Similarities and Differences between Christian Dior and Balenciaga - Essay Example

Introduction Fashion and clothing has gradually evolved into a dynamic and vibrant industry. The development of the industry was credited to the emergence of quality fashion designers and the increased recognition of the consumers. Unlike before, fashion was more of a cultural item and beyond the understanding of entrepreneurs. Changes in the environment coupled with the propagation of knowledge have made fashion designers get inclined to business. Indeed, their designing talent combined with business sense will improve the industry and allow more fashion designers to become part of the bandwagon. From ancient periods to the modern era, fashion tastes on both designers, moneyed clientele and mass consumers have changed significantly and continue evolving, albeit, enigmatically. The designs in every decade changes and designers continue changing at rapid phase to introduce never-seen-before creations. The number of players in the industry has rapidly increased making the market competitive. Even independent designers have started competing and slowly establishing their presence in the industry. The industry is beginning to take shape and the process becomes defined. Sound business fundamentals and touches of creativity are basic elements of success in the industry. In the fashion industry, there are several companies that are considered as global in terms of market and recognition. Fashion designers are famous worldwide for their ability to strike in the preference of the consumers. Christian Dior and Balenciaga are two of the most famous names in fashion. These firms are highly competitive and have different sources of market. Indeed, it is interesting to discuss the similarities and differences that both firms have. Industry Analysis Porter (1979) introduced the concept of five forces that seeks to analyse the competition in an industry. Accordingly, this will serve as an effective tool to carve a picture of the fashion industry. Based on the model, there are four forces that have to be assessed to determine the condition of the fifth force (McGahan, 2004). Through this process, the industry in which Christian Dior and Balenciaga operate will be examined using the underlying circumstances that govern in the industry. In addition, it will provide information that will explain the current position of both companies in the industry. The threat to the new entrants shows the possible barriers that will hinder the investment in the industry. Unlike other industries, fashion is more open and barriers are mostly economic in nature. First, it is important to understand that fashion is seasonal and certain designs are only purchased by customers on given periods. Given this scenario, it is difficult to determine consistent production because of seasonal changes. Another vital threat to newcomers is their reputation in the industry. It has been proven that success in the fashion world is determined by credibility and nurtured reputation. The emergence and threat of substitute industry is another important dimension that needs to be considered. At present there are no direct industries that rival fashion. Clothing as a necessity is produced in limited methods and fashion design is a foremost mechanism. Despite of this reality, the future provides uncertain trends. Custom made-clothes and other similar commodities are starting to gain prominence in the market. The bargaining power of the consumers determines the capacity of the consumers to purchase the goods and price sensitivity. Fashion designers are usually expensive but can be afforded in several markets. Signature designs are indeed high priced, but there are other quality designs that require less money to be purchased. Because buying clothes and similar products is done based on the need, consumers are able to save enough money to afford expensive branded apparels. On the other hand, consumers are sensitive in price when it comes to fashion. Since there are different alternatives, price increase will affect the decision of the consumers to make a purchase. The bargaining power of the suppliers determines the capacity of the suppliers to provide the needs of the company. Essentially, the fashion industry requires several inputs from clothes to leather. These varying necessities have to be provided by the suppliers with quality. The supplies are usually imported by designers from areas where there are abundant resources. Some big fashion companies have developed their own supply hub. This is more advantageous as the company can control the quality of the supply and provide enhancements to improve the finished products. Based on these circumstances, it is evident that the industry is highly competitive. The barriers are less, which allows new firms to venture in the industry. Moreover, substitute industries are still budding and fashion maintained its status. In addition, the consumers have the capacity to purchase the products and the suppliers are equipped to provide quality inputs. These are potentials that make the fashion industry a lucrative setting for business. Comparative Analysis Balenciaga is primarily dealing with women's fashion and was coined after Cristobal Balenciaga. The primary design of Balenciaga features a bubble skirt and unconventional ultra-modern shapes. The style has made Balenciaga a successful player in the industry. At present, the House of Balenciaga is owned by the Gucci Group which holds 91% of its shares and interest. Basically, most of decisions regarding the company are made by the mother firm and its current direction points at the goals of Gucci. Indeed, this structure of ownership provides both