Unique Advantages of Mango - Coursework Example

Management Contents Contents 2 Advantages of Mango’s Business Model 4 Product 4 Quality 4 Design 5 Culture 5 Production 5 Logistics 6 HR Policies 7 Technology 7 Analysis of the Model 8 Strategic Analysis 8 Political 8 Economical 9 Social 9 Technological 10 Analysis based on the Fast Fashion Strategy 10 Analysis based on the Blue Ocean Strategy 12 Analysis based on Ansoff’s Matrix 13 Analysis based on Multi-Brand Strategy 14 References 16 Advantages of Mango’s Business Model Mango, a Spanish brand of fashion clothing, from the very initial days was focused towards the young audience. Their main product offerings were targeted mostly towards the young urban consumers, with high quality clothes at latest price, while providing the consumer with the latest fashion trends. There has been a couple of expertise that Mango, has developed over the years, in an effort to maintain, nurture the brand image of the clothing lines and expand the business across the various geographical boundaries. Mango has developed unique advantages in terms of product and related design processes, quality, production, logistics, and HR policies as well as in the implementation in the state of the art technology. Product Through the process of subcontracting their product designs and the related prototypes, the company itself maintains the entire process of designing the product to making the product available to the end consumers. The entire chain of production has been subcontracted to various markets across the globe like China, Morocco and even to the markets in Turkey. By the process of outsourcing their designs, the company has developed the unique advantage to promote four collections in the markets on an annual manner. Quality In an attempt to maintain the standard of quality for the products, which are manufactured by following an outsourcing model distributed throughout the globe, consistent quality checks are carried out at various points of the distribution channel, ranging from the factory premises to the store premises. This provides the advantage of supplying quality materials to the consumers. Design The brand Mango focuses on providing their clothing line to the end consumers under the most perfect in store conditions with the same level of convenience offered to consumers all over the world. Design is considered as a highly critical factor in case of the brand Mango, for luring in customers to the store. As a matter of fact, in order to maintain the same kind of store image, Mango maintains an entire team of window dressers, coordinators, and supervisors whose main job is to offer the similar kind of in store feeling to consumers all over the world by offering them with the same kind of in store design and related accessories. Culture Mango being an international company has a highly integrated product line, which is manufactured by outsourcing them to other companies. Though Mango follows the outsourcing model, yet the collections are made as prototypes at the company and then outsourced for mass manufacturing, while following a centralized hierarchy. But in order to make their production lines for their collections appeal to the customers all over the world, the collections are designed keeping in sync with the cultural tastes that are prevalent in various parts of the world like the countries in the Middle East. This provides the advantage of being able to cater to the diversified cultural tastes for Mango’s clothing line for the young target audience, prevalent in various parts of the globe that prefer to be attired in a different clothing line altogether, yet at a consumer friendly price. Production Mango follows an outsourcing model, as described earlier for the production of its clothing line. In every season, an entire range of new suppliers are detected to match the technical requirements as well as the surge in production. In an effort to maintain long term relationships with the suppliers, a system of collaboration is followed and maintained by the brand like indulging in constant dialogue and negotiations with the suppliers and working and aligning them for planning and analysis. This is all the more facilitated by the maintenance of an effective production control, monitoring and support program. This provides the company with a unique advantage for syncing the entire chain of suppliers with the information related to the seasonal planning and specification for the models as desired by Mango. Logistics The logistics systems of Mango are focused around 3 key variables – speed, sharing of information across the various centers, and finally the intensive use of technology. Though the company has 3 logistics centers located strategically around the globe, in order to provide smooth delivery of merchandises and clothing lines, to the stores of Mango located in various corners of the globe, the company follows a centralized logistics system which is controlled from the headquarters. Having a highly efficient logistics system provides the company with the advantage to effectively replenish stocks at a much shorter time period, while forecasting the demand for a particular point of sale in a more effective and appropriate manner. The company’s highly effective and efficient logistics systems