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Diploma in Business
Unit Number and Title
Unit 7 Business Strategy
Mulberry Group PLC is a designer and manufacturer of luxury fashion bags, accessories, clothing and footwear. The company sells its products through its own stores and concessions, and wholesale channels. It also undertakes brand management, product design, marketing, manufacturing, sourcing and wholesale distribution of its Mulberry brand. The company operates across Europe, North America, Asia Pacific and Rest of the World. It has two head offices and two factories in the UK. Mulberry Group is headquartered in Somerset, the UK. The company focuses on the expansion of its market presence. It also focuses on improving the productivity of existing stores. Lastly, the company aims to continue its investment in supply chain management, which enable it to establish a scalable platform for the business. Mulberry is implementing a new integrated supply chain management system which allows it to forecast demand and allocate production more effectively.
The mission statement is something that outlines the company’s business philosophies and goals in a structured manner for both insiders and outsiders’ understanding.
The vision statement reflects long term plans of a given company which is drawn round clearly keeping in mind the required position in the market.
Objective statement of an organisation broadly gives a more accurate approach of the company towards a particular direction.
Goal statement of an organisation broadly describes the company’s quantifiable and evidently distinct purpose in its business function.
Core competencies of a business refer to the special capability in terms of familiarity and procedural proficiency in various section of business practise, which in turn give the business organisation a special position in the market place. Mulberry Group PLC has its core competencies laid in constant innovation in design and product development. (Bearden, 2006).
Strategic Planning:The strategic planning will help the organization in achieving the strategic objectives with the following highlights. Strategic planning can help the customer who wants to have the value for the money or each penny they spent to buy the product making the horizons broader and inviting the quality outcomes in the product with all the best possible elimination of wastages and reduced cost. Strategic planning can make consumer keen observer of the quality of the product and hence they assume that supply chain management is properly associated with the quality of the product and we are offering attractive products with high quality. The needs of the strategic planning also made the manufacturer provide the proper after sales services of the product in the case of requirements and needs and also according to the lifecycle of the product for its betterment and development. Strategic planning also develop the durability features which should also be added as a most important tool in the consumer needs as a satisfied customer is happy using the product for as long as he can without any defects or mistakes recorded. Strategic planning involves proper reliability and validity of the products making the necessary arrangements of using the potential capabilities of the product for the welfare and satisfaction of the consumers. The practise of strategic planning also helps out in spotting the existing market state of affairs in terms of the methods of action, the present customer base, and the requirement to move ahead. Strategic planning included outlying the organisational evaluation by formulating the required mission and vision statements, as well as identifying the objectives and goals of the organisation. The company has to stick to its mission and vision statement as the pivotal point of the business skills, and make the best out of its core competencies
While doing strategic planning there are different types of issues has arisen for which Organization has to carefully address them to make effective strategic planning. Firm Mulberry while analysing the issues related with their strategic planning they identified that firm has facing challenge in expanding their business in Asian countries because number of competitors are already there and they also capture the significant customer market in E-commerce. Few issues they are facing like: how they can attract customers towards their luxury product? , Facing difficulty in selecting the Location to start their business, they also facing challenge from various competitors who are selling branded and Luxury product. These types of issues were carefully addressed with following:
With the help of market research Mulberry has to do deep study to understand the need and wants of the customer. They have to maintain the competitive advantage by providing better quality product having reasonable prices which can be done by reducing cost of operations.
1. Value for money: The customer wants to have the value for the money or each penny they spent to buy the product making the horizons broader and inviting the quality outcomes in the product with all the best possible elimination of wastages and reduced cost.
2. Quality: The consumer also is a keen observer of the quality of the product and hence they assume that supply chain management is properly associated with the quality of the product and we are offering attractive products with high quality.
3. After-sales service:The needs of the consumers also made the manufacturer provide the proper after sales services of the product in the case of requirements and needs and also according to the lifecycle of the product for its betterment and development.
