Strategic Management Analysis of Charles and Keith - Case Study Example

Introduced to management-strategic management analysis Charles & Keith Introduction Charles & Keith is a famous brand of fast fashion. The companyprimarily deals in ladies accessories and footwear. The fast fashion company was found in the year 1996 by Charles Wong and Keith Wong and was named after them. The first store of Charles & Keith was established as a 500 square feet store in the Amara Shopping Center in Singapore. There are other brands of the Charles & Keith Group like Pedro and Charles & Keith Signature Label. The company is widely recognized for its high quality and fashionable products. Charles & Keith stores operate in various countries of the world including Asia, Africa, Europe, Middle East and the United States. The company also has a fully functional online store that ships products to more than 70 destinations in all corners of the globe. This report deals with an analysis of the strategic management processes used in Charles and Keith. The report includes the macro environmental analysis of Charles & Keith done through the use of tools like porter’s five forces tool and PESTEL analysis. Also, the resource and capabilities analysis is conducted for the case company. The report is suitably concluded by recommendations given on the use of new strategies by Charles & Keith. 2 SWOT Strengths Weaknesses Strong brand name and worldwide recognition. Presence in more than 374 countries as of 2014. Vertically integrated manufacturing and distribution system. Augmented benefits like unique design and good quality derived from Charles and Keith products. Own designers and self-production of the shoes and accessories. Stores located in premium locations. Impressive and unique store ambience. Loyalty programs of the company. Scale of production is conservative. One particular design is rarely repeated which means that the cost of production per unit is very high. The company extensively uses synthetic materials for production which is considered harmful for the environment. The Corporate Social Responsibility (CSR) activities are not high scale. Very less media advertising is used. Opportunities Threats Increasing popularity of fast fashion. Developing markets, especially in the Asia Pacific region. High spending interests of the working women segment. Partnering with fashion show organizers to display products in the shows. A number of companies operate in the segment of fast fashion for women like, Nine West, Steve Madden, Marks & Spencer, Louis Vuitton, Burberry, Aldo, Sisley etc. Therefore, threat of competition is very high. Constraints in some economies where the stores of Charles & Keith operate. The increasing number of online shopping options for fast fashion purchases. Replicas of the original products of Charles & Keith are available in the market. 3 External Analysis 3.1 Political Fast fashion has created a democratic engagement in the global political environment for fashion industry. A major political concern that highly affects the fast fashion industry is the exploitation of cheap labor sources in different under developed and developing countries. However, Charles & Keith as a fast fashion company is not affected by this threat because the company uses its own production team which consists of in house designers and production teams. The political factors are often supportive of the operations of Charles & Keith, especially in its home market because of the high revenue that it brings to the country. 3.2 Economic Fast fashion forms an important income generating segment of an economy. The governments of different countries encourage popular fast fashion companies like Charles & Keith to open up their stores in the countries because it adds to the wealth of the country. Also, it creates job opportunities and promotes establishment of factories and production activities which strengthen the economic position of the country. 3.3 Social Fast fashion has become a globally popular trend. The changing social lifestyles of global citizens have popularized fast fashion to a high extent. More people are becoming image conscious and use high ended luxury products and fast fashion products to enhance their social images. Societal trends are evolving and have facilitated the production and consumption of fast fashion products. Charles & Keith as a fast fashion provider has been positively affected by the social factors because the current social trends have brought in tremendous opportunities for the brand to flourish in the domestic as well as international markets. 3.4 Technological The technological factor is one of the most critical factors affecting the fashion industry. Technological advances need to be taken up by all companies for ensuring sustainability and continued success. Charles & Keith has taken into consideration the technological advancements in production and manufacturing processes as well as in the technologies used for the creation of artificial cloths like silk, leather and other synthetic materials. The “gadget” technology has played a major role in the fast fashion industry which has made it important for Charles & Keith to operate a highly functional online store and remain visible in the online media (Cravens and Piercy, 2012). 3.5 Legal The legal factors are also influential factors in the fast fashion industry. This is because the use of sweat shops and child labor are international issues which are being looked into very critically by international authorities like the World Bank, The United Nations etc. Many laws and regulations have been established regarding fair and just work practices, non-exploitation of labors, workers’ rights etc. (McLoughlin and Aaker, 2010). Charles & Keith have to focus on adhering to these rules in order to conduct the business in a legally compliant manner. Also, the company has to abide by the specific legal requirements in its operations in different countries. 3.6 Environment Sustainability is critical for every company operating in the modern business environment. The customers as well as the regulators and international authorities have become more conscious about the protection of the environment. The customers are often known to react negatively to a company which performs in an unsustainable manner. The company sources its raw materials from dependable suppliers and makes maximum use of synthetic raw materials to ensure that no living beings are harmed for the use of leather (Macmillan and Tampoe, 2000). 