Analytical Report – ‘Strategies of Cotton On Group’

Published: 2021-07-07 00:17:26
essay essay

Category: Human Resource Man

Type of paper: Essay

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Hey! We can write a custom essay for you.

All possible types of assignments. Written by academics

GET MY ESSAY
Executive summaryFashion is one of the world’s most creative industries, which is developed to make a research on consumption and behaviours of consumers in an economic way. In social perspective, fashion has long been treated as a signal upon social change. Cultural thinkers have regarded fashion as representative characteristics of modernity, and even of culture itself. Everyone wears clothing and inevitably influenced by environmental changes and becomes a symbol of era.The paper firstly introduces the strategic timeline and geographical scope of Cotton On Group, mainly about multi-brand development, and geographical expansion projects including in-store learning platform and Cotton On Foundation. Then the paper talks about the evolution on brands and markets in terms of acquisition planning. The second part firstly analyzes the environment containing political, economic, social, technological, legal and ecological sectors under the support of PESTEL tool, which can help company to recognize all environmental factors having impacts on decision-making. Then TOWNS tool outlines the external opportunities and threats, internal strengths and weakness and combine four kinds of strategies to maximum the advantages of opportunities and minimum the disadvantages of threats.After that, an industry analysis about all related counterparties in the market seems important to find out where we have power to bargain and where we have to sacrifice. Eventually, having a clear map on current brands gives guidance on where the capitals should go and what the company expects in the future. Lastly, the paper makes a conclusion on future business strategies in terms of company, business and marketing level. Coping with fierce competition on human resources and information technology, company should focus on career development in case the outflow of talents and innovate in a sustainable and digital way in terms of utility of big data. Operating under the era of on-going development, it is necessary to abandon the outdated marketing methods. Thus, Guerrilla marketing plans deserve continuous investment. Buzz marketing is a common way to guide customer to response on our products and feel a memorized trip to understand what products Cotton On has and what kind of services we can give.1.0 IntroductionThis report analyses complex Fashion Business environment, Market situation, competitive position of Cotton On and recommend Strategies for the future growth. The report aims to analyse the positioning of Cotton On Group in the fast-fashion industry using analyzing tools like PESTLE environment analysis, TOWS analysis, Porter Five Forces industry analysis and BCG portfolio analysis. In the process, it is clear to recognize the external opportunities and threats, combining with internal strengths and weakness, which is available for Cotton On to launch new business strategies and marketing plan to expand cross-border transactions. In analyzing five Forces and portfolio of prodcuts, company can discover the growth opportunity to allocate the capital investment. Only right decision can guide company to acquire extra profits in the fair competitive market.1.1 Strategic TimelineCotton On Group was founded in the late eighties, while as acid wash and lycra stepping into the fashion business market. Paired with first failure in Beckley Market in Geelong, founder Nigel had an epiphany and dropped the price. It was the start of something big. After Nigel’s cousins joined the clothing venture, it gradually became a family affair. Along with geographical expansion, Cotton On never stop the footprint of discovering new and exciting opportunities. Due to strong customer demand, company established Cotton On Kids in 2004, offering aspirational, high-quality, must-have clothing at affordable prices. Things are changing with the increasing demands not limited to outerwear, leaders enjoyed a snow trip with a casual chat, looking to cater for customer’s whole life. Eventually, company launched the Cotton On Body with its first store in New South Wales. Cope with an aspiration to have a positive impact on the world, Cotton On donate a healthcare centre and officially launch the Cotton On Foundation. In the next year, inspired by Dorothy’s red slippers, Cotton On launched footwear label Rubi. To fill a gap in the market need for quicky gift and unique stationery, Typo launched in 2009, giving Cotton On the chance to engage customers a little differently to before. At the same time, in synch with Cotton On Group style, the decision to enter the world’s biggest retail market is made at a cricket match. It is worth mentioning that 2009, 2012 and 2016 are three memorized milestones, respectively representing launch of 500th, 1000th and 1500th store. In 2013, as team members had been growing to 19,000 people, company launched an in-house learning platform COG Uni, focusing on enriching employees’ knowledge and improving their enterprise skills.1.2 Geographical ScopeIn 1991, Cotton On Group opened its first retail store in the regional Victorian city of Geelong, followed by a second store in Malop Street. In 1994, Nigel devised its journey in terms of geographical expansion, opening first store in western Australia. In 2006, company jump over the door of Australia, opening the first cross-border shop in Queensgate Shopping Centre of New Zealand; and in the same year, the 100th store was opened at Knox City. With the ambition to become one of the biggest fashion business organization, in the next ten years, company opened the international door of Singapore, Hong Kong, Malaysia, the USA, United Arab Emirates, South Africa, the Philippines, Thailand, Qatar, Indonesia, Lebanon, Oman, Saudi Arabia, brazil and UK in quick succession. Among those countries, South Africa was expected to be one of the biggest and fastest growing markets. 