sources as

well as outdoor billboards and bus shelters to advertise its products.

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The apparel industry was not growing. The company had to do everything it could to

increase its competitiveness in order to gain as large a market share as possible. Charron

worked to cut costs using newly introduced information-management technologies.

Computer-aided design cut costs and reduced the amount of time it took to go from the

design phase to actual products for sale.

2.3 Fast Facts: About Liz Claiborne, Inc .

Ownership: Liz Claiborne, Inc. is a publicly owned company traded on the New York

Stock Exchange.

Ticker symbol: LIZ

Employees: 7,500

Principal Subsidiary Companies: Liz Claiborne, Inc.'s principal subsidiaries are L.C.

Special Markets, Inc.; Claiborne Ltd.; Liz Claiborne Accessories, Inc.; and Liz Claiborne

Cosmetics, Inc.

Chief Competitors: As a manufacturer of women's clothing, Liz Claiborne competes

with: Jones Apparel Group, Inc.; Rafaella; Tommy Hilfiger Corp.; Nautica Enterprises,

Inc.; Ralph Lauren; Banana Republic; Gap Inc.; and Limited Inc.

Liz Claiborne felt that product presentation and the shopping experience were critical to

success and instituted two new programs in those areas: LizEdge, a program designed to

ensure that products are displayed attractively in stores and LizView, a program that

enhances the retail area in which products are sold. Color schemes, fixtures, and signs are

designed to attract customers and to suggest coordinated outfits.

Liz Claiborne and Donna Karan International Inc. signed a strategic licensing agreement

in 1997 to market and distribute two lines of apparel, DKNY Jeans and DKNY Active

throughout the Western Hemisphere. The alliance provided Liz Claiborne with the

opportunity to reach new consumer segments. The company noted that megabrands, such

as the DKNY line, were central to continued growth and market share gains.

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2.4 Products

Liz & Co., a line of petite clothing, was introduced in 1996, as well as dana b. & karen,

the casual career clothing line of the Dana Buchman division. New products included

swimwear and watches. Curve for women, and Curve for men were the company's

newest fragrances. New designs included fitted jackets with zippers, stretch pants, and

five-pocket jeans.

In 1997 the company introduced Liz Claiborne and Elisabeth swimwear and coats, and

extended its line of home accessories to include table linens, placemats, napkins, and

accessories. Dana Buchman Eyewear, featuring sunglasses with sophisticated styling,

were introduced and marketed by Bausch & Lomb.

The company also relaunched the Crazy Horse brand of affordable casual clothing in

1997. The collection was to be available exclusively at J. C. Penney beginning in the Fall

of 1998.

3. Discussion

3.1 Case summary

Liz Claiborne is the largest women’s apparel manufacturer in the world. Liz Claiborne,

founded in the 1980s, grew from a basic sportswear business to become a multifaceted

fashion house. Liz Claiborne has become not only the fashion industry leader but also

one of the most successful companies in the United States today.

Claiborne designs are simple, straightforward fashion that's designed for women who

have more important things to think about than what to wear. Integral to the company's

success is its customer driven planning. A sophisticated computer system, known as

System Updated Retail Feedback (SURF), keeps the company in touch with what is

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selling and what is not, around the country, around the clock. A $10 million system of

IBM computers is used to crunch information and produce bound volumes at the end of

each week. Division heads then determine both short and long-term planning needs

according to customer reactions to particular sales, styles, sizes, and colors. Liz Claiborne

also monitors customer perceptions through personal interaction with customers and

retailers. About 150 specialists around the country have responsibility for talking to

customers as they shop to solicit feedback. The company also has about 18 stand-alone

stores that serve as testing grounds for new ideas. Liz Claiborne keeps in close contact

with retailers, both to make sure they are handling merchandise properly and to field

questions and concerns. The company maintains consistency in the presentation of its

merchandise through a group of about 21 consultants who are responsible for visiting

department stores to ensure that clothes and displays are' arranged uniformly according to

"Lizmap" diagrams. The company also has about 95 customer-service telephone

operators, most of whom are assigned to respond to retailer questions and concerns. In

effect, the customer does the planning for Liz Claiborne..

3.2 Case Questions and Answers

3.2.1 What actions by others in the industry might be of greatest concern to Chazen?

Ans:

Liz Claiborne is in retail garments business sector. This sector is an ever changing sector.

Customer’s preferences changes due to many factors including social, economic, ethnic,

educational factors and many more. Even everything held constant, time is a great factor.