advantages and drawbacks. Christian Dior, however, is an independent company with some subsidiaries under its control. The company is famous for its men's wear and several products that are used by all consumers. The company is slowly becoming a dominating presence in the market and continues to expand after building store is Asia and Africa. Basically, Christian Dior has remained traditional with most of its business practises dependent of the usual strategies. Another important asset of the company is brand, which for several customers is tantamount to luxury and quality. In the point of view of the ownership, Christian Dior is in a better position because it can use its resources freely to develop new and better products. Although Balenciaga has enough freedom to perform on its own, the competition for the company is more intense. Aside from external competition, Balenciaga has to compete with the other subsidiaries in the group. The chances of being relegated from the group are highly possible. One important distinction that Christian Dior has over Balenciaga is that the pressures it experiences are commonly sourced from the environment. On the other hand, Balenciaga is being pressured from within the Gucci Group. For instance, Nicolas Ghesquiere was nearly sacked from being the head of Balenciaga after several losses. Although considered as one of the geniuses in the art of fashion design, Ghesquiere had conflicts with the top executives of Gucci Group. Indeed, it is hard for Balenciaga to explore and innovate because its failure will affect the entire group. The stakes are high since Gucci is dependent on Balenciaga to deliver. In contrast, the absolute ownership of Christian Dior makes the process of experimentations possible. It was reported in its annual report in 2005 that spending on research and development has increased immensely. In addition, the company has continued to encourage its designers to provide new innovations and options for consumers. Hedi Slimane has been tasked to reinvent the defunct Dior Monsieur to provide new variations in the men's wear of the company. The emergent style of Slimane has made Christian Dior products more enticing and highly valuable. Another important difference between the two companies is the flexibility in terms of developing new products. Christian Dior is highly flexible given its financial capabilities to support the talented designers. Balenciaga, however, has more of the latter than the former. It has to be noted that Balenciaga is part of a group and some of the group's components are also in fashion. Diversification is important but totally limited in the situation of Balenciaga. Generic Strategies Strategies of firms are considered to lean towards the strategic scope focusing on the demand, and the strategic strength concentrating on the supply. Porter (1980) further simplified the method by reducing the strategy to three specific dimensions, which included: cost leadership, differentiation, and segmentation. These aspects are also present in the companies discussed in the previous segment. From these general strategies, specific schemes of operations are designed. Since Christian Dior and Balenciaga are in the same industry, it is important to analyse both companies' approaches. Focus on single product design is a key to efficiency. This is the usual method used by Balenciaga to create its products. Most of the employees of the company are from within the group, and the lean but mean workforce structure is evident of the Balenciaga's desire to be efficient. The efficiency of the house is observed in most of its stores. The spacious area houses most of the products arranged with efficiency. Store managers are making constant evaluation especially with the performance of the employees. The company continues to aim at lessening its costs of operations without sacrificing quality. The process of differentiation is guided by the skills that are enhanced by the designers of the company. In addition, the distribution channels of the company are strong with the help of Gucci and other subsidiaries within the group. Basically, the company focuses on the quality of the products and its appeal to the consumers. In addition, the focus strategy of the company has been celebrities and other well-known individuals. Christian Dior values efficiency more than the other attributes that the company promotes. The fashion group has the most number of employees and it provides better manpower in the production. In addition, delegation tasks are simpler because of the vast workforce expertises. To reduce the company's burden on the distribution of products, the company has depended on wholesaling activities. The company has focused on department stores and fashion shops are distributors of its commodities. In addition, the company has continued its concentration of leather products making its requirements for other inputs less than that of the competition. As discussed previously, the company has continued to improve on its research and development initiatives. Christian Dior has been reliant on the skills of the employees. Thus, training mechanisms and other forms of employee enhancements are provided. The marketing strategy of the company is considered as one of the best in the industry. Marketing initiatives such as online advertising and hiring of celebrity endorsements have paid off for the company. Moreover, the company continues to expand on its capacity to provide fashion solutions to different segments of the market. Overall, there are similarities in the manner in which both companies attain efficiency. Indeed, costs have to be minimised and wastes have to be eliminated to ensure efficiency. On the other hand, it