The Module to the Phillips-Van Heusen Corporation - Essay Example

The purpose of this paper is to apply the concepts learned in the module to the Phillips-Van Heusen (PVH) Corporation. Specifically this paper will address how the organization is a global firm as well addressing why this structure may benefit the PVH. Secondly, this paper will answer what value chain activities the company performs in-house, which are outsourced, and possible reasons why.

The issue of whether or not PVH can be considered a global company is best addressed by looking at the firm’s annual report, which indicates that the company sources supplies from over 1071 factories in 56 countries. Furthermore, PVH has its headquarters in Manhattan but has administrative offices in Milan, Trento, and Hong Kong as well as operating distribution facilities at locations across the U.S. (PVH Annual Reports, 2008).  In regards to the sourcing operations of the firm, according to the Corporate Social Responsibility report, PVH has implemented a ‘Global Human Rights and Social Responsibility Program’ which indicates that the standards for price, quality, and logistics are kept on par with the human rights consideration (PVH CSR, 2008). What this means is that the firm self-identifies as a global operator and all stakeholders are equally responsible for the firm’s code of conduct.

Why PVH is a global firm is important because of the implications it has for the firm's strategy. According to the 2008 financial reports more than 30% of the income derived before interest and tax comes from international sales which are up from 25% in 2007. It is the case that the retail sales of PVH are diverse across the company’s product line, including the Calvin Klein brand which has approximately 56% of its sales in international markets to Bass where about 1% of sales are in international markets (PVH,2008). Implicit in this is that different product lines have varying success and strategies in different markets.

The question of which value chain activities the company performs in-house and which are outsourced is evident from the firm’s financial reports. One specific example is the Calvin Klein brand; wherein the firm maintains a dedicated in-house marketing, advertising, and design division. These divisions are responsible for maintaining and controlling the global marketing strategy of the brand and controlling the product development for most of their product licensees. The reasoning behind this strategy is that the firm wants to exert a certain level of control over the entire brand to ensure product and image quality.