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Lower Divison Capstone - Essay Example

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Lower Division Capstone 29-10-11 Lower Division Capstone Part 1: The new chief executive of Versace, Gian Giacomo Ferrari, stated his desire of increasing the Company’s focus on manufacturing Luxury fashion watches and jewellery, at the Baselworld watch fair held in March last year…
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Download file to see previous pages K., & Versace, G.2011). Company authorities knew that the market was already ruled by some of the most prominent and famous luxury watch manufacturers such as the Anne Klein Watches, Rolex and Di Molodo Watches. Therefore, the Company authorities were well aware of the fact that the Company will have to deliberately set a low price because it faces a high degree of competition posed by legendary luxury watch manufacturer’s, who have been in the business from decades. Therefore, in launching the Versace Luxury Watches, the Company had to employ the theory of Price Penetration in an effort to gain a footing in the market. So, initially the prices of Versace watches were deliberately set very low as compared to the prices of other luxury Brand watches. The idea behind the implementation of price penetration strategy was to introduce the consumers to the Versace Watches at a lower price which would inevitably encourage the consumers to buy them. Secondly, the other purpose of setting lower prices was to encourage the customers to develop the habit of using Versace watches, so that when the Company eventually raises the prices, their sales would not be affected substantially. (Hassan et al 1994). Thirdly, the company’s use of penetration pricing strategy ensured that it would gain a substantial slice of the market because the low price of their watches would definitely attract retailers to buy large quantities of their product. The results of the implementation of the pricing penetration theory were simple; the Versace Watches were an instant success and their first annual sales were several folds higher than the Company had initially expected. The success of pricing penetration theory lies in the fact that Versace is a huge Company with revenue of over € 162.7 million, thus the Company was well adapted to cope with the high cost of the implementation of the theory. (Davis, D. K., & Versace, G.2011). However, if I had been the senior manager at the time the Company launched the watches, I would have definitely employed the theory of Market Skimming. Through the implementation of this theory, I would have ensured that the product is sold at a high price at the time of its launching because initially the product is unique in the market and for a large number of consumers; Uniqueness matters more than the price. (Needham et al 1990). Over the last few years, the Versace business environment has changed dramatically, and globalization has proved to be the catalyst of the change. In an effort to cope with the expansion of its business, Versace has sought to employ the strategy of employee empowerment. The company is based in Italy but is now expanding their business worldwide and for this the adoption of employee empowerment culture plays a vital role. Due to the opening of boutiques and stores across the world, the Company now relies extensively on the capabilities of its employees. The Company has introduced a range of training programs and other services which ensures that their employees are more reliable and capable of performing better than ever before. On the other hand, the Company ensures that its employees feel trusted and gives the right of decision making to them. Furthermore, through various employee benefitting policies, the employees are given self confidence in an effort to ensure that they remain motivated and perform their duties to their full capabilities. Therefore, in many ways the Versace fashion house lets its employees know that for them, their ...Download file to see next pagesRead More
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