Sarit Fashion Business Strategies - Example

SARIT FASHION Student Name: ID: Course: SUBMISSION DATE Table of Contents 1. Title Page 1 2. Table of Contents 2 3. Executive Summary 3 4. Introduction 4 a. Business details and registration details 4 b. Business premises and legal considerations 4 c. Management and ownership 4 d. Innovation 5 5. Operations 5 a. Organizational structure 5 b. Key personnel 7 c. Service process 8 d. Insurance and Sustainability plan 9 6. Marketing 9 a. Products or services to be offered 9 b. Target market / customers 10 c. Industry 11 d. Advertising and sales 12 7. The Future 13 a. Mission statement, goals/objectives, action plan 13 8. Financial Management 14 a. Risk management 14 b. Operating Budgets 14 9. Concluding Statements 15 10. References 16 11. Appendices 17 1. Executive Summary Sarit Fashion (SF) is a new clothing store in London. As the name suggests, the store is famously known for its fashion clothing, make-up style and other beauty accessories as it position itself as a leading apparel store servicing British retail market. The firm also continues to dominate the online operations in several markets because of its fashion beliefs that technology management, creativity and superiority in design forms are keys to excellence in the trendy clothing sector Benton, & McHenry(2009), Currently SF sells a wide range of ladies and men clothing as well as accessories and shoes. The main SF products include fashion clothing, shoes, make ups and accessories. To ensure efficiency in provision of services, SF utilizes the latest technology and increase efficiency in service delivery and product design. The store avails latest trends of fashion and garments like “Rock Coco”, “S”, “Glactica” and “Scandi Military”, along with other luxury garments of designer relations within the Boutiques of SF. To be on competitive edge, the SF designed its first collection in 2007 by the Briton supermodel, Kate Moss. Additionally, Stella Vine who is a renowned artist in UK designed exclusive fashion editions for the store that inspired its products and services through colourful artworks. The colourful artwork is illustrated on T-shirts; vest tops and dresses with labels engraved in pink glitter. The target group of SF consists of clientele base aged 18 to 40 who work in urban centers or taking higher education. They have a mid-range income and have interest in fashion trends and are very conscious when it comes to what they wear. This store has positioned itself as one involved in selling a variety of quality high fashion clothes at affordable prices. The company has taken advantage of globalization to market its product. Globalization has brought about changes in the fashion industry. With many people trying to copy the modern fashion, the company is capitalizing on this to gain more customers. In addition, globalization has affected the revenues. With the international market being globalized, this company has managed to expand its operations into a number of countries. The changes in the trade regulations by a number of countries have made it easy for this company to get more customers. 2. Introduction a. Business details and registration details Sarit Fashion is a registered partnership company co-owned by two directors, Alex Branson and Mitchell Hawthorne who are also the founder members. SF was registered in February 2nd, 2000 in London. It’s registered under the Private Company Act with a practicing license No. 1436676/2. b. Business premises and legal considerations Established in UK in early 2000s, London presently serves as its SF head office for its global operations. Lately, the company operates in more than 4 countries with stores strategically positioned in downtown of major cities of Great Britain. c. Management and ownership As a privately co-owned business, the founder members who also serve as directors have actively participated in the day to day running of the business in support of other staffs who are employed on contract. The management of SF plays a vital role in ensuring success in daily operation of activities. While at various destination points, SF customers come to buy products and others make order them, either through phone, email or faxed order forms. As a result, new accounts are created by sales representatives who avail or sell new orders to retailers offering their services to them. The sales representatives in addition avails order service to existing clients. Order clerks undertake documentations of receipts and dispatch of book orders. All of this workforce team is managed by either the supervisor in charge of operations, or supervisor who is responsible for customer service who later report the work discharged to the general manager. An administrative assistant also reports to the general manager. d. Innovation Clothing industry has come a long way where the companies involved used to deal with specific customers within the area of operation. It is due to the competition and new mood of communication that has in led to the market expansion. Currently, most of the companies in the clothing sector prefer online promotion in order to reach out to many people as well as enjoy the promotional qualities offered by online facilities and other advantages attached to this mood of promotion. The use of clothing and textiles technology has brought major changes the production and distribution of clothing around the globe. Innovations have made it easy to access raw-materials that are man-made, for example