Managing for Sustainability - Paxton Sportswear Company - Case Study Example

Sustainable Business Development Report Executives Summary This report provides a sustainability analysis forPaxton Sportswear Company to determine how it will operate in the production of sportswear and equipment industry. The company is desired to offer sportswear for teams and individual both in the sports sector and customers who prefer wearing the comfortable sportswear outside the sports fraternity. The report is divided into sections that include a brief introduction followed by information about the functioning of Paxton Sportswear and the organizational vision and mission. The next section is based on the assessment of external factors affecting the operations of Paxton Sportswear such as political, economical, technological and legal factors. Thereafter, the report highlights internal factors such as description of skills, functions and other organizational capabilities. Integration of sustainable business principles has also been identified as an important process for the success of Paxton Sportswear with the industry. The following section is about evaluation and measurement of organizational operations to determine if the organization is achieving its objects and the interventions. Table of Contents Introduction Business organizations are faced with a number of internal and external factors that determines their sustainability in the end. Therefore, it is necessary for the owners of any businesses to perform an assessment of the industry in order to be informed about the factors that will affect their operations. Performing an analysis of the industry is important, as it will inform organizational strategies aimed at dealing with factors affecting their operations therefore resulting in production of goods that satisfy the needs of the customers while also maintaining the cost of operations at a minimum. However, when entering an industry there are factors which goes beyond satisfying the customer’s needs and getting sustainable profits. Organizations must therefore realize that they are operating in an environment that has other stakeholders such as the government which introduces the regulatory policies to govern the organizational operations in terms of taking care of the environment and providing employees with the best working environment that takes care of their safety and health. The competitive, technological, legal and economic factors are also important areas for the owners of the business to consider when implementing their strategies. This sustainable business development report will therefore include sections on business vision, external analysis and internal sources of value, integration of sustainable business principles and evaluation and measurement as important aspects to consider when introducing Paxton Sportswear into the sportswear and equipment industry. About the Business Organization Paxton sportswear is a business organization created to produce sportswear and equipments for different sports both for domestic markets in Australia and globally in a number of countries. Paxton sportswear aims at delivering authentic sportswear and equipments for different consumers that include different sporting teams in categories such as football, netball, hockey and rugby while also taking care of different clientele that includes those in fitness industry as well as those who prefer to put on comfortable sportswear. For effective ruining of organizational operations, all the major functions of the organization are controlled from headquarter located in Adelaide. All the nationwide subsidiaries, wholesalers and retailers are therefore linked through a chain of command from headquarters although they are given some freedom to exercise certain initiatives such as local advertising campaigns which are aimed at improving the volume of sales. Business Vision For Paxton Sportswear, the organization vision is to provide the low cost, highest quality products, be the customer-focused and successful company in the world. This company vision is an important tool in guiding operations within the organization with a view of achieving not only the short-term objectives but to also guide employees to work towards long-term accomplishments (Kozami, 2002). The mission statement that is to become a market leader through the achievement of five operations performance that covers high quality production, speed, dependability, flexibility and costs effectiveness also supports the organizational vision. The company vision and mission statement are important components that will ensure the organization stays ahead of competitors in terms of profit generated while keeping production cost at a minimum. External Analysis Political Factors The political situation in a country has an influence on the way business is conducted since the government of the day might introduce laws and regulations that improve or damages business operations (Harrison, 2013). Apart from the legislations and regulation, political stability is also an important factor for the business operations as stability means the businesses will operate in a secure and well protected environment. The political environment in Australia guarantees success in business due to the stability that has been enjoyed by citizens for many years. The government has introduced policies and to help domestic businesses continue to grow through regulation on imports such as The Trade Practices Act 1974 which is enforced by Australian Competition and Consumer Commission. This body has been tasked with creation of regulations to influence the standards in textile and apparel industry in addition to requesting labelling specifying care instructions for the industry (Consumer Affairs, 2013). Economic Factors The overall economy of the country is an important aspect of business investments and returns. There are several factors in the economy which will have an implication on the performance of a business organization (Harrison, 2013). For instance, the value of the Australian dollar will affect the prices of imports and exports therefore making the organization to have high or low cost of operation depending on the value. This is important since there are a number of components which will have to be imported for finishing of the products. The value of the Australian dollar will also impact sales especially since some of the buyers of the apparel and accessories will be tourist from overseas keen to buy authentic apparels made from aboriginal textiles. Consequently, a low value of the Australian dollar