is clear that Balenciaga is focused on its talented core and Christian Dior is concentrated on the capacity of the workforce for massive production. The skills of Balenciaga employees and the innovation capacity of Christian Dior are valuable attributes. Value Adding Strategies As goods are processed, it is expected that value will be added in each stage before the final product is delivered to the consumers. Porter (1985) identified primary activities and support activities in the process of value-adding. Theoretically, the process of value adding is critical because it will determine the marketability and quality of the product. Each stage of activities present different challenges that companies need to overcome. For Balenciaga and Christian Dior, it is imperative to consider the activities that create value and enhances the overall quality of the products. Balenciaga stores are considered as one of the best in the industry. The company has decided to merge the fashion creativity in the stores and the end results were effective. It is being contended by industry experts that having a nice store easily attracts customers. The cosy stores indirectly add value to the products that are sold by Balenciaga. Aside from the stores, Balenciaga's links with Gucci is an advantage. Indeed, the reputation of Gucci is established and improves the credibility of the products created by Balenciaga. It is important to have an industry leader to serve as support. Another value adding activity that the company promotes is the marketing of the products with celebrities. It is undoubtedly that movie and television personalities are effective marketers. These individuals have followings in the society and it is likely that their fans will be interested with what their idols wear. Finally, the branding strategy of the company also provides value as evidenced by the success of Lariat bags. For Christian Dior, value starts with the materials used for the products. The process of determining the right input is meticulous and involves the best designers of the company. The company believes that conventional methods such as selecting quality materials are important to success. Moreover, the distribution schemes of Christian Dior are efficient and focus the channels and stores established in different locations. The value of the product increase when the availability is present. Definitely, customers will have no time to wait for orders that are late. Once the products are readily available, hassles will be prevented and consumers will be satisfied. Aside from the logistics, the company has sound marketing strategies. The schemes centre on the ability of the company to satisfy consumer demands beyond expectations. To boost consumer relationships, the company constantly communicate with its clients and provides opportunity for consumers to post their comments on the products of the company. Indeed, Christian Dior has focused on consumer empowerment to increase the value of the products. The company contends that its initiatives to improve product value are not for the revenues of the firm, but for the benefit of the consumers. It is clear that both companies are using their strengths to provide values on their products. The leverage in resources that Christian Dior maintains has provided unlimited potentials for product development. The precise design and marketing practises of Balenciaga also needs to be noted. Value is indeed sustained by exploiting the capabilities of the firm and ensuring that the weaknesses will not become future predicaments. Future Outlook It is expected that Balenciaga will continue to emerge as one of the foundations of Gucci Group. Although Gucci gets most of the credit for Balenciaga's success, the subsidiary continues to perform behind the limelight. With Ghesquiere leading the company, it is possible that further improvements will be experienced. The contribution of Balenciaga to the Gucci group is immense because fashion provides high percentage of revenues. Indeed, the company will continue to grow and more innovations will be released in the market benefiting the customers. Christian Dior is also predicted to have a better future as explained by statistical trends. The growth of 12% in the annual revenues as of 2005 is expected to increase significantly. The Louis Vuitton will be continually patronised and will gain more clients. In addition, the markets in Asia, especially in Japan and China are forecasted to turn out positive outcomes. The market is Europe will be sustained and Christian Dior in the United States will maintain its presence in the market. Most important, the distribution market of the company will be boosted using online capabilities. Aside from these two firms, the entire fashion industry will continue to roll in the coming years. Definitely, risks and barriers will remain as major threats. Emphasis, however, on quality and pricing will be the main challenge for all players in the industry. Strategies backed by sound economic fundamentals and responsive techniques will be the keys to access. In addition, focus on quality and creativity to continue to improve the industry. References Balenciaga. (2006). About Us. Date retrieved: 10 January 2007, from: Christian Dior. (2006). 2005 Annual Report. Date retrieved: 10 January 2007, from: McGahan, A. (2004). How Industries Evolve - Principles of Achieving and Sustaining Superior Performance. Boston: Harvard Business School Press. Porter, M. (1979). Harvard Business Review. "How competitive forces shape strategy." Porter, M. (1980). Competitive Advantage: Techniques for Analyzing Industries and Competitors. New York: Free Press. Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. Read More