2014 is a big year as Cotton On open headquarters all over the world, when company set up country office in South Africa, Asia, USA and Brazil. Official headquarter launched in New Zealand in 2015, while as a successful expansion project managed from South Africa’s regional office.1.3 Evolution of company’s Brands and marketsAlthough starting with humble beginnings, Cotton On Group has taken its spirit to the globe – expanding to over 1,400 stores across 7 brands and 19 countries. In the past 25 years, Cotton On delivered the trend of moment in fashion market and inspire each member to have fun with the concept. Its value focuses on making a positive difference in people’s lives, empowering people with different colours of skin to show their lifestyles and make their own mark on the world. Year 2007 marks company’s first trial on acquiring another global youth fashion brand for both girls and guys, called factorie. This is a successful horizontal acquisition to expand the brand influence in fashion market as factorie is committed to making a positive change around the world which is in line with company culture. Besides, factorie know customers deeply and make them feel they are at the centre of products and services. Another successful and bigger merger occurred in 2013, when an iconic and recognisable brand joined Cotton On Group, called supre. Supre’s vision is to be an international, fast fashion leader, which is harmony with Cotton On’s pursuit. At the same time, supre has big customer base from a group of iconic girl gang with strong consuming capacity.2.0 Analysis2.1 Environment (PESTEL) leading to key Opportunities and threatsPestle analysis is a useful tool to help company to identify the environmental factors which affects the development of organization in order to achieve optimum performance. And it also helps in the decision making process as it gives top management more knowledge about their business (Oxford University Press 2007). PESTLE is an abbreviation of six elements: political, economic, social, technological, legal and ecological.In Australian long history, politics has strong representative democracy with a mandatory voting system that has ensured the high voter turnout in election (Country Analysis Report 2011). Thus, in some extent, policy-making represents the public willingness and may be in favour of development of fashion industry. From other side, continuous shifting on developmental issues leads to political instability, which bring unstable factors to fashion market, for example, limitations on importing fabrics or increasing restrictions on cross-border transactions. The last political factor is EU barriers for importing and this would directly influence international fashion company, like Cotton On Group, in terms of entering and operating in the local market. The internal economic factors for Australian fashion industry is high labour cost, which reduce the free cash inside the company for potential investment and furtherly slow down the expansion projects.There are three external economic factors: firstly, the fluctuation of foreign currency exchange (trade-weighted index) brings the barriers for international trade and movements in purchase expense will be passed on customers in terms of fluctuation of prices; secondly, business life cycle varies brand to brand, which is an opportunity to motivate fashion company to launch or absorb more brands inside a group; thirdly, world’s wealth shifting to developing countries gives company more opportunities to discover new growth points and find mutual benefit. Fast-fashion becomes social trend and fitness lifestyle prevail in public insight. Fashion circle icons continuously upsurge and re-rule the fashion market. And there is no denying that cultural difference makes threats towards fashion industry, which cause low sales of sub-brand in specific areas. Due to on-going evolution of technology, the diversified development of multi-media motivate company to facilitate more channels to do the marketing and advertising.Under the push of fast-going internet of things, people tend to online shopping instead of in-store shopping, which is commercial assault towards expansion of brick-and-mortar stores. Besides, some regulation limits some kind of chemists used for clothing manufacture, to some extent, impeding the innovation of fashion industry. There is growing body of evidence elucidating that fashion industry is taking steps to reduce its negative environmental and social impact, communicating these concepts through advertising and branding (Cecilia, Julia & Camilla, 2015), and such