Value Chain Strategy for Ted Baker - Report Example

Report

Ted Baker Plc (Ted Baker) is a global lifestyle clothing company whose distribution channels are primarily retail, including e-commerce, wholesale, and licensing (territorial and product). Headquartered in The Ugly Brown Building, London, the company employs over 3200 employees worldwide and netted in a revenue of approximately £530 million in the 2016/2017 financial year (Ted Baker 2017). The company started as a men’s shirts specialist in Glasgow and is now one of the fastest-growing leading lifestyle brands in the United Kingdom. It has now expanded its collection to include a wide range of luxury clothing, including women wear, watches, fragrances, skin wear, footwear, and eye wear. For the company to remain relevant and competitive for all these years, there are strategies that it has implemented to bring about its competitive advantage. This report outlines the value chain of Ted Baker, giving an in-depth analysis of the primary activities of the value chain that give the company the highest competitive advantage.

The value chain is a systematic approach to examining the development of competitive advantage. It is comprised of value adding activities that are based on pricing strategy and cost strategy (Kumaar and Rajeev 2016, p. 75). It thus encompasses all the activities undertaken from the conception of the product to the time when it reaches the end user, ranging from producers, inputs, suppliers, operations, processors, retailers, and buyers. The profitability and sustainability of any company is dependent on how well it manages these activities within the value chain. The value chain analysis identifies the sources of the firm’s competitive advantage and how each activity individually influences the company’s competitive strategy (Ensign 2001, p. 22). However, the individual input is not viewed in isolation, rather, as collectively contributing to value addition.

One of the primary ways that Ted Baker acquires a competitive advantage is through differentiation. Differentiation includes distinguishing the product or service offered by the organization to create something that is perceived industry wide as being unique (Porter 1998, p. 37). Differentiation can take various forms including design and brand identification, technology, dealer networks, customer service, logistics, operations, marketing and sales, company’s infrastructure among other dimensions. Differentiation can give a company competitive advantage as it creates a defensible position that can cope with competitive forces and maintain long-term profitability.

Differentiation in Ted Baker is achieved through different activities. The first activity is implementing durable quality management processes. The company engages with suppliers earlier on in the development processes, giving it an opportunity to quickly identify high-risk fabrics and offer subsequent solutions to resolve the issues before they impact significantly on cost or delivery time scales (WRAP 2017, p. 1). Establishment of a standardized quality management process ensures that there is consistent quality across all suppliers in addition to helping Ted Baker build on its knowledge of core fabrics. This provides a framework for information sharing among the supply chain partners. An organization that adopts this approach experiences significant reductions in the supply chain costs, improved partner relationships, increased material flow, and faster delivery (Kocoglu et al. 2011, p. 1631). In this instance, this approach enables Ted Baker to deliver the best customer value by producing items made of durable fabric, while also incurring low costs on the production process. Implementing a quality management process eliminates the risk of information asymmetry among customers, consequently influencing the buying decisions (Hanf and Pieniadz 2007, p. 105). The resulting enhanced coordination and collaboration through information sharing mechanisms facilitates the achievement of competitive advantage.

In addition to quality, product differentiation in Ted Baker is achieved through production of unique products that satisfy individual customers’ needs and preferences. All Ted Baker’s products are produced in a way that rings out the personality of Ted Baker. According to the company’s founder, Ray Kelvin, Ted is an enigma who travels across the world, setting rather than following fashion a pioneering fashion icon (Balmford 2016). His travels around the world are said to be the influencing factors to his establishing himself as a shirting specialist. The company has built a typically British brand offering original but commercial fashion wear, high quality design and distinctive use of colour and patterns particularly appeals to the self-conscious consumers who are interested in consuming something that is out of the ordinary (Ted Walker n. d). Ted Baker is nonetheless a fictitious character, but Ray Kelvin has been said to be the nearest living person to the character (Ruddick 2013). The personification of Ted as a quirky, passionate, and rebellious fashion icon makes Ted Baker’s products unique with minimal viability of being imitated.

Customers are always willing to pay more for products that satisfy their individual size, style, taste, need, or expression (Dirisu, Iyiola and Ibidunni 2013, p. 263). Product differentiation thus becomes a source of competitive advantage for a company. A unique product also eliminates the threat of substitution. A company with a unique product makes it hard for competitors to find new and different ways of imitating the product or service (Srivastava, Franklin and Martinette 2013, p. 48). A product that is capable of being easily imitated weakens the competitive power of an organization.

The unique use of the human characteristics of Ted Baker has resulted in the creation of a brand personality and brand identification. A brand personality is perceived by customers as attractive if it helps the individual in expressing themselves and identifying with the brand (Kim, Han and Park 2001, p. 198). Therefore, the greater the self-expressive value and distinctiveness of the rand personality, the greater the attractiveness. When a company’s brand personality has an attractiveness to a large number of people, the more consumers it will have, thus increasing its client base. More outcome variables of more people identifying with the brand personality include brand loyalty and more word-of-mouth reports. Consumers use brands to construct their selves, present themselves to others, or achieve their identity goals (Sallam 2015, p. 44). This is in the context of the social identity theory, where identification with an organization happens even without any formal ties or interactions to it. The congruence between brand image and the customer’s self-image enhances customer satisfaction and preferences for that particular brand (Zhang 2015, p. 60). For example, Teddy Baker’s experiential and innovative retail store, Grooming Rooms, gives its customers a traditional Turkish barber experience, which may draw in customers who are inspired by the dapper and perfectly groomed image of Ted Baker (Gilliland 2017). In the case of Ted Baker, the brand image presented by the fictitious character Ted Baker is congruent with a particular segment of consumers from where the company builds its competitive advantage.

