Factors that Underpins the Success of Laura in its Chosen Markets - Essay Example

Laura Table of Contents I. Factors that Underpins the Success of Laura in its chosen Markets ............................................................................... 3 II. Laura Production & Distribution System ........................................... 4 a. Strength and Weaknesses of Laura’s Production System . 4 a.1 Recommended Improvements on Laura’s Production System ...................................................... 4 b. Strength and Weaknesses of Laura’s Distribution System 5 b.1 Recommended Improvements on Laura’s Distribution System ..................................................... 5 III. Market Potential for Introducing Laura Products in U.S. and China ................................................................................................ 6 a. Strength and Weaknesses of Laura ...................................... 6 a.1 Analytical Framework to Assess Potential Sales within the First 3 years in U.S. ...................................... 7 a.2 Analytical Framework to Assess Potential Sales within the First 3 years in China .................................... 7 b. Operational Requirements ...................................................... 8 c. Project Plan ............................................................................ 10 Figure I – SWOT Analysis for Laura in U.S. and China ...............................12 References .................................................................................................. 13 Factors that Underpins the Success of Laura in its chosen Markets The ability of Laura to determine the trend of in-fashion clothing and its immediate response to the customers’ needs and wants contribute a lot to the company’s success in selling ladies garments. The company is able to forecast the real-time fashion trend by investing more on technology and a reliable design team who are responsible in monitoring the fashion trend that comes out of fashion magazines, fashion shows, the type of clothing that fashionable women wear when going to fashion cafes’ restaurants and bars. As part of monitoring the fashion trend, its store managers are active in determining the customers’ preferred designs by monitoring its daily sales. Fast moving items are being recorded in the store managers’ hand-held computer in order to relay the message to the head office and its central design team. When it comes to production, Laura chose to print roughly 40% of its own fabric and produces 80% of its finished products. This production strategy allows Laura to be more flexible in responding to the sudden changes in fashion trend. Having an efficient logistics and Laura’s commitment to produce unique and fashionable clothing preferred by its target consumers throughout UK and Europe within a short span of 15 days makes the company able to keep up with the fast changing fashion trends. By continuously expanding its market distribution via increasing the number of its store outlets, telephone / mail order operation, and investing on online catalogue and ordering system including its practice of changing the store clothing designs every 4 weeks makes the annual sales increase over the years as the company maintain a very low operational and production costs. Laura Production & Distribution System Strength and Weaknesses of Laura’s Production System The strength of Laura’s production system includes its ability to determine the trend of in-fashion clothing and its immediate response to the customers’ needs and wants by investing on a low cost in-house garment production that is responsible in printing its own fabrics, cutting, and sewing of garments just-in-time for delivery. The benefit of such production strategy is that it allows Laura to immediately respond to the customers’ constantly changing preferred fashion style within a short span of 15 days. The problem with this type of production strategy is the fact that its competitors are saving more money from outsourcing the production of garments in third world countries by bulk. In line with a much lower cost of production, Laura’s competitors are able to sell their product line at a much lower price. For this reason, Laura is not able to penetrate the lower end of the markets that are not able to afford the higher price of Laura’s merchandises. Recommended Improvements on Laura’s Production System Considering that Laura is planning to expand its business to China and the United States, it would be best to relocate its production firm to China. To improve and maintain a low-cost production system for Laura, it would be best to shift the company’s production offshore in order to provide Laura a higher production savings due to a cheaper cost of labour. This will make the price of Laura’s product line more affordable and competitive. Developing other useful strategy such as out sourcing of custom-made fabric designs or offering a home-based job to qualified fabric designers and sewers could also keep the operational costs of Laura low. Strength and Weaknesses of Laura’s Distribution System The strength of Laura’s distribution system is its efficient logistics throughout its store outlets all over UK and Europe. Having invested on computer technology allows the company to trace on inventory stocks in real-time basis. Increasing the number of Laura’s store outlets, the use of telephone / mail order operation, and investing