Managing Organization of Chanel SA - Literature review Example

Among the most popular companies creating luxury brands, the prominent role of Chanel Company is evident. Because of this, the presented paper concentrates on the role of Chanel fashion brand in a business view. In particular, it overviews the key events and features of over the century history of company, when it was created by designer Coco Chanel and has steadily developed into the global entity. Then, it presents contemporary state of this business in terms of brand elements, sales, distribution, and technology of product creation. Finally, the impact of Chanel on global luxury fashion market reveals that it is among the leaders in its business segment. To start with, the history of Chanel Company is closely linked to the personality of beautiful Coco Chanel. In general, her role in the development of fashion industry in general and company’s future in particular is so crucial that most scholars on Chanel even neglect the analysis of her company in contrast to describing her outstanding personality (Nagasawa, 2011, p. 47). With her appearance on business stage, Coco aimed to overthrow dominance of extravagance by personality in fashion. Precisely, this intension corresponded with social transformations of First World War. Thus, her vision gained development, and talent of “mixing with the right crowd” and marketing awareness helped her to establish the entire company, while most of her competitors failed in these attempts (Tungate, 2008, p. 13-14). From the very beginning of designing cloths, Coco Chanel wanted to create something beautiful, functional, and comfortable at once (Nagasawa, 2010, p. 30). These days, this appeal is still up-to-date for company with the maintenance of creative base in France, which is currently headed by talented designer Karl Lagerfeld. In contemporary times, the word “Chanel” already has different connotations: The “Chanel” brand, “Chanel” products, Chanel S.A. (unlisted in French), Chanel Group (global), Chanel K.K. (subsidiary in Japan), Coco Chanel (founding designer), and even the name of current chief designer Karl Lagerfeld (Nagawasa, 2011, p. 48). By turning global, Chanel revealed its strength as diversified and successful luxury company. In three words, these products are “innovative, functional, and beautiful at the same time” (Nagasawa, 2010, p. 28). On the importance of company’s origin, even the corporate logo represents the name of Coco Chanel by combining double C in it. In Fayer’s (2014) opinion, this simplicity, tackling a tradition and chic helps the company to be “one of the most recognized and respected in the world.” Moreover, the role of woman is still crucial for Chanel, since both current and previous Global CEO and President are women; as Nagasawa (2011) assumes, “This may indicate … Chanel places more emphasis on women who are the main target customers. It could also be because the Werttheimer brothers, who prefer to remain reclusive, are making a conscious effort to promote women to responsible positions” (p. 52-53). In both cases, it is noticeable how deeply Chanel incorporates its tradition, meaning preserving and developing the key achievements of its founder, Coco. Correspondingly, Tungate (2008) noticed the close link between ideas of the founder and Chanel contemporary product line, “urging us to own a little piece of legend” (p. 27). The importance of this appeal evoked company to launch INSIDE CHANEL project on its corporate website in order to make consumers aware of brand chorology (Fayer, 2014). In short, the analysis of origin and history of Chanel shows the element of tradition, or “rich history” (Fayer, 2014), as the key advantage the company managed to save until now. In the presented research on Chanel brand, all of these elements require specific attention. Firstly, the company constantly seeks for innovation. In this context, Nagasawa (2010) claims, “Chanel, a luxury goods brand with a long tradition, has evolved into what it is now by consistently adding new innovations to its tradition” (p. 26). In other words, the selected by Chanel strategy refers to the innovative type of business, which is not common for the brand with such long and widely popular history. Secondly, Chanel Company cares of product’s functionality. For instance, Nagasawa (2010) pays attention to the white ceramic line on Chanel watch, which steadily equals body temperature and helps its owner to forget of wearing a watch (p. 30). Finally, beauty is in essential element of all Chanel goods, meaning principle features of Chanel brand as leather “chain belt bags” and element connected with “No.5” popular title (Nagasawa, 2010, p. 27). In short, Chanel aims to combine these three components in one by caring of brand luxury reputation. For instance, it uses materials of high quality, “high-tech ceramic used in airplanes and spacecraft, which overcomes the fragility of fine ceramic” (Nagasawa, 2010, p. 28). In addition, the brand is always attentive to the details the competitors on market mostly miss, like caring of women’s fingernails while deploying clasp (Nagasawa, 2010, p. 32). Therefore, Chanel brand is a complex creation of this contemporary global company. In context of corporate sales, Chanel does not tends to show its financial situation to others. Since Chanel is unlisted and private, it has rights not publicize any details on its sale figures (Nagasawa, 2010, p. 34). However, there are certain facts impossible to hide. On internal organization, there is a part of corporate strategy to move all the managerial functions, meaning “merchandising, marketing, advertising, public relations, store design, sales, finance, legal and human resources” to New York headquarters, or Chanel, Inc. (Nagasawa, 2011, p. 51). Due to this, Chanel allows French division to concentrate on creation, which