polyester, nylon and vinyl along with unique features like zippers and Velcro. Additionally, the technology has led to rise of fashion designers with technical skills to design famous clothing lines. Some designers have ended up becoming celebrities because of their unique brands and designs. Therefore, it will be paramount to develop technological changes within clothing industry develop suitable solution to gain operational efficiency and maximize firm competitiveness. The firm has been using the old operating system, DOS in operation management which limits success of SF.The firm is presently adapting to a new operating system to increase its production of competitive brands in the retail clothing. The adoption of new software is accompanied by some discrepancies, which is likely to prevent the success of the store for quite some time before training is done on side of staff to make them acclimatize with new operating system that is being launched. Lack of back-up systems because of DOS has made the firm to lose massive data during the shift from one system to another and this is likely to also hinder the operation success. 3. Operations a. Organizational structure For a SF, the organizational structure is a chain of command of people and their functions. The organizational structure of SF tells you the character of the firm and the values it believes in. For that reason, when doing business with a company or getting into a new job in a company. SF tends to adopt a number of structures for management purposes. Although the SF follows a particular structure, there are departments and teams following some other organizational structure in exceptional cases. They also maintain effective communications within the working group, motivate, train, and appraise staff. Securing funds and managing budgets is also a role of directors. b. Key personnel The jobbing processes have been paramount for Sarit Fashion in maintaining flexibility and quality of fashion products at the market, and enhanced speed in service operations and dependability of products. More specifically, systems of "high commitment" in jobbing practices at Sarit Fashion increase organizational effectiveness by creating conditions where employees with specialized skills become highly involved in the stores and work hard to accomplish the organization’s goals (Jackson et al, 2010). The call for an attachment of value in the quality of team selected to execute some duties through their successful operation for performance improvement in the stores, which assist the SF attain the set goals and objectives. Services at Sarit Fashion creates a general overview of the reality on the grounds as regards to quality of services rendered, cost and quality strategies employed along with marketing strategies at store has been vital in maintaining customer base. SF call to distinguish two elements of quality in wide-ranging activities of a fashion clothing development, that is: consumers’ expectations and the jobbers’ perceptions and find how the two connect with each other. The benefits occur from a high quality position and are exhibited in a further competitive positioning at the market, hence enabling the business to achieve its goals; which could be measured through increased profitability and market share of the company. Basically, employees perform the essential tasks within the Sarit Fashion, and company’s human resource systems are designed to support and manage this human capital. (Jackson et al. 2010). c. Service process Online connection of store will be imperative in linking one store to another and in case of one store run-out of stock, it may get some products from the nearby stores. It is believed that the use of in-house software and sophisticated operating system will avail more opportunities for SF business empire. This could limit instances of hacking into their system and increase service efficiency in their respective stores around the world. However, SF can still outsource some vital software as it builds its in-house system. The goals of outsourcing often comprise of reducing of labor and overhead costs, maximizing profits, dominating a market and gaining a competitive advantage. There are several outstanding technological resources that have make SF attain the slot of market leader which includes supply chain and inventory management, innovation, good collection of information on consumer needs, effective data management, and processing. The firm is keen to understand competitors’ interventions and strategies at the market and respond to them accordingly by perfecting on its core competencies and capabilities in relation to customer relationship management. SF stores focuses in making the world a more flourishing society through the production and distribution of unique cloth fashions. This makes SF to be geared towards attaining a steady and long-lasting growth and development in future. The achievement is meant to be harmonized by more than a few aspects which comprise of considerable surroundings, market demographics, internal environment, financial condition, value chain activities and availability of resources. d. Insurance and Sustainability plan Insurance and sustainability in businesses is meant to implement practices that support and enhance economic safety, social wellbeing and environmental protection as they work hard improved performance. To achieve this, Sarit Fashion formulates sustainable business strategy which is enclosed in sustainability reports. Sustainable development for SF entails three components, namely, environmental protection, social equity, and economic prosperity, form the basis for a reporting paradigm called the triple bottom line (TBL). The TBL approach is intended to help the company integrate the three components of sustainable development into core operations and to translate sustainability theory management practice. 