provides the advantage of keeping a check on the inventory level, all over the globe, in a real time manner. The provides the company with an advantage of monitoring and controlling their supply chain in a more effective manner, thereby taking appropriate measures for over production or stock outs. HR Policies The human resource of an organization is one of the most critical components for the successful running and execution of performance of any business organization. Mango has the advantage of maintaining and associating with a pool of highly motivated, flexible and professional workers who have a open approach and low resistance to change. Though highly effective HR policies, internal promotional hierarchies and pay structures, the company derives the advantage of maintaining a lively and happy workforce, who believes in giving their best efforts for the development and growth of the business of the company. Technology The company is highly indebted to the progress of communications based technology, as it has provided the company with the power to maintain a centralized structure for its large scale operations, which revolves around various parts and corners of the globe. The integration of the technology with the company provides the advantages of controlling and effectively integrating the entire range of complex processes ranging from designing, manufacturing and supplying of the products in an automated manner. The integration of the company’s processes with the latest in technology has provided the benefit of aligning the changes that are needed to be implemented at the store level, by accessing information on a real time basis directly from the stores. This empowers the company to provide faster delivery of the merchandises, thereby reducing the delivery time required. The company’s high integration with technology has provided the advantage of opening and maintenance of their online store, which has also boosted the demand for their products on a global note mainly from countries like UK and Germany. Analysis of the Model The model followed by Mango, has been developed over the years, right from the early days of its inception. Though the company follows the model of outsourcing of its manufacturing process to various corners of the world, in an effort to reduce incurring of costs related to manufacturing, it has also maintained and retained the centralized structure of decision making in relations to the various processes involved. Also, in an effort to manage the outsourcing of the manufacturing process, the company has built a reliable and strong network of suppliers and manufacturers on a long term note, who are integrated in line with the company’s requirements and maintained through efficient sharing of information and knowledge about the processes of the company. Also, the company has developed a high level expertise in terms of running the global operations of logistics, productions, product, store design through smooth integration and alignment of modern communications technology. This makes the entire model of the business model, easy to understand from the outside, while involving highly complex handling of business operations inside. A more detailed strategic analysis is given below: Strategic Analysis The detailed strategic analysis for Mango can be done effectively through the PEST model. The PEST model increasingly considers the various aspects like political, economical, social, technological which may affect the business in the short as well as the long term (Morden, 2007, p.94). Political Mango follows a centralized operations model, while outsourcing the operations of manufacturing to various countries. The suppliers and manufacturers existing in various countries, manufactures the merchandises in sync with the company’s requirements for demand for various stores around the globe. Since Mango is a global brand, it is vulnerable to various political factors that may influence its business operations in a particular country or continent. Handling and managing the global operations requires expertise in dealing with the macro and micro factors in the political environments that exist in different locations around the globe (Dwyer & Hopwood, 2010, p. 452). Economical The economical factors of PEST analysis involve the various critical factors like the performance of the economy of that particular region as a whole, the interest rates, the consumer behaviour, factors related to the import and export duty etc (Gupta, Gollakota & Srinivasan, 2005, p.144). The factor of outsourcing of the manufacturing processes is also interrelated and dependent on the economies of various countries like China, Vietnam, Morocco, India etc. The macro and micro economic factors like the performance of the economies of these countries as well as the demand factors, interest rates, and the import and export taxes as well as the excise and customs duty can affect the business operations of the company Social The company’s business operations are dependent on the social factors as well. The company’s highest attention to social factors can be noticed by highlighting the company’s attention to take into account the cultural tastes that differs in consumers in countries like the Middle East. Also, the company in an effort to