MBA7002 Strategic Management

MBA7002 Strategic Management

Introduction

• For the following presentation SHEIN has been considered as the case study
• Along with the macro environment, the resource and capability of the organisation will be evaluated in this presentation
• The business model of the company will be critically analysed and strategic tools will be used to evaluate the competitive position of SHEIN

The presentation has been completed by considering SHEIN; along with providing a brief discussion regarding the mission vision and objectives of the organisation the macro environment of the firm has also been analysed in this presentation. Effective models and tools have been incorporated in the analysis to analyse the resource and capabilities of the organisation and its competitive position.

Description of current vision, mission, and objectives

• Vision
  • The vision of SHEIN is to lead the global fashion industry and modernise the fashion industry (SHEIN, 2023)
• Mission
  • The mission statement of the company is “to make the beauty of fashion accessible to all” (SHEIN, 2023)
• Objectives
  • The organisation has an objective to foster innovation to ensure that fashion is accessible to all, by providing products at more affordable prices (SHEIN, 2023)
  • SHEIN also has an objective to reduce its overall emissions across its complete value chain by 25% in the upcoming 7 years (Smart Energy Decisions, (2023)

In this slide, the mission, vision, and objectives of SHEIN have been presented, through which it is observed that SHEIN is willing to be a leader in the global fashion industry, along with modernising this industry as well as making fashion accessible to all.

Macro environment analysis

• Political
  • Political stability in China is -0.43 points, as of 2021 (The Global Economy, 2023)
  • The Chinese government has been taking the initiative to support the private sector (Huang, 2023)
• Economic
  • The GDP of China has been growing significantly which is approximately $17,700.9 billion in 2023 and is predicted to be approximately $23,608.86 in 2028 (Textor, 2023)
  • China’s average annual inflation rate has declined by 0.66% in 2023, from the previous year (Textor, 2023)

In this slide, it has been observed that the political and economic factors have been influencing the macro environment of SHEIN. Most importantly, aspects such as the support of the Chinese government to the private sector, the growing GDP of China, and the decline in the inflation rate are supportive of the business of SHEIN.

• Social
  • The awareness among the Chinese population regarding sustainable fashion has been increasing
  • China’s consumer spending grew from 438015.20 CNY Hundred Million in 2021 to 447910.20 CNY Hundred Million in 2022 (Trading Economics, 2023)
• Technological
  • Incorporation of advanced technologies including artificial intelligence, machine learning, the Internet of Things, virtual reality, and augmented reality the fashion sector in China has been transformed
  • Innovations such as digital fabrics, smart textiles, and 3D printing have been influencing Chinese fashion companies to create sustainable and unique designs (Medium, 2023)

Both the social and technological factors are influential to a fashion company like SHEIN. Increasing awareness among the Chinese population for sustainability and their growing purchasing power has been encouraging fashion companies like SHEIN to emphasize sustainable fashion to ensure sales. The use of advanced technologies has been allowing fashion brands to foster innovation. Hence, macroeconomic factors like technological advancement, growing economic stability, and the purchasing power of Chinese customers, have been influencing the overall business of SHEIN positively.

Opportunities and Threats

SWOT analysis

In this slide, through SWOT analysis, it has been observed that the organisation has a strong market presence and it has been able to ensure financial growth. However, the company has been threatened by extensive market competition and continuous shifts in consumer demand. Along with these, considering the weaknesses of the company, there is a great opportunity for the company to respond to new market trends and ensure its profitability in the global e-commerce industry.

Resources and capabilities

• Resources
  • Revolutionary fast fashion business
  • Ability to quickly copy the latest trend
  • Offshore labour cost
  • Dedicated human resources
  • Intellectual property

In this slide, the resources of SHEIN have been identified where significantly different resources have been noted, for example, in terms of the revolutionary fast fashion business. Along with this, it has been noted that the organisation has the ability to quickly copy the latest trend along with a sense of better intellectual property. Moreover, the organisation has a low cost of labour along with dedicated human resources. All of these resources are the major aspects for SHEIN to operate effectively in the home country as well as the host nations.

• Capabilities
  • Robust supply chain
  • Effective online presentation
  • Strong procurement and designing strategy
  • Brand awareness

This slide identifies the capabilities of SHEIN that allow the organisation to operate successfully along with bringing the best out of themselves in the existing marketplace. In this context, it has been noted that SHEIN has the capabilities in terms of a robust supply chain, strong procurement, and a design strategy. Other than this, effective online presentation of the organisation has been noted that impacts the entire brand awareness of the company. These capabilities lead to enhancing organisational competitive advantage in the long term.