will be of economic advantage to Paxton Sportswear Company business since prices are low compared to the cost overseas. Tourist will therefore be attracted to the prices of the shoes and apparels due to their low prices comparable to the value of their respective currencies. The economic situation of the country does not only affect business from overseas but also local consumer levels. This is as a result of the effect of the economy on the disposable income that people are ready to spend where for instance, during boom periods people have more disposable income and will therefore purchase more of our products. Return on sales during economic boom will be higher as retailers will record a high rate of sales which means products will not stay longer on the shelves. Environmental Factors Concern over protection of the environment comes in the wake of a major increase in the global consumption levels that has been pushed by globalization, which has linked the global market as well as the increased global population (Harrison, 2013). Research indicates expenditure on consumer goods increased by four times from 1960 to 2000 where private global expenditures on consumer goods rose to more than $20 trillion in 1995 dollars (Starke, 2004). Corporations have taken advantage of this increase in global consumption to raise their production levels therefore increasing the industrial uptake of material resources. Based on the results on hundred multinationals, World Resources Institute (2001) reports that sales for this corporations increased by 50 percent from 1990 to 2000. The increased consumption level has led environmental degradation. Due the increased awareness about environmental pollution, Paxton Sportswear Company is going to implement production measures that based on environmentally safe methods while also including seal on packaging materials that customers must recycle them after use. For example, production and facilities will also employ initiatives based on recycling used water while also ensuring efficiency in the factory to reduce the amount of emersions released to the environment. These efforts ensure water basins are protected from harmful substances that might be released with the waste water therefore help protect aquatic life and consumption by people and animals. These water management programs are important since they create a positive perception among the local communities as Paxton Sportswear Company is perceived as an organization that returns safe water back to the community. Technological Factors When designing apparel for the consumers, there is need for the organization to take into considering the technological developments taking place with the industry and for the production to suit the current needs of the market. Technological developments in the apparel industry have seen new discoveries in the areas of fibre, fabric and finishing of materials which results in higher quality of shoes and clothing. As a new entrant into the industry, Paxton Sportswear Company should base production on the on the realization that obsolete technologies that relies on designing with pen and paper no longer applies in the industry. Consequently, the organization will apply production designs that are state of the art through use of computer-assisted designing of products. The Internet is also an important area where Paxton Sportswear Company will seek to take advantage of advanced technology. The organization will seek to have an online presence to boost marketing and showcasing of products to both local and international markets. Given the highly competitive business environment that the organization operates in, having a vibrant online option for purchasing Paxton Sportswear Company products ensures a global reach as people can order their preferred products and it will be shipped to them. The online cite encompasses all the products manufactured by the organization which ensures customers access broad ranges while also sampling the depth of the brands manufactured by Paxton Sportswear Company. The site is also constantly being reviewed and improved to increase visibility and ranking in online searches to ensure consumers are attracted to the right products. Social Factors Paxton Sportswear Company prides itself as an organization that cares about the needs of communities in which it operates and will be evident social through support it will offer to provide solutions and responding to the needs of the people. Paxton Sportswear Company seeks to ensure the economic empowerment in community where operations are located. This will be achieved through implementation of policies such as creating employment opportunities for the local populations based on the available positions and the qualifications of potential employees from the community to handle different areas of the organizational operations. Additionally, application of supply a policy which ensures locals is given an upper hand in delivery of raw materials and services required in the organization. These programs among others will be implemented as part of the corporate social responsibility initiatives aimed at improving the community by fighting poverty. Consumer Factors There are also consumer factors that have to be taken to consideration for the business venture to succeed. Factors such as the culture, lifestyle, demography and population changes are all important aspects that will inform the level of sales. Geographically, the company will divide its market according to the projected levels of sales made and the potential for future penetration of new markets. For the success of the organization, it is essential to concentrate on markets that promise long-term growth and profitability and therefore increase investment. Demographically, the available market is segmented based on sports shoes, apparels and accessories for men, women and children. Global market in this industry is dominated by men who consume up to 62 percent of all the products with women being the next segment having a consumption of 29 percent and the rest being for children (Transparency Market Research, 2012). Based on these ratios Paxton Sportswear Company has to produce more sports shoes, apparel and accessories for the male consumers followed by those for females with the volume of products for children being relatively lower. However, there is still need for future improvement in the volumes of products for children due to the increased demand for comfortable and sporty wear for this market segment. While the demand for female wear is expected to grow with CAGR of 1.3 percent