Strategic Management

Assignment - III

Submitted to: Submitted by:

Prof. Dr. Sanjeev Malage Amtarleena Sikdar

MFM - III

2014-16

National Institute of Fashion Technology, Bangalore

Zara:

SWOT analysis:

Strengths:

1. Strong branding- loyalty and awareness

2. Fulfilling demand in affordable yet trendy fashion

3. Fast delivery of new products and trends

4. highest numbers of products in the industry

5. Cost leadership strategy by aiming at cost efficiency

6. Highly efficient supply chain that supports fast fashion

7. Distribution efficiency by vertical supply chain

8. High frequency in the flagship stores in key locations

9. Multi-channel strategy

10. Extending online sales in existing market

11. Healthy financial performance

Weaknesses:

1. Pressure of cost leadership strategy in consideration to achieve high quality standard

2. Short lead time( only two weeks) forces less variation in style, design, colour and size

variation

3. Rapid growing effect lacking in e-commerce sector

4. Higher cost from vertical integration

5. Risk of single centralization

6. Cost up in overseas distribution, R&D and labour

Opportunities:

1. Global expansion in key markets like Asia and America

2. Going big and better in e-commerce sector and grow revenue through that

3. Company image and engagement for environment, labour, social and product

dimension

Threats:

1. Exchange rate fluctuations

2. Expansion strategy regarding market entry barriers

3. Change in customer demand, price sensitivity and trend and fashion ideas

4. Unsure success if entering markets which are less fashionable

5. Competitors such as H&M, GAP and Benetton and new entries in market that want to

recapitalize their profits in new markets.

6. Long term success in an competitive industry requires to maintain strong organic

growth

7. Group performance pressure to deliver high performance

TWOS matrix:

Opportunities1. Global expansion in

key markets like Asia and America

2. Going big and better in e-commerce sector and grow revenue through that

3. Company image and engagement for environment, labour, social and product dimension

Threats1. Exchange rate

fluctuations2. Expansion strategy

regarding market entry barriers

3. Change in customer demand, shopping behaviour, price sensitivity and trend and fashion ideas

4. Unsure success if entering markets which are less fashionable

5. Competitors such as H&M, GAP and Benetton and new entries in market that want to recapitalize their profits in new markets 

6. Long term success in an competitive industry requires to maintain strong organic growth

7. Group performance pressure to deliver high performance

Strengths1. Strong branding-

loyalty and awareness2. Fulfilling demand in

affordable yet trendy fashion

3. Fast delivery of new products and trends

4. highest numbers of products in the industry

5. Cost leadership

SO strategies

S1S9O1O2- Using existing brand loyalty and awareness and multichannel strategy to expand market and flourish in the e-commerce sector

S3S4S6S10O2- The huge number of products coming to the store within a very short cycle of time will help

ST strategies

S9S10T3- Using multichannel strategies and online expansion to grab online shoppers that will help deal with the changing shopping behaviour. Online strategies can include discounts to attract price sensitive segment.S1S3S4S6T5- To deal with

External

Internal

strategy by aiming at cost efficiency

6. Highly efficient supply chain that supports fast fashion

7. Distribution efficiency by vertical supply chain

8. High frequency in the flagship stores in key locations

9. Multi-channel strategy

10. Extending online sales in existing market

11. Healthy financial performance

increasing sale in the online store as well, more the new products more attractive online shopping experience. Along with this Zara’s unparalleled supply chain will be helpful for product shipment delivery in case of online store and that will lead to high level of customer satisfaction. Also already being started to sell online in the existing customer base it will help out in expanding furthermore.

S5S11O3- Healthy financial condition and saving costs can help them focus on the betterment of the brad image in terms of engaging labour and other social and environmental activities

the competitors Zara needs to make use of all its core strength that give it a sustainable advantage.

S1S9S10O2- To overcome barriers in entering new markets they have to focus on their branding and also expansion strategy and multichannel strategy.