Adding value to customer

• Coping up with the latest trends would lead to impacting positively customer loyalty and increase consumer drive (Al-Hawary S.I.S and Obiadat, 2021)
• Utilising better procurement and robust and innovative resources would lead to impacting the sustainability of the organisation
• Dedicated human resources would impact the entire customer service efficiency of the company (Azizi et al. 2021)

This slide identifies the aspects of adding value to the customers with adequate resources and capabilities. Thus, SHEIN has been reflecting positive impacts and value to the customer with the consideration of adequate understanding of consumer requirements with the latest trends. Dedicated human resources and innovative aspects in the company impact the entire success of the organisation with better customer experience.

Contd…

Value chain analysis

In this slide, value chain analysis of Shein has been conducted. The overall analysis clearly indicates that the company has a significant focus on various business activities including logistics, marketing, technology use and innovation, customer service, and others. Hence, these aspects are adding value to its customers as well as the operational activities of the company and helping it to ensure success.

VRIO analysis

This slide identifies VRIO analysis of SHEIN, as this tool allows the evaluation of the organisational resources that contribute to the entire market position. In this context, customer loyalty, market reputation, brand awareness, product portfolio, and skilled human resources have been identified to be the resources and capabilities of the organisation. These potentially offer the company a competitive advantage in the market.

Critically assessing the organisations business model

• The on-demand model of SHEIN is more effective and precisely takes into account referring to customer preferences (Shein Group, 2023)
• This model provides greater options more reasonable prices and reduced waste (Shein Group, 2023)
• This model continuously accesses customer input and replaces bestsellers (Shein Group, 2023)

This slide identifies the business model of the organisation, as it has been identified that SHEIN is extensively focused on audience engagement and a digitally empowered supply chain. Through this, on-demand model of the organisation, the company has been able to digital supply chain with data-driven merchandise planning and customer feedback and analysis. Through this business model, the organisation has been able to focus on the bestsellers while understanding the aspect of reducing waste, as it is a more ecologically friendly approach for the company.

Unique selling point of SHEIN

• Introducing Chinese fashion to the West (Branding Records, 2023)
• Affordable trends that are accessible to all budgets
• An unbeatable manufacturing lead time (Branding Records, 2023)

This light refers to the unique selling point of SHEIN where it has been noted that the organisation is excessively focusing on introducing Chinese trends to the West. Apart from this, the organisation has focused on making fast fashion trends accessible to all budgets reflected in their manufacturing aspects along with reducing any significant carbon footprint. Moreover, the manufacturing lead time is unbeatable in SHEIN, as it empowers the consumer to shop online using a single platform from a wide range of products.

Competitive Landscape: Porter’s Five Forces

This slide identifies the external environment of the organisation, referring to Porter’s five forces that impact on the entire understanding regarding the competitive landscape of the company.

Current strategic position: Porter’s Generic Strategies

• Differentiation strategy
  • Differentiation strategy would allow SHEIN to improve its product offerings with better quality management
  • With differentiation, organisation would be able to create uniquely desirable products for their consumers that can impact the entire consumer drive
  • Differentiation would lead to impact in terms of being distinct from its rival companies (Cennamo, 2021)
  • The organisation has not been recommended to emphasise differentiation focus, cost focus, and cost leadership

This slide identifies the appropriate strategy that would impact effectively for the growth of SHEIN. In this context, a differentiation strategy has been noted that would lead to a competitive edge for the organisation in terms of being distinct from the competitors along with offering improved product offerings with better quality management and desirable products.

Future direction: Ansoff matrix

• Product development
  • Referring to product development, it is suggested that SHEIN should focus on appropriate designing, planning, and developing seasonable products for its targeted customer
  • Adeducate consideration of organic fabrics should be incorporated in the entire product line for the sustainable approach (Behera et al. 2021)
  • With product development the organisation should focus on undertaking the context of product life cycle

This slide focuses on the growth opportunity for SHEIN in the existing nation, regarding this product development has been considered as an appropriate recommendation for SHEIN in order to introduce new products in the existing marketplace. It is suggested that SHEIN should focus on appropriate designing and planning of products according to seasons. Other than this, organic fabric should be incorporated along with a better understanding of the product life cycle.

Conclusion

• SHEIN has a very precise understanding regarding their mission and vision that leads to better development of organisational position
• Well-organised resources and capabilities have been impacting organisational growth and business model development
• Adopting organic fabrics for new products along with focusing on seasonable offerings is suggested with an in-depth understanding of product development through and Ansoff Matrix

This slide concludes the entire analysis and understanding regarding SHEIN and its strategic management while identifying significant theories, its mission, vision, resources, and capabilities. Moreover, a few recommendations have been suggested for the development of the organisation.

References

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