from 2011 to 2018, children will more than double this figure with a CAGR of 2.8 percent for the same period (Transparency Market Research, 2012). It is also important to consider the cultural implications which affect the reception of products since market will not be readily available for products considered to be foreign or against the cultural outlook of the society. Additionally, the product has to reflect the styles preferred by the largest sections of the consumers consequently, the apparel produced would reflect the most recent trends in terms of fashion and comfort for the customers. Legal Factors There are number of legal requirements affecting the apparel industry which must be followed for continuity of the business. Consequently, it is important to consider legal frameworks affecting different areas of operations (Harrison, 2013). For instance, there are laws affecting the labour markets which must be adhered to for the organization to operate within the laws of the state. Therefore, the business must operate within legal parameters affecting such issues as the rights of workers and child labour laws. This will also include taking into consideration that fact that workers in this sector are unionized and are therefore prone to picketing their employers which in most cases is as a result of certain aspects such as wages and medical cover of their employment contracts being inferior to that of other workers in the industry. Without implementing effective measures to handle these issues, the organization runs a risk of delayed supplies to stores therefore affecting the market as competitors might take advantage to increase their market shares (Oxfam, n. d.). Internal Analysis Functions of the Organization The main business function of Paxton sportswear is to produce sportswear and equipments for different sports and non-sports needs both for domestic markets in Australia and globally in a number of countries. This production targets consumers such as sports franchises and those in fitness programs as well as those who prefer wearing the comfortable products from the organization. Paxton sportswear aims at delivering authentic sportswear and equipments for different consumers that include different sporting teams in categories such as football, netball, hockey and rugby while also taking care of different clientele that includes those in fitness industry as well as those who prefer to put on comfortable sportswear Major skills possessed by the Organization Major skills for Paxton Sportswear Company include possessing capabilities to control necessary resources that are essential for exploitation of potential openings in the market in addition to executing organizational conceptual strategy. To ensure this skill is retained within the organization, organization oversees tight controls over all aspects of production processes by ensuring designing and manufacturing is done in-house especially during in-season adjustment where the retailer’s factories produce an output of 85 per cent of all production. The need for outside production will always be incorporated into the main operations by forming strategic partnerships with factories situated near headquarter to ensures the strategic agreements are met with timely delivery and service. This will result in creation of production flexibility capable to react to changes in demand and therefore be able to design and produce output based on the trends in the market in terms of demand for particular quality, quantity, style and fashion. Recruitment, training and development of employees should also reflects the needs of the organization which is to have highly talented and dedicated employees who are ready to put their skills to innovative use. This is an important pointer to success that is based on continued dedication towards rapidly responding to changing trends in fashion which will see the organization produce different products frequently. Reacting to customer needs is the best move to create customer loyalty that will help develop brand recognition which is a benefit that will continued to offer considerable commercial value over the years (Barlow, Parry and Faulkner, 2005). Additionally such strategic positioning will ensure the number of consumers for different products is always rising while to increase brands recognition making them to be identified as trend setters in the sportswear industry. SWOT Analysis Being a new business in the industry, it is important that the functioning of the company has to be based on the reality of the industry which is informed by the strengths, weakness, opportunities and threats as factors affecting it operations (Stanford, 2005). I) Threat The industry has a number of companies that are already in operation therefore representing competition for the available market. Apart from the global brands such as adidas, Callaway, Nike, and Puma (Oxfam, n. d.), Paxton Sportswear Company has face competition from domestic producers of sportswear and equipment such as Attack Sports, Game Clothing, Jax Sportswear and Regal Sportswear (Attack Sports, 2014; Jax Sport, 2011; Regal, n.d). Nike and adidas continue to attract business in the domestic and global markets due to the heavy investments as a result of their economies of scale. Their sponsorship deals with teams, in rugby, football, netball among other categories of sports means they are better placed to attract a large section of the market. II) Opportunity Even with the stiff competition in the market, Paxton Sportswear Company has an opportunity to attract consumers to their products due to the continued expansion of the market. There are opportunities that are going to be sized both at the domestic and global level due to the prospect of growth in the industry. Based on the available data of the market, it is projected that will grow at Compound Annual Growth Rate (CAGR) of 4 percent making the industry to be worth 178 billion US dollars by 2019. The continued growth of this market will be due to factors such as growing fitness consciousness, creased disposable income in emerging markets, rising popularity of sports shoes, apparel and accessories for females and the increased preference of stylish and comfortable sportswear outside sporting events (Team 2013). Consequently, Paxton Sportswear Company will strategize to take advantage of these markets in order to improve the market share in both domestic and global markets in the coming years. III) Strength Paxton Sportswear Company is going to emphasis on presence in the market as one of its areas of strength. To achieve this, the