on online catalogue and ordering system contributes a lot to the efficiency of its market distribution. By continuously expanding its store outlets, the company is able to make its merchandises accessible to the prospective target buyers. The weakness of using mail order operation and online catalogue and ordering system is the high costs of private delivery. The company still have to employ additional manpower to handle the private delivery system. Recommended Improvements on Laura’s Distribution System Considering that Laura has been fully expanding its store outlets in the past three years, it would be best to slow down on its expansion in order to encourage interested consumers to visit one of the established stores throughout UK and Europe. Over expansion may hinder having economies of scale in each newly opened Laura’s store outlet. Since there is a limited market for Laura due to its high cost of clothing as compared to its competitors, over expansion of its local stores in UK and Europe may not be the best solution to increase its sales. Market Potential for Introducing Laura Products in either U.S. or China Strength and Weaknesses of Laura Over the years, Laura has successfully established its brand name throughout UK and Europe in terms of being able to sell fashionable clothing for women. Considering that the company has a unique ability to quickly convert the needs and wants of its customers into finish products as well as having the expertise, skills and knowledge to expand its business offshore, there is a higher chance that Laura would be successful upon introducing its products and services to potential target market in U.S. and China The weakness of the company includes the fact that the company is new to the U.S. and China market. For this reason, there is a higher possibility that the target consumers in U.S. and China are not aware of Laura’s fashion designs. Due to cultural differences between the company and its target market, the fashion trend in U.S. and China may not be the same as the fashion trend in UK and Europe. (See Figure I – SWOT Analysis for Laura in U.S. and China on page 12) Analytical Framework to Assess Potential Sales within the First 3 years in U.S. Considering that the estimated female population in the U.S. by 2010 is 157,120,608 (U.S. Census Bureau, 2007), the market opportunity for Laura in U.S. is considered as high. In case Laura would decide to outsource the printing of fabrics and sewing of clothing or offer work at home option to qualified fabric designers and sewers could keep the operational costs of Laura low. Among the threats upon Laura’s plan to expand its market to U.S. includes the long line of successful designers in the country; the low-cost of outsourced products among the successful brands in the U.S.; including the chances that the U.S. market may not respond effectively to the Laura’s fashion designs. Since the company has already implemented the use of an On-line catalog and ordering system, the company should immediately promote the online catalog in order to maximize the investment on IT technology. Based on geographical boundaries, Laura could start establishing a limited store outlet in the United States in order to increase the target consumers’ attention. As soon as the company is able to determine its success in terms of increasing the demand for its merchandises, the company could start expanding its retail store outlets in the country. Analytical Framework to Assess Potential Sales within the First 3 years in China Considering that the estimated female population of the Chinese females between the ages of 15 – 64 is roughly 460,596,384 (Index Mundi, 2007), the market opportunity for Laura in China is much higher than in the U.S. market. Similar to the case of penetrating the U.S. market, the company will save a lot of production cost in case the company decides to outsource the printing of fabrics and sewing of clothing or offer work at home option to qualified fabric designers and sewers. Among the threats upon Laura’s plan to expand its market to China includes several successful designers in the country; the low cost of garments in China; the cultural differences which affects the fashion style of Chinese individuals; as well as the chances that the Chinese market may not respond effectively to the Laura’s fashion design. Considering that the Chinese market is very huge, it would be best to sell Laura garments during the first year by establishing Laura store outlets only. Starting on its third year, depending on the success of Laura’s sales performance, it is recommended that the company starts to combine of mail order and establishing Laura shops. This strategy will enable Laura to save some fixed operational costs associated with establishing too many Laura store outlets in the country. By combining both market distribution channels, the company will be able to maximize the cost of investment on warehouses and logistics. Operational Requirements Since not all U.S. citizens would patronize Laura’s merchandises, it is best to assume that a conservative estimate of 3% of the U.S. population would buy at least one Laura merchandise at a minimum price of £45 each. The expected total sales in U.S. would be £ 212,112,820.80 (157,120,608 x 3% x £45) wherein 3% of the population totals to 4,713,618.24. Considering the same assumption used in the computation of the U.S. market, the expected total sales in the Chinese population