4. Durability: Durability features should also be added as a most important tool in the consumer needs as a satisfied customer is happy using the product for as long as he can without any defects or mistakes recorded.
5. Reliability and Validity: There should be proper reliability and validity of the products making the necessary arrangements of using the potential capabilities of the product for the welfare and satisfaction of the consumers.
Presently the company is listed on the Alternative Investment Market, which has enabled the company’s legal and other requirements to be under limit. However the requirement to act in accordance with the requirements lay out by the UK Corporate Governance Code will become more important once the company increases its size over the passage of time. (Adcock, Halborg, & Ross, 2001).
In this era of competition a firm should necessarily be available with the events when they can record the potential success for the organization and they are able to do all this with the help of the competitive advantages. As Mulberry group is although a big house and therefore there is a great need of identifying the factors which makes the organization available with the advantages in the competitive so that they can record high sales and high profitability. As Mulberry is a large corporation it has a direct competition with the Dolce and Gabana products, these industries are working in the similar apparel industry and the battle and competition among them is fierce. In the present situation, the company is involved in rethinking and reshaping its approach towards the product offerings in various categories of the portfolio. At the same time it is very important for the company to identify and introduce important products in the key price range. If the key price range issue is resolved in the near future, then it will be easy for the decision makers to focus on the entire range of product offering by triggering better design based appeal. Another long term based strategic approach can be taken towards increasing the number of Mulberry store network. The company has taken a very big step considering its size by opening flagship store in the global fashion capital Paris.
The main competitive advantages in these industries are discussed as follows:
Firstly they need to develop a rational approach in cost cutting options making the global benefits to the organization, and making the customers satisfied with the best competitive price. It is a matter of fact that any organization working n cost reduction strategies are available with the competitive advantages. For example, Honda organization is consistently working on the cost reduction techniques.
Secondly the organization should be available with the development strategies of the product and employees relations making the attractions of the consumers to the product and targeting on the loyalty traits of the customers. The organizations dealing in this respect have a competitive advantage and for example Apple organization has loyal customer base which make the product launch successful.
Lastly there should be optimum utilization of resources so that in minimum maximum can be achieved and making the organization available with the competitive advantages.
In the present situation, the company is involved in rethinking and reshaping its approach towards the product offerings in various categories of the portfolio. At the same time it is very important for the company to identify and introduce important products in the key price range. If the key price range issue is resolved in the near future, then it will be easy for the decision makers to focus on the entire range of product offering by triggering better design based appeal. Another long term based strategic approach can be taken towards increasing the number of Mulberry store network. The company has taken a very big step considering its size by opening flagship store in the global fashion capital Paris. The future strategic plans possess the challenge to balance the budget allocated towards the Paris store and opening new relatively smaller stores across the other key markets. Supply chain management is another field of strategic planning which needs to be handled carefully by Mulberry. The company being into fashion and merchandising business, the importance of apt management of supply chain and optimal amount of investment in the same are important. Inventory management and an integrated approach towards the supply chain are two areas which need to be taken care of simultaneously. Presently the company is listed on the Alternative Investment Market, which has enabled the company’s legal and other requirements to be under limit. However the requirement to act in accordance with the requirements lay out by the UK Corporate Governance Code will become more important once the company increases its size over the passage of time.
This is a useful tool for strategic planning which is used in perceiving the prospective of products and potential in development of those products through market growth rate and market share. The matrix uses market growth rate and market share as two matrices in the framework, and hence try to find out the performance of individual category. The classifications of company’s products are shown in the matrix and hence give the decision makers a clear perception about the future strategies. In the matrix, there are four quadrants namely: cash cows, stars, dogs, and question marks.
Cash cow: Mulberry Group PLC has identified their cash cow as the businesses that have a high market share such as: high-end accessories, apparel. The best performing products or categories in the company product portfolio are: Leather poacher bags (the two best selling items are dispatch bag and binocular bag) which exhibit the English country style. However the products have relatively a limited opportunity to grow astronomically.