6. Marketing The company marketing strategy has however been successful over the last periods where it has stood out uniquely and more interesting is that they never place logos on their products. Their main strength is their innovative products, which make their customers coming back for more from them.The speed of delivery makes them the fastest fashion stores in the industry, which gives them an upper hand in the industry. They have also changed their products to meet the requirements of the customers. The company threat is mainly their competitor and also the increasing cost of the cost of production, especially the raw material and the labor cost. This increases their expenses, thus, reducing the gross profit. Their main opportunity is the youth. They can invest much on youth because they are the ones who will always be trying to be with the latest fashions. Their main weakness is advertising where it uses the traditional methods of advertising instead of using the modern social media to advertise its products. a. Products or services to be offered In short, Zara is a company that has invested in fast fashion. This company has managed to pull through by using a number of strategies. Through its promotion strategies, this company has managed to spread the gospel of its products far and wide. In addition, the pricing strategy of this company has been tailored to cater for the mid-income earning customers. Even though it offers low prices, its products and services are of high quality. It has capitalized on globalization to get its products reach as many clients as possible. Because most of its clients are teenagers, the company has made use of social media and other online marketing methods to market its products (Benton & McHenry, 2011). This company has created products that suit the needs of its target customers. This aims at differentiating it from its competitors through the fresh looks the customers get once they are in the clothes. b. Target market / customers Marketing target of Sarit Fashion has been made possible through research. This company has invested money to investigate on what the customers want. It targets given groups that like given products. In most cases, this company attempts to target teenagers because this age group is the one that is looking clothes that are of style. Young people tend to be fashion sensitive hence account for the large percentage of customers for this company. Additionally, this company understands that the youth have low income hence they need stylish clothing at cheap prices. SF has also tried to implement certain products that catch the attention of the older generation. There are also older customers who want clothing that will make them appear young. These are the other kind of customers the company targets. In addition, SF has tried to target high fashion followers by offering them products that are modern. SF has put in place measures that ensure market differentiation. More specifically, it has focused on young teenagers, as it believes it can offer them products that will make them different from the rest of society members. In terms of market positioning, the company has positioned itself as a low cost brand that offers customers high quality products at cheap prices. They have positioned themselves as a company that offers trendy products. It has produced designs of clothes that correspond to the modern fashion used by youngsters. c. Industry The fashion industry is very competitive and Sarit Fashion has adopted a unique trend of marketing. The company does not advertise its product online and uses about 0.3% of its revenue on marketing and promotion of its services. The company focuses on its product, pricing and place and not much interested in promotion. The company sales and net income for the last five years has been as follows: Year 2009 2010 2011 2012 2013 Sales ($ in millions) 76.7 89.69 78.19 82.98 79.7 Gross income ($ in millions) 16.77 19.53 8.09 9.06 4.93 The company main competitors HMB and Mango for the last four periods are as follows Year 2009 2010 2011 2012 HMB Sales ($ in millions) (2.27) 3.56 3.72 4.86 Operating income ($ in millions) 16.59 18.23 (20.1) (8.04) Mango Sales ($ in millions) 30.76 66.68 102.34 96.83 Gross income ($ in millions) 5.14 13.75 19.91 4.68 Company situation is vital in modern business. It can be defined as a negative and positive performance of the given organization. It also affects the choice of strategies to be applied by management to ensure the company is run in such a manner that will ensure its current and future goals are met. Company situation helps the organization to assess its current and future strengths, weaknesses, opportunities and threats. The company has seen the sales decrease and the gross income as well. If this trend continues, then the company will soon be making losses. Its competitor HMB however, is making losses as well, but Mango has seen its sales and gross income increase steadily apart from the year 2012. The company thus faces a stiff competition from Mango whose sales have been increasing steadily with its sales almost doubling each year. This