With time, fashion changes. What is hot cake today can be obsolete tomorrow. Modern

fashion of a decade ago is considered as heck today.

Customer’s preference thus is the most important factors. Thus the company who will be

able to best suit the customers will be successful. There are various mentalities of

customers like price conscious, quality conscious, fashion conscious, looking different

etc.

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In addition during the 1990 era, the war of IRAQ slummed USA economy forcing many

to cut their live standard. In addition people were shifting towards more casual fashion

and work place was accepting these casual dresses in the era. Thus more and more people

were searching a fashion which fit their new demand. However Liz was unable to supply

these new products to its customers as it was designing simple, straightforward dresses

for working women.

Thus the main concern of Chazen was to analysis the environment of the economy and

fashion trend and fit the strategies accordingly.

Historically USA is full of fashion designers products who works for the best fit and

there are some cost leader strategic firm like wal-mart. Thus Liz Claiborne have to

analyze the factor which will be profitable for liz Claiborne as the environment does not

seem to favorable.

Besides, Liz Claiborne mainly pursues focus strategy that is to design simple,

straightforward fashion designed for women. It has a niche market of working women.

However the roll was changing and people were searching something that will fit both

home and office. Thus any cost cutting by competitors will switch the cost conscious

customer who is now earning less. In addition failing to maintain present trend might be a

prime reason to switch customer from Liz to fashion house.

3.2.2 Comment on the internal consistency of what is done strategically at Liz Claiborne.

Do goals, strategies, administration and strategic control seem to be in harmony?

Ans:

To comment on whether the goals , strategies and administration are in harmony or not,

we need to sort out the goals, strategies and internal control system.

Goal

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To bring women in touch with themselves, not their dreams and design simple,

straightforward fashion that’s designed for women who have more important things to

think about than what to wear. No gimmicks. No surprises.

Strategy

In the company's 1997 annual report, Chairman Paul Charron noted that the company

was focused intently "on leveraging and extending our core competencies, employing

new technologies and devoting ceaseless energy to make us the world's preeminent

designer and marketer of fashion apparel and accessories."

This was done practically by installing retail feedback software named SURF. They do

collect all the sales and distribution information from their internal SURF system

software. They monitor the pattern of choice from sales data and can gather valuable

sales adjustment for different distribution system. In addition they collect personal

interview of customers to get their feedback because they belief that technology can

supplement but cannot replace the human. Thus they collect their customers thinking by

personal interview. They care and listen to customers for increasing customer’s loyalty.

In addition, they bring the fashion that customers want. From all the above they make

short term and long term demand forecast and make the fashion accordingly.

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Product development and Distribution strategy: 1990

Administration and strategic control

A sophisticated computer system, known as System Updated Retail Feedback (SURF),

Keeps the company in touch with what is selling and what is not, around the country,

around the clock. A $10 million system of IBM computers is used to ' crunch information

and produce bound volumes at the end of each week.

Liz Claiborne keeps in close contact with retailers, both to make sure they are handling

merchandise properly and to field questions and concerns. The company maintains

consistency in the presentation of its merchandise through a group of about 21

consultants who are responsible for visiting department stores to ensure that clothes and

displays are arranged uniformly according to "Lizmap" diagrams.

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From all the above, its clear the goal, strategies and control are in harmony. Internal

management, goals and strategies have no conflict and set towards same outcome.

3.2.3 What collective strategy opportunities might exist for Chazen to consider?

Ans:

The market is ever changing for textile products due to change of economy, demography,

education, globalization and many. We identified many of the prospect which was

changing during the end of 2oth century namely 1990 and afterwards. Due to those

changes, the strategy needed to be changed accordingly.

Change of economy

During the 1990 USA engaged war with IRAQ and this had adverse effect on economy.

Government spent heavily on the war creating pressure on tax payers as well as national

development budget. The war also created hostile relationship with many coutries and as

a result exports of USA product declined. All this issue created a new problem and that is

firing of employees by many large corporations. Lots of people lost job and demand for

upscale product declined. Many focused on budget products and this created new market

segmentation and that is budget customers. This segment was born from the existing

market and a result existing market size declined for braded products.

Change of Taste

During 1990 customer’s preference started to change towards casual dress. Lots of people

wanted to have something which will be ok with home and office both. Liz had serious

problem with the theme as its market analysis , infrastructure was based on only market

segmentation. Thus liz needed a more dynamic system than before. Liz needed a good

strategy which will cope up with the changed market expectation.