Weaknesses1. Pressure of cost

leadership strategy in consideration to achieve high quality standard

2. Short lead time forces less variation in style, design, colour and size variation

3. Rapid growing effect lacking in e-commerce sector

4. Higher cost from vertical integration

5. Risk of single centralization

6. Cost up in overseas distribution, R&D and labour.

WO strategies

W3O1O2O3- To make it big the company needs to look at the immense opportunity it has in the online sector and create or develop an image that would boost online sales along with giving customers an exclusive experience. Also focusing on the online marketing and selling in the key markets.

W2O2- To grow in the ecommerce sector Zara can keep its best selling products in more variations permanently in its online store.

WT strategies

W3T3- As shopping behaviour is changing to keep pace with that Zara can tap on the online market with intense marketing and promotional activities that will ensure growth and also be able to stay at par with the consumer base that in inclining towards online shopping.

Columbia Sportswear Company:

Columbia Sportswear Company is a United States company that manufactures and

distributes outerwear and sportswear. It was founded in 1938 by Paul Lamfrom, father of

present chairperson Gert Boyle. The company is headquartered in Cedar Mill, Oregon,

an unincorporated part of Washington County, Oregon, in the Portland metropolitan

area near Beaverton. Columbia Sportswear also produces footwear, headgear, camping

equipment, skiwear, and outerwear accessories.

Columbia Sportswear distributes its products in more than 72 countries and 13,000 retailers.

Columbia also operates its own chain of retail stores, including its flagship store located

in downtown Portland, Oregon.

IFE-EFE Matrix:

The IFE(Internal Factors Evaluation) matrix

Strengths Weight Rating Weighted Score

Owners if multiple omni-technologies .15 4 .6

More than 70 years of experience .1 3 .3

Original founder family still runs the company .07 3 .21

Many jackets feature Columbia interchange system .09 4 .36

Solar panels at headquarters building .05 3 .15

Weaknesses

Dependent upon key personnel .1 1 .1

Success depends on company’s distribution system,

information system and growth strategy

.13 2 .26

Advance purchases often leads to excess inventory .15 2 .3

Labour disputes .1 1 .1

Product Liability and warrant claims .06 1 .06

Total 1 2.44

The EFE(External Factors Evaluation) matrix

Opportunities

Innovation capabilities, high quality R&D .3 4 .12

Official Supplier to NBC .18 4 .72

Its a part of Outdoor Industry Association (OIA)

Eco Working Group

.1 2 .2

Threats

Financial health of retailers .12 3 .36

Dependency upon key suppliers .08 2 .16

Change in historical weather conditions .1 2 .2

Seasonality .08 2 .16

Consumer preferences and fashion trend .04 1 .04

Total 1 3.04

The IE Matrix:

I, II, IV- Grow and build

III, V, VII- Hold and maintain

VI, VIII, IX- Harvest or exit

According to the total IFE and EFE score, they fall in the division II of the IE matrix. The red

spot shows the approximate position if we plot both the scores. This division suggests grow

and build strategy for the company.

Columbia has a much lower score compared to its competitors such as Cabela’s, Lululemon,

Under Armour Etc. The reason why Columbia has lower score is that their growth has been

very slow. The slow growth in combination with the economic recession gave them average

scores.

I II III

IX

IV VI

VII VIII

V

Strong 3.0-4.0 Average 2.0-2.99 Weak 1.0-1.99

High 3.0-4.0

Medium 2.0-2.99

Low 1.0-1.99

Total IFE matrix score

Tot

al E

FE m

atri

x sc

ore

Bibliography:

https://en.wikipedia.org/wiki/Columbia_Sportswear

http://www.strategicmanagementinsight.com/tools/ife-efe-matrix.html

https://nicoleskubic.files.wordpress.com/2014/02/columbia-strategic-audit.pdf

http://www.ukessays.com/essays/marketing/company-analysis-for-zara-marketing-

essay.php

http://www.volunteerhub.com/blog/the-tows-matrix-putting-a-swot-analysis-into-

action/

http://www.managementparadise.com/balajiv.ganesh/documents/6231/zara---it-for-

fast-fashion/

http://www.cyberessays.com/lists/tows-martix-of-zara/