shows that SF is in the maturity stage where their sales are changing with a small margin. The company should therefore look for ways to reduce the cost of the company. The company should also try to look for new markets to sell its products. d. Advertising and sales Through the use of social media, SF will be in a position to have its products reach many customers from different parts of the world. Social media sites like Facebook and Twitter have become vital in marketing. If this company can make use of these sites, then it will for sure reach many customers. However, it should also not forget using the traditional means of reaching customers, as they are also vital. When it comes to attracting attention of customers, fashion companies tend to pay attention to what the customers need in order to help them know the trend to adopt. In order for companies to stay on top, there is need for them to offer customers trendy products. The modern fashion industry has become very competitive. This has seen Sarit Fashion adopt a new marketing strategy that is very unique. This company spends about 0.3% of its revenue in marketing and promoting its services. It is the nature of this company that it does not advertise its products online. SF has focused heavily on its product, pricing and place not taking much interest in promotion. For this reason, it rarely advertises store sales or promotions unlike other retailers. Its way of marketing has made it stand out as a unique fashion store. Another interesting factor about this store is that it never places its logo on its products but rather its innovative products that are available have kept the customers coming back again and again to its stores. It is a clear indication that its products advertise themselves (Benton & McHenry, 2011). SF fashions have remarkable logistics and they are able to get a product from design and present them ready for sale in less than two weeks. The speed delivery of products has given this company an upper hand in the market. It is a strategy that has made SF one of the best fast fashion stores. The popularity of its products has kept going up day in day out. In addition, this company keeps bringing in new products that satisfy the needs of modern clients. It is a fashion stores that needs what the clients need and offers them the same. Through its rapid expansion, it has managed to market its brand. With over 4 stores in over 4 countries across the Britain, this company has managed to tap many potential clients. With its brand name spreading across the world, the company is now focused on sustainable marketing. In terms of market segmentation, SF has segmented itself and ventured into a number of regions. For instance, Inditex has come up with a number of cloth lines like Massimo Dutti and Bershka on top of SF. 7. The Future SF needs to consider the financial and the non-financial objectives in order to remain its good performance. Looking from the strategies that SF is doing now, we can say that these strategies effective and sufficient enough for the company. However, SF should increase its sales revenue in the coming year by providing online markets, online advertising and opening new stores in Eastern countries. SF is a company that has invested in fast fashion. Even though there are a number of challenges in this industry, this company has managed to pull through by using a number of strategies. It has capitalized on globalization to get its products reach as many clients as possible. This company has created products that suit the needs of its target customers. This aims at differentiating it from its competitors through the fresh looks the customers get once they are in the clothes. Nevertheless, SF should manage promotion strategies to spread the gospel of its products far and wide to get its products reach as many clients as possible. The company should made use of social media and other online marketing methods to market its products because most of its clients are teenagers. 8. Financial Management a. Risk management After identifying a particular risk, banks may use some four main risk management solutions: (i) avoid; try to minimize, if difficult to bear with the risk they may pull out from investment options, (ii) control: they should try to undertake mitigation measures within their disposal to minimize the risk, (iii) transfer; some banks may resolve to outsource risk management solutions either through hedging or insurance and (iv) accept; investors will undertake the investment while bearing the risks involved in mind (Coleman, 2011). This is especially when the level of risk is very low and poses small harm to investment. The past financial panics and disasters, most notable economic slowdowns have closely been watched by SF when engaging in global businesses to help minimize the financial risks. c. Operating Budgets Liquidity Liquidity is the assessment of the extent to which an organization can be able to meet its immediate liabilities. An organization with high liquidity ratio means it had the ability to meet its obligations. Liquidity can be measured by calculating current ratio and quick ratio. Current ratio defined as how much power does the current asset can cover current liabilities. The result in both years 2011 and 2012 the current ratio is above 1, which is good for the company as their asset have more power to cover the liabilities from their assets. Quick ratio basically has the same indication like current ratio. However, quick ratio only looks