Historically Liz was following focused strategy where it focused on specific market

segment. Its marketing proposition was considered as niche marketing. However Due to

change of the economy and taste of customers, liz needed a new strategy.

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New Collective strategy

According to change of economy and tastes of customers Liz had two new opportunities

as well as one threat. Opportunities were new market segmentation. The growth of

budget customer meant, liz had to go for cost leader strategy. In addition they needed

product line diversification.

Product line diversification

Increasingly people were moving towards casual dress. Many families had working

husband and wife who had less time to shop on separate location . they wanted one stop

solution. So liz could diversified its product for men and children.

Cost leadership strategy

Imports become less costly and already Wal mart was discounting its product using less

costly imported products. Thus liz needed to fight with the strategy by cutting cost.

This two combined strategy would cut cost of liz and also create synergy. By adding

products it could expect expanded market size with reduced distribution cost.

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4. Stock performance of Liz Claiborne:

Many people say, stock performance often reflect company’s performance however in

reality stock price is the indicator of company’s future performance. Most of the analyst

speculate on future performance and take / quit position based on that. 1992 company had

stick to its previous strategy and market hinted that the strategy to stick with previous

strategy is going to be dangerous. Stock price of the company dropped from USD 20 in

January 1992 to just under 10 USD at the end of 1993.

Ironically the company suffered huge set back during the period and the companies actual

performance was as expected by market expert.

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There was prolonged slump in the mid-1990s; Liz Clai-borne experienced a reversal of

fortune. Earnings rose 69 percent in 1996, one of the best gains in the apparel business.

Net sales were a record $2.2 billion, with steady gains in women's sportswear, Dana

Buchman products, and the outlet stores. In 1997 Liz Claiborne set another record with

net sales of $2.4 billion, and earnings per share of $2.65. In addition, strong sales

increases were reported in the Casual Sportswear Group, which includes, LizSport,

LizWear, and Liz & Co. This line was introduced after Liz Claiborne suffered huge loss

due to rigid policy. However from 1994 company started changing and their luck

reversed.

5. SWOT Analysis

Internal Factor Evaluation Matrix

Strengths

1. Strong Fashions – Within any fashion company, the right fashion styles is the key to

their success.

2. Strong Brand Recognition-Liz Claiborne is the largest women fashion ware maker.

3. Almost all brands have a niche focus – Almost all brand units with Liz Claiborne focus

their efforts in one niche market to minimize brand cannibalization.

4. Decentralized Management – Liz Claiborne is able to make decision extremely fast.

Business units make their own decisions.

5. Diverse Brand Portfolio- Liz has a wide variety of brands for its different customers.

Weaknesses

1. No Mission Statement – Liz Claiborne has no companywide mission.

2. No Vision Statement – Liz Claiborne has no companywide vision.

3. Brand Cannibalization Each brand taking away sales from one another.

4. Lack of Focus – Liz Claiborne as a company is not focused on one particular area of

the fashion apparel market.

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5. Lack of Brand Idea Sharing – Business units with Liz Claiborne are slow to share

ideas.

External Factor Evaluation Matrix

Opportunities

1. Expand into Emerging Economies

2. Enter New Product Markets

3. Acquire More Companies

4. Ecommerce Sales – Increase Liz Claiborne’s online ecommerce presence.

5. Expand Standalone Stores – Add new stores for Liz Claiborne’s existing brands that

have stores and those that do not.

Threats

1. Competitors- Liz has lots of well know competitor like walmart, k mart, Gap etc

2. Lose Fashion Edge – Since fashion is the key to a fashion business, there are always

the threats that Liz Claiborne will lose its fashion edge.

3. Politics/ Trade Agreements of Countries – Changes in the world economy and politics

could hamper Liz Claiborne’s company strategies. E.g. tariffs, quotas, wars, embargos,

etc.

4. International Economies – Liz Claiborne’s international presence could stumble with

the economies of those particular regions that they are involved in.

5. Brand Cannibalization – Individual business units could take sales away from one

another.

6. Conclusion

The industry involving high fashion and designer clothes is as tough and competitive. It

is an environment of continuous and unpredictable change. While recognizing the

tradition of Liz Claiborne, Chairman Jerome the changing industry dynamics must be

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considered. The fashion industry isn't about clothes and designs at all: it is about

information. It is about people's need to establish themselves in a social pecking order

and associate with a particular social group. Fashionable clothes are communication

devices, they make a statement about the wearer, identifying them with a group and their

position within a group

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