Business Strategies at the Company Gucci - Case Study Example

BUSINESS STRATEGY Introduction The success of any business often depends on then business strategies that are put in place, which not only give it a competitive edge over its rivals, but also enable it to produce high quality products that satisfy clients. The contemporary business environment is characterized by an emergence of many businesses, which have increased the level of competition in many business industries. In this regard, businesses launching operations for the first time are finding it hard to cope with the competition, with some of them developing strategies that are thought to be effective. One of the businesses that have remained competitive for a long time is Gucci, this is a highly successful Italian leather and fashion goods brand. It is part of the Gucci group that is under the ownership of Kering, a French company. According to Roberts 2015, the group managed to make about €4.2 billion in terms of revenue in 2008 making it stand in the 41st position in the Business week’s “Top Global 100 Brands.” Currently, Gucci is the biggest-selling brand from Italy across the world, wholesaling its products through various departmental stores and franchisees. According to the 2013 Forbes list, Gucci was ranked in the 38th position as the most esteemed brand, having a value of about US$12.1 billion (Roberts 2015). Business strategies at the company Vision, mission and goals For any business organisation, its vision, mission, goals and objectives form part of the most significant components that are essential for its strategic planning. At Gucci, the company has created its success on its mission and vision, which guide business processes and functions. For instance, Gucci’s mission has always been “to become the leader in the luxury market at world-wide level” (Roberts 2015). Alternatively, the company has its mission statement as, “price is forgotten long after quality remains” (Roberts 2015). The company’s success has been derived from the fact that it produces many luxury brands, which appeal to many of its clients. In this regard, the company has managed to establish itself as a brand that is characterized with an impeccable craftsmanship in the products that it develops. Additionally, Gucci has been successful in the development of a unique fashion influence with a highly unique blend of various luxury heritages (Roberts 2015). So far, the company defines itself as being cool and highly responsible for the products that it develops, which clients have continued to appreciate. All these attributes have been important core values that the company esteems, which informs its success since conception. Strategic planning One of the approaches that have been instrumental in shaping the company’s business strategies includes strategic planning. Here, the company often examines its internal capabilities, which enables it determine the extent of production and the quality aspects that have to be incorporated in the development of its products. According to Wilson (2011) the importance of examining the internal capabilities is that it helps in understanding the company’s strengths, weaknesses, capabilities and strengths that range from operational, financial and people. Other important issues that determine the company’s ability to produce its products form an examination of its internal capabilities include an understanding of its limitations, brand position among other important aspects (Moore 2010, p. 28). For instance, in the past, the company managed to change its reliance on individual prowess in designing products, which had brought many challenges to that of using the product brand. This approach has made the company to design products using designers that are least known and then pushing these products to be recognized beyond the level of recognition by the designers that made them. The use of SPACE matrix The SPACE matrix and Ansoff strategies have also been used extensively by Gucci in the process of developing its competitive strategies. At Gucci, the SPACE matrix approach has been instrumental in the development of strategic planning; here, the tool has often been used at the start of every planning process. In this tool, the framework for analysis is based on four main issues, which balance its external and internal factors. For instance, some of the external factors in this case include environmental stability and industry attractiveness. One the other hand, internal issues include an understanding of the company’s financial strength and competitive advantages. The findings from this matrix play an important role in the development of competitive strategies, which have seen the company become successful in its operations. Using these strategies, the company has managed to survive some tough times like the financial crisis, which many companies did not survive. An examination of the company’s internal capabilities has also been helpful in the establishment of products in the most creative fashion. Operating in an industry that is full of companies making many luxury brands, Gucci has not been left behind in inculcating creativity in its products. Most often, the company has been relying on efficient and effective designers, who although are least known, they develop products that end up being cash cows for the company. The ANSOFF strategy Another important strategy that the company has used in the past in developing its success includes the ANSOFF matrix. The advantages of the ANSOFF matrix are that it is essential in their determination of important growth opportunities in the company (Simister 2011 para 7). The ANSOFF matrix often has the product and market dimensions as well as four strategies of business growth, which can be established in two main dimensions. The ANSOFF matrix outlines the strategies of an organisation according to whether the current products and market should be maintained or whether one of them should be changed (Simister 2011 para 7). According to this market, an organisation can choose to follow a market penetration strategy by selling products in the markets it already have while bringing new products to the market. Additionally, the company can also decide to chose new markets and develop products that can appeal to the identified demand (Changing Minds, 2015). In this understanding, Gucci has been combining these two aspects in its marketing activities, which have enabled it to create and expand its markets. The company has been purchasing other successful brands, which have enabled it to fulfill the needs of new markets in new countries that it has been reaching through franchises. In the company’s market penetration approach, it is always keen on the pricing strategy, which is always expected to be fair, so that it attracts customers. With low prices, the company increases its clients for new products, who are often made to taste other brands made by the company. This strategy is very successful even among other multinational companies that often want to create a large market share in a highly competitive market. Gucci has been active in the study and development of new markets, something that has helped it in its expansion approaches. Conclusion In conclusion, it is important to acknowledge that an understanding of the business and market characteristics has been crucial in the development of lasting success at Gucci. The company has continued to evaluate and assess different markets, which has been crucial in the development of competitive advantages. The development of these competitive advantages has been helpful in ensuring that the company remains a key competitor in the luxury fashion in the global markets. With advancements in technology, the company is fast expanding through a continuous market research that informs it of the changing competitive approaches and customer tastes and preferences (Moore 2010, p. 32). This means that in future, the company is expected to devise new approaches that will enable it tackle the changing business environment. The company’s external business environment, being very dynamic needs not only strategic management, but also the development and implementation of successful business approaches. Bibliography Changing Minds 2015. The Ansoff Matrix. Accessed 9 June 2015 Simister, P. 2011. Space Analysis-strategic position and action evaluation matrix. Accessed 9 June 2015 Wilson, R. 2011. Fashion industry. Rosen Central, New York, NY. Read More