Stars: English made designer leather goods that are attracting more attention from a range of European markets can be seen as Star for the company. The products which are priced in the key price range of £500 to £800 are performing well across markets. These products have high market share which is expected to grow further.
Question marks: these products which show comparatively low market share are categories under this. The products have however a high growth prospects. The company has recently launched the new Tessie collection which was received positively.
Dogs: new Spring Summer launched by the company is under this category. The products are not doing well, even after the clearance offer efforts. The category is expected to decline even further. The product that is low on both market share and growth prospects are expected to be shut down.
SPACE: The Strategic Position and Action Evaluation (SPACE) matrix
This long term strategy is suitable to examine and decide the present performance in order to excel in various fields. Various categories to measure the matrix are: financial strength (FS) and competitive advantage (CA), and environmental stability (ES) and industry strength (IS).
In the present situation and stage of the company, Mulberry Group PLC should aim for the following path:
By using Profit Impact of Market Strategies study the management team of Mulberry firm has to analyse their market strategies effectively. To analyse the efficiency of the different business units established by Mulberry in order to expand their overall business operations they use profit impact of their market strategies. This is done by using PIMS because it contains the overall profits and other activities of different strategic business units set by Mulberry.
Strategies in the different level of the organizations are as follows:
1. Business Level:In this level the organization is working to develop the advantages distinctively and making the organization grow potentially. They are also identifying the market niches to better target the market and achieve the high level of profitability. Like the Mulberry organization is identifying the market niches to better target the market and achieve the high level of profitability
2. Corporate Level:In the corporate level Mulberry organization devise the strategies built in the business level and monitor the product strategies for the successful development of the organization and for the welfare of the stakeholders of the organization. Like the Mulberry organization is monitoring the product strategies for the successful development of the organization and for the welfare of the stakeholders of the organization.
3. Functional Level:In this level the organization is working to coordinate the unit activities for the better performance of the organization. In this stage they also utilize the human resources with the best development and making the organization efficient and effective.
In order to plan the growth in the market, the company can examine the market viability and also look out for legal regulations to succeed in online space and in the new markets. Regulations regarding retailing, promotion strategies, taxations and other business related legal terms must be taken into the picture. In order to succeed in the online retailing, the company needs to have a talented bunch of technology professionals. After outlining the growth strategy and goal in the long term, marketing and promotion activities must be carried out simultaneously. The marketing department of the company is responsible for devising and implementing arousing and appealing promotional tactics. The efficiency of the marketing and promotional activities will ensure that the company will have a better launching pad to initiate its new collections. Emotional and effective marketing strategies will be helpful for the company. After the departure of Bruno Guillon as Chief Executive Officer, it is up to the new leader to make sure that strategies are kept in line with the vision. Although the company has its think tank at place, it can still consider going for strategic consultant who will outline the requirements of the online growth and new market success (Prahalad, & Hamel, 1990).
Technology:There are several technological factors which affect the business environment with the competitive advantages and the usage of the technological advances in the efficient manner. The obsolete technologies should be removed and eliminated from the business immediately.
Marketing:Mulberry could benefit from the emerging markets, which provide significant revenue generating opportunities to the company. Asia continues to be the major driver of retail growth worldwide. Countries such as China and India could register strong growth in the future. By 2016, China’s retail market would overtake the US retail market to reach an estimated US$4.2 trillion. Recently, the Indian government also permitted foreign direct investment of up to 51% in multi brand retailing. Such policies could significantly offer new opportunities to the company.
Time:The first requirement is the Human Resource requirement is the time constraints where the company has to decide on how many people it needs in the new business outfit which will comprise of people well versed with e-commerce and technology. Then it is important to decide upon the training requirement of the new employee pool. The payment structure should be decided keeping the regulation in mind; the major evaluation of human resource is to examine the local employee unions and their influence over the business operation. In order to mitigate the risk of the losing key human resources from the team, it is highly advisable that regular reviews should happen in order to adjust remuneration packages and performance appraisal.