business will focus on heavy investment in channels of distribution staring with the local market and then in determined global markets. Having multiple subsidiaries, wholesaling and retailing points will ensure products are shipped to different markets within a short period of time after production. Having more outlets than competitors will increase accessibility of our sportswear and equipments, which will create customer preference for the products. Additionally, the product will be based on customer satisfaction as the driving force of production. This will be achieved through measures such as focusing high quality sportswear and equipment based on introduction of new products and concepts in the market that relies on innovative ideas. IV) Weakness Paxton Sportswear Company will find it difficult to wrestle a number of key market segments from the competitors that have been established for longer periods. Signing sponsorship deals with sports franchises is an important move that increases the levels of sales for producers of sportswear and equipments. However, such deals require huge sums of money to be a success. Based on the available funds to invest in the project, getting sponsorship deals with elite sports franchises will be a difficult task for Paxton Sportswear Company. Integration of Sustainable Business Principles Given the competitive nature of the sportswear and equipment industry, there is need for the organization to introduce a business model that will integrate the internal and external factors affecting its operation. For instance, the organization should respond to the economic situation of the country by producing at the level where demand does not exceed supply or production of limited products which will not be adequate to demand in the market (Wells, 2013). Consequently, in order to react to the market forces and economic situation of the country, Paxton Sportswear Company ensures sustainability by basing its business model on developing a system that relies on short lead times. Moreover, it ensures keeping quantities produced based on demands by distributors to lower inventory the risk while also increasing the varieties of available products to satisfy different customer style and choice. Additionally, the business model at cornerstone of Paxton Sportswear Company success is based on retailer’s unique value proposition, which is combining modest prices with provision of latest styles that are released to the market at a faster rate than the competitors therefore being able to beat them at product availability. Evaluation and Measurement For the sustainability of the organizational to be maintained, there is to conduct a well-planned evaluation and measurement process which will include measuring, comparing and analysing important data on consistency between outcomes and the specific objectives. This process is important as data derived from the process will be useful in determining whether or not the objectives and predetermined goals are being achieved, the adaptability of the organization to the operational environment that includes both external and internal factors such as changes in technology and organizational efficiency in utilizing available resources. Further, this process will be crucial in determining areas of improvement, modification or strengthening in addition to determination of suitable modes to improve customer experience of the output produced by the organization. There are several criteria for evaluating and measuring organizational performance, however, the five-tiered approach developed by Francine Jacobs will be adopted for this organization (Laufgraben and Shapiro, 2004). The five-tiered approach has found widespread application in deferent programs and can therefore be used in evaluation of a training event. The five-tiered approach is based on five steps that include need assessment, monitoring and accountability, program clarification, progress and program impact in assessment of the outcomes. Needs assessment in this case covers the identification of areas where it is necessary to do an evaluation of performance and the level of need for improvement. Secondly, monitoring and accountability involves coming up with a target group with the content needed to improve their skills and experiences also being determined. The third tier features development of better approaches to improve the program to make it more effective in meeting the needs of the targeted group. The fourth tier the employees under the program are assessed using techniques such as questionnaires and observation to find out their reactions and perspectives on the ability of the program to solve identified problems. Lastly, there is the program impact tier whose role is to assess the long-term impact for the group under the program. Conclusion This report is based on the introduction of Paxton Sportswear into the production of sportswear and equipment industry by assessing business vision, external analysis and internal sources of value, integration of sustainable business principles and evaluation and measurement for the company. Based on this sustainability analysis, the company will have to observe a number of factors during the course of it operations for it to maintain production in the industry. The organization vision and mission have been identified as important yardstick that guides the organization towards achievement of both short and long-term goals. Before Paxton Sportswear commences production, it is important to consider external factors which have implications on running of the organization. This is because political, technological, legal, environmental and economical factors will also influence the operation of the organization in terms of how it relates to employees, quality of production and the return on investments. Internal factors have also been highlighted as important contributors to the success of Paxton Sportswear as they influence the level of production and quality of output while also determining the competitiveness of the organization in relation to others producing similar products. Additionally there should be evaluation and measurement policies that will help determine whether the organization is heading towards the desired direction or not with strategies to correct problematic areas also being included. References Attack Sports. Home, 2014. [Online]. Available at: http://attacksports.com.au/ [Accessed on: 28th July 2014]. Barlow, S., Parry, S., & Faulkner, M., 2005. Sense and respond: The journey to customer purpose. 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