fashion brand was called ‘muted sustainable’ brand. Those productions fits for the requirement of sustainability, which help to reduce the waste of resources and improve the sustainability. Admittedly, muted sustainable brands dilute the market share of fast-fashion brands as they respond to appeal from non-profitable institutions.2.2 TOWS Analysis leading of optimum strategyOnce we assess the positioning of a fashion brand in the market, an effort could be made to enrich the analysis with the use of instrument of strategic management, such as TOWS matrix. It is necessary to perform a systematic analysis of strengths and weaknesses, which in turn can be transferred to opportunity and threats under the specific condition (M.Marikina 2013). And these factors are made up of four different strategies as below.External Opportunities (O)Information technology evolutionIncreasing cross-border tradeGrowth through acquisitionExternal Threats (T)Brands’ business life cycle (vary)Limitations on usage of chemists (some kinds)CompetitionInternal Strengths (S)Strong digital skillsHigh brand recognitionSuccessful expansion projects (diversification)Company culture ‘innovate a new world’SO “Maxi-Maxi” StrategyGathering profile information about users to discover customers’ preferenceUse strong brand association and successful guidance to expand overseas and acquire recognizable brandsST “Maxi-Mini” StrategyLaunch multi-brand and acquire new brands to hedge risk including fierce competitionContinuous innovation on clothing design in sustainable wayInternal Weaknesses (W)Weak in branding and advertisingHigh cost of labor resourcesHigh attrition amongst senior executivesWO “Mini-Maxi” StrategyTechnological innovation helps open new advertising channelsLaunch more overseas office (e.g. Asian country) to balance cost management and give more chance for job rotationsWT “Mini-Mini” StrategyEstablish internal employee networking system and organize team building to relax the relationsSO “Maxi-Maxi” Strategy: the most favorable situation will be if an organization uses its strengths by taking advantage of external opportunities. In a fair competitive situation, this is the most effective way help company to acquire extra profits than other fast-fashion organizations. Cotton On can take advantage of an in-house learning platform COG Uni to provide the systematic training for technological solutions, which is used to pull information from complex data from manufacturers and customers to generate a total market map of the design, manufacture, marketing, distribution and selling of clothing in fashion market. In this way, the productions and services are in favour of end users (customers). Besides, there is a trend of shifting world’s wealth to developing countries; thus, it is suggested to open international stores in Asian countries. At the same time, Cotton On has two successful mergers and acquisitions case that should be regarded as good samples for future expansion actions.ST “Maxi-Mini” Strategy: survival of the fittest is the best mode of fast-fashion industry. Cotton On Group started to establish sub-brands from 2004. As intensive competition accelerating vanishing of some brands, Cotton On speed up launching new brands to fit for market need and hedge the risk. At the same time, international expansion projects have successfully put brands into different markets with different competitive environment, thus in turn, deviate brands’ business life cycle. In this respect, company started to acquire ‘winner’ brands with special characteristic that have been picked up from the fastidious fashion market, such as factorie and supre. Cope with market trend and self-advantage, company is encouraged to develop in a multi-brand way. Due to appeal from friendly-environment company, more and more limitations on some kinds of chemists, and this asks for high requirements on material on clothing and potentially requests company to innovate on clothing materials and designs.WO “Mini-Maxi” Strategy & WT “Mini-Mini” Strategy: information technology evolution brings development of Internet of things, which broadens the advertising channels. Thus, company should catch the opportunities to innovate the marketing channel that is not limited to advertising in the interval of TV programs or on a small page of newspaper. Actually, launching country office in Asian countries is good way to reduce the high labor cost and give more chance for job rotation to relieve the conflict and pressure on colleagues’ relations. Asian countries have growing consumption capability and relatively lower cost on human resources, to some extent, can balance the worldwide pressure on cost control. Apart from these, a good employee networking system and frequent team building will help to form a peaceful working atmosphere. And properly improve quality of workplace can motivate employees’ enthusiasm on job.2.3 Industry Analysis (Porter Five Forces) Leading to market AttractivenessForcesImpact levelDetailingBarriers to entryModerateSpace constraints in shopping centresCapital cost relatively lowLow customer’s loyalty for fast-fashion brandsSubstitutesLowQuick reaction to market trendBuyer PowerModerateBuyers are fragmentedProducts are standardizedSwitching cost is lowStores are concentratedSupplier PowerModerateSwitching cost is highSophisticated and vertically integrated supply