from the company’s quick asset. Therefore, inventory is not included in the formula. The result shows that the quick asset of the company still couldn’t cover the liabilities that they have. Leverage Ratio This ratio is to find out the amount of total asset that financed by the total debt. The higher the result will cause a higher financial risk. A healthy company should have a low debt to total asset ratio because they need a more flexible finances. Debt financing could lower the degree of flexibility. Zara in both 2012 and 2011 had a low result on this ratio, which means only a small amount of the total asset that financed by the debts. A slight decreasing trend also shows a positive progress for their assets. Activity Ratio Inventory turnover defines how fast the business can liquidate their inventory. The higher result shows a good sign of the inventory circulation. For the year of 2012 Zara has a quite bad performance on their inventory turnover which is not for the company’s favor. 9. Concluding Statements In the fashion industry, supply chain management is a crucial factor that any stakeholder in this industry needs to look at. With the hard economic climate, customers are spending less on fashion. This has seen the companies in this industry not perform so well in terms of sales. In order for any company to make profits, it needs to offer customers high quality products at a cheaper price. The companies need to do a market survey and know how much customers are ready to spend and the trends they prefer. 10. References Benton, W.C. & McHenry, L. (2009) Purchasing & supply chain management in Retail Industry, McGraw-Hill/Irwin, USA Betz, F. (2011) Managing technological innovation: competitive advantage from change, 3rd ed., John Wiley & Sons Inc., USA Bidgoli, H. (2010) The handbook of technology management: supply chain management, marketing and advertising, and global management, John Wiley & Sons Inc., USA Chase,R.B., Jacobs,F.R.and Aquilano,N.J (2006). Operations Management for Competitive Advantage with Global Cases (11th Edition). McGraw-Hill, USA. Cetindamar, D.; Phaal, R. & Probert, D. (2010) Technology management: activities and tools, Palgrave MacMillan, UK Coleman, T.S. (2011) A practical guide to risk management, Research Foundation of CFA Institute, USA Daniels, D. J.; Radebaugh, H.L.and Sullivan, P. D. (2009) International Business: Environments and Operations. International Edition, Twelfth Edition, Pearson Education, Australia Dhillon, M.C. (2009) Technology management: advanced strategy for information technology, Global India Publications, India Fitzsimmons,J.A., Fitzsimmons,M.J. (2008). Service Management: Operations, Strategy and Information Technology (6th Edition). McGraw-Hill, USA. Hill,T.(2005). Operations Management (2nd Edition). Macmillan Business, UK. Jackson, S.E.; Schuler, R.S. & Werner, S. (2011) Managing human resources, 11th ed., Cengage Learning, USA 11. Appendices Appendix Table 1 Inditex Gap H & M Revenue 2010 11,083,514 14,197 108,483 Revenue 2011 12,526,595 14,664 109,999 Sales Growth 1443081 467 1516 Growth Percentage = (Sales Growth/last year Revenue)*100 13% 3.3% 1.4% Table 2 Financial Analysis INDITEX Liquidity 2012 2011 2010 Current Ratio 2.01174386 1.944931917 1.711003662 Quick Ratio 1.539262994 1.490851458 1.280380137 Working Capital 2,734,515 2,527,605 1,638,835 Working Capital Ratio 0.25 0.26 0.20 Leverage 2012 2011 2010 Debt- to -Assets 0.32 0.35 0.35 Debt -to- Equity 0.47 0.53 0.55 Activity 2012 2011 2010 Days of Inventory 0.0006321 0.0006610 0.0005798 Inventory Turnover 4.50 4.63 4.31 Total Assets Turnover 1.268 1.275 1.327 Profitability 2012 2011 2010 Gross Profit Margin 0.596 0.593 0.571 Operating Profit Margin 0.18 0.18 0.16 Net Profit Margin 0.14 0.14 0.12 Return on Total assets 0.18 0.18 0.16 Return on stakeholders' equity 0.26 0.27 0.25 GAP Liquidity 2012 2011 2010 Current Ratio 2.024906015 1.87398568 2.188643829 Quick Ratio 1.265977444 1.10071599 1.495541999 Working Capital 2,181 1,831 2,533 Working Capital Ratio 0.31 0.23 0.32 Leverage 2012 2011 2010 Debt- to -Assets 0.63 0.42 0.39 Debt -to- Equity 1.69 0.73 0.63 Activity 2012 2011 2010 Days of Inventory 0.0004837 0.00051 0.00048 Inventory Turnover 5.73 5.43 5.47 Total Assets Turnover 1.960 2.076 1.778 Profitability 2012 2011 2010 Gross Profit Margin 0.362 0.40 0.40 Operating Profit Margin 0.10 0.13 0.13 Net Profit Margin 0.06 0.08 0.08 Return on Total assets 0.11 0.17 0.14 Return on stakeholders' equity 0.30 0.30 0.23 BUSINESS PLAN REPORT STATEMENT: BRIEF DETAILS OF WHAT WAS COMPLETED IN BUSINESS PLAN REPORT: NAME OF STUDENT COMPLETING EACH SECTION: Title page Table of Contents Introduction: (Description of business strategy, ownership and legal structure, skills and experience) Operations (Management structures and procedures, hiring and staff requirements, assets required) Budgets and cost-volume-profit analysis James Budgets and cost-volume-profit analysis The marketing section (products and services to be offered, target market, competitors and location) Nick Service process in the operations section Identification of risks and outline of funding needed in the financial management section Peter Concluding Statements Appendices References All students The tasks were delegated at the beginning of the assignment and consultation occurred regularly. The team worked well together and communication was strong. There was no group leader – all provided equal leadership in overcoming problems and providing a finished product. Read More