nurture the long term relations with the suppliers and manufacturers and to ensure the smooth execution of the outsourced manufacturing processes maintain the policy of engaging in continuous interaction with the collaborators. The company also maintains a young workforce within the company, which helps it to promote the culture of being highly motivated and professional while showing zero resistance to new changes. Technological The technological aspects in the PEST framework for business takes into account the various steps and measures taken by the business in order to align its business processes with the latest technology. It also highlights how implementing the latest technology has helped the business to grow over the years. In this case, the company is highly dependent on technology as it is increasingly focusing its effort to maintain the highly centralized decision making process for controlling each and every Mango store located around the globe. The company, through the process of getting data on a real time basis, gets to manage the logistics in a more efficient way, thereby making faster delivery of merchandise to its stores and eliminating the process of stock outs or oversupply of merchandises through efficient demand forecasting. Future strategy of Mango Analysis based on the Fast Fashion Strategy One of the significant strategies that Mango could take in regards to making an entry into new fashion segments is taking resort to the strategy of fast-fashioning. Fast-fashion is observed to be a technique where limited edition products are created by the company in regards to each product segment. Through the help of fast-fashion strategies fashion retailers operating in the international scale can work in the segment of new fashion trends and thereby can offer to the consumer new product designs and styles. Working on the segment of fast-fashion the fashion companies thereby require their supply chain networks to work in pulling the demand from the market rather than continually pushing same design products to the market on a continuous basis (Barnes and Greenwood, 2006, p.259-268). The supply chain systems of the fashion companies are thus required to incorporate technological and process innovations both in regards to production functions and also in regards to the development of the logistics systems to help in the reduction of time required for the products to reach to the stores from the manufacturing and distribution centres. This reduction in the lead time pertaining to the reaching of products to the transaction points would help in rightly presenting the right merchandise at the right time and thereby in effectively meeting changes in consumer demand. Further the focus on the continuous flow of products to the stores based in new designs and styles would help in enhancing the demand pattern of the consumers and thereby aiming to liquidate the products in a much lesser time span. This rise in consumer demand aimed through the introduction of new styles and designs would thereby help in the enhancing of the number of stock turns. Level of stock turn implies that the shelves would not be filled by the same type of products for a longer period thereby helping the company in rightly reducing the locking up of working capital in regards to the procurement of the products from different supplier bases. Further the company in its endeavour to tap newer market and product segments needs to enhance on its point of sale systems (Doyle, Moore and Morgan, 2006, p. 272-275). The point of sales systems of the company needs to be increased from only 220 to help gain an enhanced linkage to the supply chain base of the company. The supply chain networks of the company need to work on the information gained on the basis of point of sales systems that help in gaining information based in changes in consumer demands in regards to separate consumer databases. Such enhanced information gained through the scanning of bar codes in regards to the products purchased by the consumers shared with the supply chain networks helps the manufacturing units to produce the needed styles and designs required in the market. Such production of merchandises in regards to market demand help the company in enhancing its market share and market capitalisation paradigms (Barker and Finnie, 2010, p.1; Christopher, n.d., p.1-4).This strategy also helps the company in rightly working to enhance its goodwill and brand image in regards to other competitors operating in the same fashion segment. However the management body of Mango in regards to the market, branding and sales division along with their designing and manufacturing counterparts are required to conduct visits to fashion and trade shows reflecting new fashion trends in the light of different seasons. Styles picked up by the team would help in the incorporation of innovation rendered to the styles and designs in the existing product portfolio and despatched to the stores as limited editions. Henceforth ‘fast fashion’ as a strategy would help the company gain an enhanced space in the fashion retail industry in the international market through organising retail inventory based on forces driven by market demand. Analysis based on the Blue Ocean Strategy In addition to working on fast fashion as an