chainsRivalryHighDepartment storesGlobal fashion giantsProduct differentiation is lowBarriers to entry: there is no government restrictions and proprietary knowledge to protect new entrants from fast-fashion industry. And the capital cost and exit cost for entrants, while there is no enough space for new company to launch stores in the shopping centers and commercial streets. But loyalty from customer is low for fast-fashion brands and it is easy for new stores to attract the customers only if the price is low.Substitutes: the rise of media and online shopping has exposed customers to the latest designer fashion from runway show, fuelling the industry operators renew their types and update trends on demand (Lauren Magner, 2017). Consequently, fast-fashion is pushed to capture the customers’ mood and the emerging fashion of moment. This trend has contributed to the popularity of fast-fashion stores. Due to market requirements on quick reaction, there are little substitute for fast-fashion clothing.Buyer Power: the clothing of fast-fashion has characteristics of standardized, easy to imitate, big-scale of production; thus, it is easy to replace by another production, even brand. And the switching cost is nearly zero. Although the customers are fragmented, different store with similar productions gathers together in the same street or shopping center, which make customers easier to change their mind. Gradually, market competition makes customer become more powerful in choosing clothing with lower price and same quality.Supplier Power: fast fashion brands
have much shorter production and distribution lead times, which enables a closer match of supply with demand. Correspondingly, industry operators require sophisticated and vertically integrated supply chains to respond quickly to seasonality and unpredicted demand (Lauren Magner, 2017), which makes switching cost is high.Rivalry: global fast fashion giants, like Zara, Topshop, H&M and Uniqlo, are expected to expand with ambitious plan, although they have strict requirements regarding store location and size. New entrants prefer to open a flagship store in the heart of city, occupy market share from domestic retailers. Apart form this, industry operators compete directly with department stores who hold an advantage of economies of scale, such as Myer and Target. The clothing ranges of those big retailers are often similar in price and quality. Not only that, department stores focuses more on improving customer experience and online presence.2.4 Portfolio Analysis (BCG matrix) leading to profitable capital structureBCG matrix is designed to help with long-term strategic planning by reviewing its portfolio of products to find the most valuable part to invest, which is also known as the growth matrix. And it is easy to follow the method: milk the cows, don’t waste money on the dogs, invest in the stars and give the question marks some experimental funds to see if they brings more profits.Compare to two global fashion giant H&M (H&M annual report, 2017), 4288 stores in 43markets and Zara (Inditex annual report, 2016), 2213 stores in 93 markets, 1375 stores in 17 countries in total seem that Cotton On has a relatively small market share in fast-fashion market.In my perspective, no brand should be put into stars and dog column, that is, no brand should be abandoned and invested. There are five brands regarded as cow-cash, which should be milked as much as possible without killing them. Born in 1991, Cotton On is the parent brand with 600 stores in 17 countries. In the last ten years, Cotton On Body is fast growing up with 350 stores in 11 countries. While in recent year, both of brands slow down the speed of expansion. 2007 and 2013 mark two brands supre and factorie who joined the Cotton On Group,with more than 100 and 170 stores respectively. Both of these two have been established more than 20 years and only after they joined company, it seem that they had found their home and developed at a fast speed. And the last cash-cow brand is Typo launched in 2009 with 200 stores in 13 countries since then. Both Cotton On kids and Rubi shoes have low market share and occupy the potential capacity to grow up. The company has invested in much of capital on Cotton On, Cotton On Body, Typo and other two joined brands, it is no denying that these brands have strongly expanded to international market. And I take an opinion that focusing on Kids and Rubi is a good choice for future development for the sake of market need on kid’s clothing and shoes.3.0 Recommendations3.1 –General strategies for Cotton On GroupCopy with on-going technological innovation, Cotton On should take advantage of digital skills regarding on decision making and marketing plan. To begin with, it is clear to divide the decision making into productions and services associated with customer behaviors that can be analyzed and concluded by sorting numerous databases. What we would have in the process is the customers’ preference and effective suggestions for the future planning deployment. Although the nature of fast-fashion is easy to copy and fast-updated, production should be equipped with creativity as creativity is the starting point of fashion market (Walter, 2002). Besides, combined with sustained development requirement, it is suggested to innovate in a sustainable way in terms of materials and manufacture. As H&M talked to investors