Another activity in the value chain is channel selection. Channel selection involves the choice of distribution channels that range from company-owned channels to specialty outlets to road-line outlets. Developing successful strategies in distribution in the current fierce competitive environment is a complex undertaking and whose effective implementation can help the organization address the market challenges while also exploiting the available opportunities (Mwanza and Ingari 2015, p. 1). This underscores the importance of critical thought into choosing the appropriate distribution channel. The choice of an optimal structure of distribution is determined by costs, client expectations, activities of competitors, market absorption, number of products in the market, strategy of product positioning, and segment of the market for the particular product (Urbanska 2010, p. 133). The highest influencing factor however, is choosing a distribution channel that will significantly increase sales and limit costs. The highest percentage of Ted Baker’s products are sold through retail. It has its own stores and concessions all across the world. It also has territorial and product licenses covering the Middle East, Asia, and Australasia (Ted Baker 2017). Wholesale customers, also known as Ted Baker trustees, undergo critical evaluation before they can join the team. This approach allows the company to closely monitor the distribution of its products, ensuring that all the values and beliefs it espouses are upheld to the very end. Most significantly, it protects the company’s brand.

Another activity is its incorporation of technology into its value chain. The internet has opened up numerous opportunities for businesses. It minimizes entry barriers and reduces costs used in marketing (Shin 2001, p. 165). Ted Baker has online stores where customers can click and collect items. Further, the company does not use the conventional methods of advertising and instead uses social media to promote its products (Mortimer 2015). Most specifically, the company has been using Instagram campaigns to appeal to more customers as it expand internationally.

The effective implementation of any differentiation strategy is dependent on resources and linkages. The former provides the necessary inputs required while linkages provide the necessary support for the strategies adopted (Sultan and Saurabh 2013, p. 44). Ted Baker engages in various activities that effectively enhance its competitive advantage. Most of these activities revolve around product differentiation and include producing high quality goods, involvement with manufacturers and supplier through the quality management processes, production of unique products that have a brand personality as well as implementing a distribution channel that protects the brand and using technology to market its products and connect with existing and potential customers.

Reflective Essay

Learning Development

This course was a new experience for me, involving informative and motivating aspects. It has imparted me with a wide range of knowledge and experiences concerning the industry. Most specifically, the Distribution strategy and Customer Experience industry speakers significantly changed my perspective in their respective fields. I was previously unaware of the significance the choice of an appropriate distribution structure can have on a company’s sales and costs, as well as the subsequent creation of a competitive advantage. I have learnt that that it is imperative for organizations to be flexible enough in order to adapt to the ever-evolving technological advances in a timely and efficient manner in order to stay relevant and profitable. My perspective on the impact of the digital landscape has exponentially widened. While I was aware, to some extent, of the impact of technology on how we carry out businesses and on the general business environment, I realize now that my knowledge on the same was sadly very minimal in respect of both distribution and customer experience. I feel greatly empowered me with the necessary skills of identifying new trends in the different industries and can thus help my organization to respond effectively in order to create or maintain its competitive advantage and profitability. Most significantly, in an environment that is increasingly becoming digitalized, I am convinced that an ability of identifying trends will be extremely critical.

Strengths and Weaknesses

I have various strengths, which have been greatly improved throughout this course. First, I have always been an analytical person, with the ability to collect and analyze information, problem-solving, creative thinking, decision-making, judgment making. Being engaged in real time organizational scenarios has helped me in improving my ability to investigate and identify a problem and find a solution in an efficient and timely manner, through practices such as detecting patterns, observation, brainstorming, interpretation of data, integration of new information, theorizing, choosing the most appropriate option. My communication skills have also greatly improved. I have gained more confidence through presentations of my analytical analysis as well as the numerous interactions I have had with people from different organizations and within the school environment. I have also improved greatly on my research skills. It is now easier for me to undertake industry research than it was before as I am now aware of the items, patterns, and trends that I ought to be looking out for. The course has also given me an insight into some of my shortcomings. Most of them revolve around communication, and in particular, not being an active listener. While I have improved on my ability to express myself, I am yet to learn how to carefully listen to others without interrupting or being extremely critical of them.

Strength

Weaknesses

• Analytical
• Problem-solving
• Creative thinking
• Self-expression
• Research

• Active listening: constant interrupting and being critical of other people’s perspectives.

Feedback

The feedback from other people is largely consistent with my analysis. Specifically, on the issue of being an active listener, I have severally been told that I find faults and weaknesses in other people’s perspectives and correcting people even when it is unnecessary. I sometimes become angry when a person continues to insist that their perspective, which appears to be wrong to me, is right. This may sometimes come off as arrogance, pride or intolerance to diversity.

Action Plan

My primary development need that I need to improve on is communication (active listening). I want to have the ability of listening and understanding what a person is saying, so that I can render the most helpful and effective assistance they had hoped from me. To this end, I intend to take an extra communications class in January 2018, running for three months. By doing this, I believe that I will have equipped myself with the necessary skills to create and maintain trustworthy relationships with my customers in the future. The skills I hope to acquire here is learning to understand non-verbal language, not interrupt speakers, using minimal encouragers, and reflecting statements with appropriate statements.