effective strategy to focus on the production of limited editions based on new designs incorporated in the garments, Mango further enhanced its focus to work on a ‘blue ocean strategy’ to create new markets by formulating newer brands and logos. Mango is found to work on the creation of a new style focused on the urban and trendy male consumer segments. The company in that formulated a new brand called ‘HE’ and embossed on it a new logo of Unicorn. This strategy thus helped the company gain an entry into a new consumer market focusing on urban casual consumers. The strategy of Blue Ocean gets coined with the activity of Mango for the focus of the company to create a new style and logo helped the unit to create a new fashion statement thus countering less or no competition. Henceforth such strategic activity taken by the company rendered in ‘HE’ gaining an effective foray into leading markets where Mango has created its stores. Thus the activity of Mango in carving out new styles and logos focused on a totally different consumer segment composed of urban-casual male population helped in making the company create a differentiated image in the existing fashion markets (Kim and Mauborgne, 2005, p.60). Analysis based on Ansoff’s Matrix The above activity of Mango in developing a new fashion segment based on creation of a new style and logo aimed at attracting the urban-casual male consumers can also be analysed based on Ansoff’s Matrix. In here the company to enhance its market share in the existing market works on new product development activities (Stone, 2001, p.50-51). The same can also be reflected through the following diagram as follows. Figure 1 (Stone, 2001, p.51) Analysis based on Multi-Brand Strategy The third strategy that is incorporated by Mango to gain an enhanced space in the consumer markets through the introduction of new designs and concepts rendered in the fashion merchandises is the foray to create stores based on multi-brand concepts. The use of the multi-brand concept is rendered by Mango to help the consumers gain access to a large number of fashion options in regards to both male and female segments. Moreover the introduction of new private labels by Mango such as ‘HE’ can be largely liquidated in the multi-brand outlets together with other merchandises created by designer houses. Multi-branding as a concept used in the formation of stores by Mango engages the consumers to effectively opt among a plethora of options all reflected under one roof. This strategy thus aims to rekindle the purchasing desire of the consumer base and thereby helping in the enhancement of the basket size of the consumers. With increase in the basket size the rate of conversion in regards to the different stores is also held to increase which in turn enhances the sales and market revenue of the company. Further the use of multi-branding strategy in regards to retail companies also helps to study the consumer behaviour and desires pertaining to different styles and designs incorporated in regards to new fashion styles rendered in the merchandises. Thereby multi-branding strategy helps the enhancement of decision making ability of the merchandiser and the retailer as to which style would run effectively in which target market and thereby conducting manufacturing and supply chain functions accordingly. Again in regards to different markets and different consumer segments the level of competition can be effectively studied in relation to the presentation of different styles, designs and brands created by the company in the different stores. Strategies like inter-store transfers can be carried out effectively by the retailer to help in liquidating merchandises pertaining to a particular style or fashion design that may fail to liquidate in regards to a particular region (Lao, 1998, p.219). References Barker, J., and Finnie, G., 2010. The next generation demand network in quick response systems: Intelligent products, packet switching and dynamic information. School of Information Technology [Pdf]. Available at: [Accessed May 9, 2012]. Barnes, L., and Greenwood, G., 2006. Fast Fashioning the Supply Chain: Shaping the Research Agenda. Journal of Fashion Marketing and Management, 10 (3), pp.259-271. Christopher, M., No date. The Agile Supply Chain: Competing in Volatile Markets [Pdf]. Available at: http://www.sclgme.org/shopcart/documents/agile_supply_chain.pdf [Accessed May 9, 2012]. Doyle, S., Moore, C., and Morgan, L., 2006. Supplier Management in fast moving fashion retailing. Journal of Fashion Marketing and Management, 10 (3), pp.272-281. Dwyer, J. and Hopwood, N., 2010. Management Strategies & Skills. Australia: McGraw – Hill Pty. Ltd. Gupta, V. Gollakota, K. and Srinivasan, R., 2005. Business Policy and Strategic Management: Concepts and Applications. New Delhi: Prentice Hall of India Pvt. Ltd. Kim, W.C., and Mauborgne, R., 2005. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. United States of America: Harvard Business Press. Lao, F., 1998. Marketing Management. Philippines: Rex Bookstore, Inc. Morden, T., 2007. Principles of Strategic Management. Third Edition.USA: Ashgate Publishing Company. Stone, P., 2001. Make Marketing Work for You: Boost Your Profits with Proven Marketing Techniques. United Kingdom: How to Books Ltd. Read More