Coach Company: Internal and External Environment - Essay Example

Question one Coach Company has various strategies that it uses to attain competitive advantage in the luxury market. First, through vertical integration, Coach has devised a growth strategy that gives it a competitive edge over its rivals such as Kate Spade LLC, Dooney and Bourke Inc., and Michael Kors. For instance, its strategy is not only focused on matching key rivals in styling and quality but also beating them in price by 50 percent or more. Secondly, the company has also adopted a business level strategy by developing a business model strategy through its multichannel distribution model. This model focused on providing indirect sales to other third parties thus increasing the number of sales of products and thus increasing its brand awareness in the market. These two strategies enabled Coach Company to attain its two primary strategic objectives which were to increase the global distribution of its products and to also improve the store sales productivity. Therefore, through these two strategies, the company has been able to attain competitive advantage over its major rivals, however, it was not certain whether the firm could match some of its prime rivals such as Dolce and Gabbana, and Versace. Question two: Internal Environment Strengths Coach Company has the principal strength of adequately competing with its competitors on its highly unique and superior luxury goods. Besides the company’s products has an innovative styling that has played a huge role in attracting new customers. Comparatively, Coach Company products are available at major outlets and sold at price less than 50% or more than its chief competitors in the luxury industry. In addition, the company has delivered extra services to the customers such as customer care to cater for their queries whenever they occur. As a result, the company has experienced increased customer satisfaction and loyalty from its customers. Equally important, Coach engaged in strategic associations with other major company such as Movado thereby broadening their market segment. This concept of outsourcing has not only enabled them to cut their maintenance costs but to lower their manufacturing costs as well. This has therefore increased their competitive advantages in the luxury industry. Weakness and Risk The companies has also various internal weaknesses which should be managed appropriately. For instance, the luxury industry is characterized by rampant change in the fashion trends. This has thus led the factory outlet stores to outperform the retail price stores. Therefore, the company’s products and brand are diluted due to the high number of the outlet stores in the factory. Comparatively, men’s products only account for up to 2% of the total sales that the company makes and thus this is below the company’s expectation. This shows that the company’s inventory system is one of the major weaknesses and the company should thus employ an appropriate marketing strategy which will increase the sales of men ware and other out ware products. Question FOUR: External Environment Opportunities Coach Company has experienced a growing demand of its luxurious goods and products in emerging global markets such as India and China. More importantly, the raise in the Indian standards and increase in affordability due to economic improvement has enabled the Indians to become major consumers of luxurious products. Comparatively, emerging markets such as Middle East, Asia, Mexico and Australia have faced rapid and tremendous increase in wealth thus consequently increasing the spending habits of the consumers. There is thus an opportunity to increase the number of retail stores in these regions that can result in the increase the sales of the company’s product more so in the men wares. The development of both the domestic and the international markets is thus a great opportunity that the company can use for product expansion. Threats Since Coach Company has many external competitors, it has also a lot of threats which can act as a huge hindrance to the company’s progress. For instance, it faces stiff competition from companies such as Hermes and Louis Vuitton among others. Moreover, the market has also experienced an increase in counterfeit goods which are mostly offered at relatively lower prices. In addition, the rising rate of economic depression in many parts of the world has resulted to change in the consumer behavior patterns thus affecting the overall sales of the company. Coach Company can thus employ new marketing strategies as well as increase the quality of their products. Question Five: Porter’s Five Forces Analysis Current Competitors Coach Company is highly faced with competition from existing competitors such as Hermes and Louis Vuitton. However, the brand is designed in a way such that it meets the customers’ needs and affordability, a factor that has enabled it to attract more customers as well as retaining its old customers. Furthermore, its lower prices has given it an advantage over its competitors in the luxury market. Competition from New upcoming companies Apart from the existing competitors, Coach Company is also faced with competition from new entrants in the industry. However, this competition is very minimal since the company is an established brand that has a very strong brand image in the market. Therefore the company has a high level of customer loyalty due to high consumer satisfaction. In addition, customers in the luxury industry is usually characterized by high tendency and belief for purchasing goods from established brands rather than emerging ones. Therefore, Coach Company faces very little competition from emerging companies. Low bargaining power from users and suppliers Coach Company is faces little negotiations from users and suppliers as a result of having a good brand position. The users have a high brand awareness and the country has created a strong brand image and thus there is very little negotiation and bargaining power from users and suppliers. Threat from Counterfeit Products Coach Company faces a high threat by substitute products and services since they are provided at relatively much low prices. Even though Coach Company’s products are of very high quality and are also reliable, there are other counterfeit products which are of similar looks but low quality. This has affected the sales performance of the company and as a result it has become the prime threat of the company. In order to deal with this threat, Coach Company should engage in excessive customer education and advertisement. Read More