in 2017 annual report, H&M has completed 59% cotton is organically recycled. In this respect, it is a sustainable way to reduce the waste of resources and pollution.At the business and marketing level, online shopping is popular in fashion industry, which can bring convenience to customers instead of runway show and latest type of clothing to customers’ insight. What’s more, marketing team should have awareness on which point is the source of customer’s feeling of fashion—catwalks, or clothing by celebrities, bloggers and other influential people. Thus, it is pity to forget those people’s influence on brand recognition and purchasing power. It is suggested that marketing team should be aware of celebrity’s influence and innovate to make marketing plans.At company and business level, it should insist on multi-band strategy to hedge the risk of varying in business life cycle in order to acquire mutual benefit among brands. At the same time, company should take culture into consideration in expansion project in terms of choosing suitable brands launched in the right area consistent with local culture. Unavoidably, company should shift the part of expansion plans to Asian countries that are taken as economic fast-growing points.Lastly, from the perspective of human resources management, company should perfect the employee networking system to improve the communication cross the department. On the premise of launching overseas offices, company should emphasis on job rotation in order to relieve the conflict between senior executives and give more chance for their career development. Obviously, in-store learning platform – Uni is successful and it should be developed to enrich stuffs’ enterprise skills, especially digital skills.3.2- Guerrilla Strategies for Cotton On GroupGuerrilla marketing involves efforts and energies focusing on grasping the attention of the customer in a personal level instead of public level, which are exclude traditional media, like advertisement on newspaper, TV or through direct mail. In a direct way, it increases engagement with the product, which is designed to create a memorable experience for the customer. One of the famous ways of Guerrilla marketing is buzz marketing that encourages the public to discuss the products or brands via high-profile media. In this way, customer can freely response to the products and services without the company paying for that, in turn, this forms the basis of the promotion plan for products and services. Marketing team can write an article uploaded on Facebook and welcome customer to discuss it; and through ‘word-of-mouth’ way, public quickly understand more about company regardless good or bad, which can be seen as producing the hot topic. At the same time, Cotton On should encourage customer to update their mood when they wear the Cotton On series. In another plan, combining media effect with celebrity influence may be more effective and efficient, such as sponsoring clothing to an activity or a TV program that can bring our brands to public and let them discuss on what they have seen. More importantly, utility of right color of website and e-commerce platform is essential for success of marketing plan, or it causes loss of sales and customer defections (Nitse et al., 2004).ReferenceCotton On Group, reviewed on Apr, 12th, 2018OUR HISTORYOxford University Press. 2007. PESTEL analysis of the macro-environment. Oxford University Press, reviewed on Apr, 13th, 2018. http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htmCountry Analysis Report. 2011. Reviewed on Apr, 13th, 2018http://www.doc88.com/p-0973275137868.htmlCecilia Solér, Julia Baeza & Camilla Svärd (2015) Construction of silence on issues of sustainability through branding in the fashion market, Journal of Marketing Management, vol.31, no.1-2, pp: 219-246https://www.researchgate.net/publication/273959226_Construction_of_silence_on_issues_of_sustainability_through_branding_in_the_fashion_marketM.Marikina (2013), The Competitiveness of the Bulgarian Economy – Competitive Advantages and Disadvantages (Analysing with the TOWS Matrix), Economic Alternatives, issue 4, 2013http://www.unwe.bg/uploads/Alternatives/a05.pdfLauren Magner, 2017, Dressed for success: The recent entry of several global brands has boosted industry revenue, IBIS World, reviewed on Apr,14th, 2018Inditex annual report, 2016, reviewed on Apr,15th, 2018http://www.inditex.cn/documents/10279/319575/Inditex+Annual+Report+2016/6f8a6f55-ed5b-41f4-b043-6c104a305035H&M annual report, 2017, reviewed on Apr,15th, 2018http://about.hm.com/content/dam/hmgroup/groupsite/documents/masterlanguage/Annual%20Report/Annual%20Report%202017.pdfS. Walter (2002), Some Effect of Creativity on Fashion Market Behaviour, Ebla Working Papers, vol.89, no.5, pp:2823-2838http://econwpa.repec.org/eps/othr/papers/0210/0210005.pdfP.S.Nitse, K.R.Parker, D.Krumwiede & T.Ottaway (2004), The impact of color in the e‐commerce marketing of fashions: an exploratory study, European Journal of Marketing, vol.38, no.7, pp:898-915https://www.researchgate.net/publication/228649486_The_Impact_of_Inaccurate_Color_on_Customer_Retention_and_CRM

Warning! This essay is not original. Get 100% unique essay within 45 seconds!

GET UNIQUE ESSAY

We can write your paper just for 11.99$

i want to copy...

This essay has been submitted by a student and contain not unique content

People also read