To retain new employees and to keep the morale high of the present employees across various regions, long term incentive schemes must be practised vigorously. Moreover it is important to do the succession planning so that there will not be any problem if a senior manager leaves or in case of changes within the management team (Kotler, & Armstrong, 2010).
Introduction procedure is required for the online portal of Mulberry. The ideal timeframe should be targeted to be completed in one year. The first three months should be towards market research and evaluation of online infrastructure in the company. The legal requirements need a longer timeframe and hence the legal department of the company will be active until the year end. Marketing need evaluation and promotion planning will be started simultaneously, which will be followed by market and competitor analysis. The next step of investment related evaluation and activities will start from the seventh month, which will be used towards infrastructure development. With the advent of the online marketing and advertising by societal marketing techniques the Mulberry organization maintains the hike and increase in the sales making their summer and spring collection available under the price of GBP 1000. This step make the organization cover their 74 percent dip profit of last year in a favourable result in first few weeks.
They have recorded the trading conditions more difficult in luxury sector as the Chinese demand was slowing down and Ebola was affecting the places and in this respect they have recorded different and difficult external environment where the stats are showing the revenue fall 17% and the sales dip of 9%. But the potential capabilities of the Mulberry have not made the horizons weak and it is not affected by Ebola. They have also encountered with the pre tax loss as earlier they were having the pre tax profit in the past year.
Mulberry is counted in the premier bag making industry but there are potential threats in the tourists coming to the place and the possibilities of Ebola, also there are incidents recorded where the Chinese demand is slowing down and this will be a potential threat to the organization. But as the comments of the chief executive the Mulberry organization is safe from this as Ebola is not affecting the travel business and harming any of the products bases of the organization. Also they have recorded a slight increase in the Chinese people and a slight decline in the Russian people.
They have recorded the airport business is going good as it records good passenger numbers in their flight schedule and record high profitability. The Mulberry organization is also planning for utilizing their operations in selling the products in the Christmas period as these last month sales make the broad path for the full next year sales. With these retrospective policies and strategies they have recorded the share price gain with 2%, they have launched attractive price strategies to make the attraction by the distinct and potential customers. They have recorded retail sales 8% high in the current financial year, and the online sales increases up to 18% with the preliminary sales which were only 4%. They also observe that Chinese tourists are involving high in the business and on the contrary Russian tourists are coming less to these places. Employee hiring will start from one month before the formal introduction of the business in the market (Schwartz, & Davis, 1981).
In order to ensure that all activities which are set at the time of planning of business strategy are properly achieved following controlling and monitoring actions would be followed:
Set targets and benchmarks: With the help of setting standard targets and benchmarks actual outcomes can be measured. If they found any deviation then they would take corrective actions.
Prepare and analyse budgets: Company has to prepare various budgets like sales budget, expense budget, cash budget which help in analysing actual results. This technique is highly accepted by the organization because it helps in analysing the figures easily. With the help of past information Mulberry make their budgets.
Preparing charts and graphs: With the use of charts and bar graphs Mulberry can monitor their results. These graphs are prepared on the basis of past information and it is reviewed that whether the sales figures after implementing the particular strategy is going upward or downward. Thus it plays an important role in monitoring and controlling the outcomes.
Timescale: Mulberry can set a fixed period of time for completion of task or project. Timely completion of task would signify effective achievement of business objective.
In FY2014, Mulberry’s retail business reported revenue of GBP109.07 million, which accounted for 66.7% of its total revenue. In FY2014, the retail sales in the UK amounted to GBP91.9 million, followed by international retail sales of GBP17.1 million; and online sales of GBP15.6 million. The figures above indicate that there is opportunity for the company through online channel. Competitive environment, counterfeit products and changing consumer preferences could have an adverse impact on the operations of the company in the long run. However the company could benefit from new business initiatives of the company, growth in online market and emerging markets. The company needs to take a huge leap in the online retail as well as expanding its present capacity. The present economic condition is in recovering stage, and the company can forecast positive outcome in the future.
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