4 Competitive Environment 4.1 Intensity of rivalry among competitors The intensity of competitive rivalry in this industry is high. The main products of Charles & Keith are women’s footwear and accessories like bags, wallets, belts, sunglasses etc. This segment is a highly concentrated industry where both small and big players engage in aggressive competition for getting maximum market share (Abraham, 2012). The main competitors of Charles and Keith are Aldo, H & M, Nine West and Steve Madden. All of these brands operate in the segment of trendy-expensive range of footwear and accessories. Perceptual map for footwear and accessories companies (Source: Coulter, 2008). 4.2 The threat of new entrants The threat of new entrants in this industry is low. This is because the industry is highly concentrated. The premium segment for footwear and accessories is dominated by big international players like Steve Madden, Nine West, Charles & Keith etc. while the low to medium segment of footwear and accessories is dominated by local manufacturing companies. There is almost no space left for a new entrant to position itself in the whole industry (Kourdi, 2009). Therefore, though the entry barriers like scale of investment are moderate, the scopes are limited in this segment. 4.3 The threat of substitute products The threat of substitute products is low in this segment. The main customers of Charles & Keith are women belonging to the niche segment of the society. As such, these customers have high preference for quality, fashion and design while price is a relatively less significant factor for them (Johnson, Scholes and Whittington, 2011). The customers of Charles & Keith look for unique design and premium quality which is not available in replica products or substitute products. 4.4 Bargaining power of suppliers The bargaining power of suppliers is low to moderate. There are a number of competing companies in the fast fashion footwear and accessories segment and also there are quite a handful of suppliers available in every country. Charges & Keith is a reputed brand of fast fashion which makes suppliers eager to work with the company (Lynch, 2008). 4.5 Bargaining power of customers The bargaining power of customers is medium to high. The company has an established base of loyal customers. However, other companies like Steve Madden and Nine West also hold chunks of market share. The availability of options and the low brand switching costs in this industry increases the bargaining power of customers (Kozami, 2002). 5 Internal environment analysis (250) 5.1 Resource Type The fast fashion company has high availability of both tangible and intangible resources. The company has maintained unique teams of designers, suppliers and employees which have helped in enhancing the capabilities of the business. Also, research and development, designers, brand name and marketing avenues and the unique retail stores concepts are other resources of the company (Cunningham and Harney, 2012). The high profitability of the company has made sufficient financial resources available in the business as well. 5.2 Firm’s capabilities The capabilities of Charles & Keith lie in the high level of professionalism in every aspect of the business including sourcing of raw materials, product designing, product delivery and creating ultimate satisfaction for the customers. The available resources have helped the company to develop a unique in house production and designing system. Charles & Keith invest 3% of their annual income on training the in house designers which adds to the designing capabilities of the company (Marr and Gray, 2012). Conclusion The management of Charles & Keith is much attentive when it comes to satisfying their customers. That is why the company focuses on designing unique products. The supply chain and integrated vertical production and distribution processes are key capabilities of Charles & Keith. The company seems to have a perfect combination of fashion, design and affordability which has acted as a competitive advantage for the company. Recommendations Business level strategy The fast fashion brand is much focused on maintaining high quality of products for which it needs good suppliers. Therefore, the company should continue collaborating with the best available suppliers. The company should continue abiding to the environmental laws pertaining to different countries in order to operate in a sustainable and acceptable manner. Also, it has to conduct the manufacturing and production processes in an environmental friendly and sustainable manner. The company can open up different new brands in order to attract a wider range of customers. The company can make more use of innovative techniques of promotion. Corporate level strategy Since the level of competition in this industry is increasing at an accelerated rate, therefore, Charles & Keith should focus on retaining its customer base in different countries. For this, the company should ensure high brand visibility and brand awareness. Also, it should stay in international fashion news and be associated with international fashion related activities and shows. The company should become more active in the social media sites and more visible in fashion coverage (Hill and Jones, 2011). Charles & Keith can also enter into collaboration with the fashion show organizers in order to promote their products among the super-premium segment. References Abraham, S. C. 2012. Strategic Planning: A Practical Guide for Competitive Success. UK: Emerald Group Publishing. Coulter, M. 2008. Strategic Management in Action, 4Th Ed. New Jersey: Pearson Education. Cravens, D. W. & Piercy, N. F. 2012. Strategic Marketing. New York: McGraw Hill. Cunningham, J. and Harney, B. 2012. Strategy and Strategists. UK: Oxford University Press. Hill, C. and Jones, G. (2011). Essentials of Strategic Management. London: Cengage Learning. Johnson, G., Scholes, K. & Whittington, R. 2011. Exploring Corporate Strategy, 9th Ed. Harlow: FT/Prentice Hall. Kourdi, J. 2009. Business Strategy, 2nd Ed. London: Profile Books. Kozami, A. 2002. Business Policy and Strategic Management, 2e. India: Tata McGraw-Hill Education. Lynch, R. 2008. Strategy Management, 5th Ed. Harlow: Prentice Hall. Macmillan, H. & Tampoe, M. 2000. Strategic Management: Process, Content and Implementation. Oxford: Oxford University Press. Marr, B. and Gray, D. 2012. Strategic Performance Management. USA: Routledge. McLoughlin, D. and Aaker, D. A. (2010). Strategic Market Management: Global Perspectives. Madrid: John Wiley & Sons. Read More