would be £ 621,805,118.40 (460,596,384 x 3% x £45) wherein 3% of the population totals to 13,817,891.52. Considering the high value of Laura’s merchandises, its store outlets need to be located in the urban malls wherein expensive items are being sold. In order to maximize the investment in each store outlets, Laura should consider the establishment of its outlet in different geographic locations with potential buyers. The type of garments to be sold in U.S. and China would depend on the fashion trend accepted in each country. Since there is a possibility that the fashion trend in U.S. may differ in China’s fashion trend, Laura’s design team should conduct a careful monitoring on the fashion trend in each country. Store managers should also monitor how often other companies change their garments. For instance, stores in China change their display once every 4 months; it would not be wise to change Laura’s garments once every 4 weeks since the average display of garments in other stores takes a longer time to change. Allowing Laura’s garments on display for at least 2 months would be more economical since it allows potential consumers to have a closer look on its merchandises before the company declares that the item is not saleable. To source the garments, the company should invest on a big warehouse with proper logistics in U.S. and China where its merchandises would be delivered in each of the established stores each country. Proper logistics would make a more efficient transferring of Laura’s merchandises to each store that runs out of stock. With regards to Laura’s existing IT system, changes related to the U.S. and China’s new store outlets and warehouses should be added. This will allow the central office to have a close monitoring on the product distribution in each prospective country. Project Plan The time scale in the project plan chart is represented by 0.1 for each month. Starting from the management activity listed below, the company should first monitor the fashion trend in U.S. and/or China. Regularly monitoring the fashion trend will enable the company to determine the materials needed in serving the fashion needs of its target purchasers. The second best thing that the company should change is its IT program on logistics and its Online Catalog and order system. Since the system is already available, a minor adjustment will enable its target market in U.S. and China to use the same IT system. Similar to Online Catalog, the company can also implement its mail order operation. The company should also establish its local in-house garment production particularly the search for a local potential designers and offering home-based jobs to qualified fabric dyer, cutter, and sewers. The market study should be conducted full-blast during the first eight months whereby the search for potential customers, geographic location for store outlets, and gathering estimated costs for establishing the stores are considered. The number of store outlets that will be opened during the first year will be based on the sales potential coming from the online catalog and mail orders. The construction of the store outlets are expected to be finished on the first year of implementing the project plan. By the time the store opens, the company should be able to hire competitive store managers to handle the needs of the needs of the customers. A regular monitoring of its sales performance is necessary to give Laura an immediate feedback on how to convince the buyers to purchase its merchandises. Store expansion will be solely based on the existing store performance aside from other marketing issues that may arise within the chosen geographic store location. The company’s promotion in magazines will be conducted for the purpose of implementing a once a year sale in order to sell the unsold items during the whole year. *** End *** Figure I – SWOT Analysis for Laura in U.S. and China Strengths Weaknesses Opportunities Threats Successfully established its brand name throughout UK and Europe in terms of being able to sell fashionable clothing for women. The company is new in U.S. and China market. The projected female population in U.S. is 157,120,608 by July 2010. (U.S. Census Bureau, 2007) Whereas Chinese females between the age of 15 – 64 is roughly 460,596,384. (Index Mundi, 2007) There are a lot of highly competitive designers in U.S. and China. Has a unique ability to quickly convert the needs and wants of its customers into finish products. The U.S. and China target consumers are not much aware of the Laura’s fashion designs. Out sourcing of printed fabrics and sewing of products or work at home option could keep the operational costs of Laura low. Considering that most branded clothing in U.S. are made in China, their cost of production are lower than Laura’s. Have the expertise, skills and knowledge to expand its business offshore. Fashion trend in U.S. and China may not be the same as the fashion trend in UK and Europe. U.S. and Chinese market may not respond effectively to Laura’s merchandises. References: Index Mundi. (2007, May 15). Retrieved October 6, 2007, from China Demographics Profile 2007: http://www.indexmundi.com/china/demographics_profile.html U.S. Census Bureau. (2007, May 31). Retrieved October 6, 2007, from Interim Projections of the Female Population for the United States and States: April 1, 2000 to July 1, 2030: http://www.census.gov/population/projections/SummaryTabA3.pdf Read More