indirectly leads to success in sales. In this context, the above-mentioned reliance on in-house standards finds its reflection. On the success of corporate sales, there is an opinion that Chanel is among the rare brands in contemporary market that makes each product profitable, with no use of extensive production (Nagasawa, 2010, p. 33). In approximate numbers, Chanel owns billions of dollars only in cosmetics segment (Nagasawa, 2011, p. 53). Based on the recent information from Forbes, corporate sales are already over five billion dollars (Forbes, 2015). Among the key markets for Chanel, Nagasawa (2010) acknowledges Japan as frequent destination of sales in contrast to crisis on overall global market of luxury goods (p. 27). At the beginning of this century, President Collasse said that achieving almost 10 billion U.S. dollars is common reality for Chanel K.K. (situated in Japan) (Nagasawa, 2011, p. 53). Thus, sales figures make it possible to assume that Chanel has an attentive approach over choosing customer base. In addition, the distribution of Chanel products depends on internal diversification of business. Due to Nagasawa’s (2011) classification, the company has three directions of development: fashion (Luxury ladies wear, handbags, shoes and accessories), fragrance/cosmetics, and watches/jewelry. Based on this, company builds its business of global distribution. In fact, it is possible to purchase from Chanel website some types of cosmetics in certain regions. Furthermore, Chanel distributes watches as independent outlets, which are available from official retailers. Unlike these two categories, it is possible to purchase jewelry through Chanel retail store only (Nagasawa, 2011, p. 54). Thus, it is reasonable to state that it is not mostly common for the company to let their clients communicate with non-corporate representatives. As Nagasawa (2011) noticed, “As for distribution, although it is not easy with the advent of the Internet, necessary measures are taken to prevent the sales through auction sites and circulation of counterfeit items as much as possible” (p. 55). Thus, it is evident Chanel’s corporate philosophy of precise attention and control over each detail finds its place in the way the company distributes its products. On the technology of creating products, it is important for Chanel to use in-house manufacturing as the method “to cultivate profound knowledge and know-how on products, and to carry out planned manufacturing” (Nagasawa, 210, p. 31). In this context, it is evident how business strategy of single woman still finds its implementation in global company, even though it has to deal with planning, contemporary challenges, and organizational risks. In the case of “J12” watch, cultivation of craftsmanship and workshops serves as traditional element in organizing business, while global market of sales and using Internet capability reflects attention to contemporary times (Nagasawa, 2010). Moreover, the devotion of employees to Chanel business is crucial for contemporary managing success, as only sustainable corporate philosophy enables such a stable development of company (Nagasawa, 2010, p. 33-34). The global impact of Chanel is evident in the position #86 with $6.8 billion value in Forbes list of the most powerful brands, which is mostly filled by popular culture products (Forbes, 2015). In the opinion of Nagasawa (2010), the global importance of Chanel brand hides in the fact that it has an “insistence on turning creativity into commercial products and its technological prowess” (p. 32). In 2008, the company announced its vision in statement, “The Ultimate House of Luxury, defining style and creating desire, now and forever.” While analyzing this sentence in detail, Nagasawa (2011) stresses on the intention of timelessness, preservation of style in changing fashion environment, desire to remain a high-quality luxury brand, and opposition to mass production in the essence of corporate philosophy (p. 56-57). In this context, it has already become evident to the wide public that only the company that seeks for creativity and innovativeness has chances to turn into major player on global market. In the segment of luxury products, the importance of Chanel is hard to overestimate. Even though it not always is the first in implementing its products, the analyzed company manages to make it so good that it still enlarges its client base. In order to sum up, it is evident that company’s history is closely linked to the outstanding personality of Coco Chanel. In particular, the innovative ideas from this woman that combine both beauty and functionality helped her company to get contemporary global respect and popularity. In fact, Chanel Company leaders managed to create mostly private and narrow-oriented business, which is not afraid to experiment but makes it in the best. For instance, introduction of watches and jewelry it supplements by attentive choice of target market and strict control over each detail in both creating and distributing the product. As a result, the company has impressive gains in sales and obtained prominent and respectful place in contrast to its main competitors as unique, beautiful, luxury, functional, and high-quality brand. References: Fayer, Amanda (2014). How Chanel Wins Social with Stylish Content Marketing and Storytelling. NewsCred Blog, August 26. Retrieved from: http://blog.newscred.com/article/how-chanel-wins-social-with-stylish-content-marketing-storytelling/9088fabb3d47f256dc8879bf6cbc106f [Accessed 22 May 2015]. Forbes (2015). The World’s Most Valuable Brands: 2015 Ranking. Forbes. Retrieved from: http://www.forbes.com/powerful-brands/ [Accessed 23 May 2015]. Nagasawa, Shin’ya (2010). Chanel’s Devotion and Product Development as a Luzury Brand. Taking R&D and product development of its watch. 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