SG7001 Managing Strategy & Operations and Partnerships Assignment Sample 2024
Introduction
Atelier Chiang Mai is a fashion-clothing brand based in Thailand that produces quality products and premium apparels designed in the factory on European standards and delivery. They produce both larger and smaller quantity productions. This report focuses on drawing competitive and corporate strategies for Atelier Chiang Mai and resolving the issues currently faced by them. The report also outlines a proposal for Atelier Chiang Mai future expansion and sustainability. Lastly, the report will present a conclusion summarizing the above concepts.
Competitive advantage of Atelier Chiang Mai stemming from their strategy, using the tools taught during the term.
Atelier Chiang Mai is a clothing brand known for its quality products, is producing premium garments, and presently works in Asia. Chiang Mai was opened as an opportunity of no premiums tore present in Asia, which offers premium products and integrated services to both individuals and other brands (Chiang-mai-clothing.com, 2021).
Vision of the organization: The aim of the company is to provide fashionable clothes at low prices, which are unique, and quality products. By creating differentiation with an advantage of cost, the organization has been able to establish itself in the Asian market. Here, we have applied porter’s generic strategies. The organization has utilized the specialized skills and services that are unique and customized, through which it can attract customers and gain competitiveness in the market.
Resource based view of Atelier Chiang Mai
Resources of the organization:
| Resource | Types | Characteristics |
| Tangible resources | Financial assets: This includes the capacity of the organization to make investments or borrow funds (Collins, 2015) | Atelier has net assets of approx. 50 million $. |
| Physical assets: This includes, equipments and other machinery held by Atelier | Atelier owns various type of new machinery used in apparel production and detailing. | |
| Intangible | Technology; this includes IPR, trade secrets and patents.
|
Atelier is able to get cheap raw material and usually suppliers are from Thailand. How the organizations are getting such low priced raw material is a secret as it provides the organization with advantage of cost leadership through which cost is kept low and margins are kept high. |
| Reputation: This includes reputation, consumer loyalty and satisfaction among suppliers, consumers and government | Atelier is a very renowned brand in Thailand as it has its own manufacturing that provides customized apparels and accessories which fulfils client requirements. In addition, the advantage of low price and high quality have helped them in branding the product and have built strong reputation in the eyes of customers. | |
| Human resource | Reward and recognition, trailing and development, recruiting and selecting (Harney and Trehy, 2016). | · Qualifications, expertise, fair salary, training and career progression. |
For identifying capabilities, we are using porter’s value chain model to further elaborate on the opportunities and initiatives with the company to grow and sustain.
Value chain analysis
The porter’s value chain model consists of primary and supporting activities. The primary activity consists of five categories:
| Value chain model:
Inbound logistics: This includes cheap raw material, heavy machinery, owned factory and manufacturing unit and desired inputs at low prices. Desired production capability and resource capacity. |
Opportunities and Threats
· Can procure raw material from other suppliers than china and Thailand |
| Operations: strong team supporting transformation process. Customized client requirements, wide operations such as packaging, fashion designing, sampling, finishing. Bulk or small quantity produced (Luo et .al. 2015). | · Expansion in Asian markets
· Growth prospects in developed countries
|
| Outbound Logistics: software’s that processes, schedules, tracks, and orders, handles the material and delivery. Shipping and courier associations. | · Add new routes, delivery channels and shipping services and destinations (Ranathunga Arachchilage et. al. 2016) |
| Marketing: Needs marketing and branding for enhancing global visibility and presence | · Social media advertising to spread awareness internationally and traditional and celebrity advertising to boost sales. |
| After sales service: customize the requirements, changes, and alterations demanded by the client. Satisfy the complaints of the consumers through which it is able to serve the right customer practices that enhance the customer loyalty and satisfaction. | · Reaching out customers’ demands, solving complaints, and addressing issues. |
| Procurement: Raw material is acquired cheaply and transformed into a product of high quality and fashion that is not only demanded but also is personalized as per the requirements of clients. | · Low cost material with high quality with hard bargain |
| R&D: Atelier does adequate investment in R&D to improve its production processes. Further telecommunication technology, software designing aids in fulfilling the client requirements and understanding the trends of the industry, customer-changing preference and buying behavior. | · Investments to generate understanding of market and consumer preference, taste and likes (Bensmina and Wahiba, 2015) |
| Human Resource Management: Atelier hires and trains its employees so that their roles can be enhanced and they can provide maximum contribution to the organisation for achieving the ultimate satisfaction levels. The recruitment and training procedures are very rigorous to support the operations. | · Training high employee qualifications, expert opinions, satisfied pay rates commitment and loyalty of employees. |
| Atelier has a strong infrastructure comprising, stationary and office, factory outlets and machinery, law compliances, right assets, market information and resources to deploy the opportunity (Bustinza et. al. 2015) | · Owned factory and manufacturing unit, low cost site. |
VRIO analysis:
| Factor | Valuable | Rare | Imitable | Organized |
| Competitive disadvantage | No | – | – | – |
| Competitive equality | Yes | No | Yes | – |
| Temporary competitive advantage (Knott, 2015) | Yes | Yes | Yes | – |
| Unused competitive advantage | Yes | Yes | Yes | No |
| Long-term competitive advantage | Yes | Yes | Yes | Yes |
For better strategy, Atelier must do a SWOT analysis through which they will draw a conclusion on which strategy will be most favourable for Atelier.
| Opportunities
· New suppliers · Greater market presence, marketing and promotion to boost sales and awareness · Low cost differentiation focus as an advantage · Casual apparels at low cost |
Threats
· Changes in economy · Government regulations · Fluctuations in currency · Competition · Changes in customer requirements |
Issues and corporate strategic options for Atelier Chiang Mai
Issues:
Less international presence:
Atelier Chiang Mai was not able to produce high quality goods at affordable prices until 2018 when the company decided to have its own manufacturing unit based on European standards. Due to his, the company was not able to establish itself as an international brand. However, the company has seen some growth since last two years but still lack the international presence.
Restricted to Thailand and china for supplying raw material:
The organization has limited number of suppliers, which has resulted in over dependency on the Thailand and Chinese markets for fabric suppliers, which limits their access to other international markets. The company gets affected adversely during any changes in these markets and therefore this can be issue in the times of recession and political instability or stagnant economic crisis.
No market strategy:
Currently Atelier Chiang Mai has no marketing strategy through which it promotes its products. This causes low presence ad brand visibility. As the company deals in premium and luxury, products it is very important to make its target audience aware of the services it offers and their brand existence. This is a key issue in clothing organization.
Corporate strategy to address above issues:
Technology advancement:
Atelier can use automation to increase employee and organization productivity. This will motivation of employees and will improve process and product (Guercini and Runfola, 2015).
Targeting right audience:
Measuring social factors and targeting both niche and low-income group market will provide access to better client base and larger brand visibility, profitability, competiveness, and consumer loyalty.
Right partnerships:
Engaging in fruitful and strategic partnership will help in accessing new markets and will enable resource sharing for Atelier.
The company must focus on expansion strategy through which it can enter into new markets as the company offers premium high quality products that are unique and personalized, this will; help the firm in entering other markets, which will resolve its limited presence issue and will help them in stabilizing in their current markets (Ginevičius and Ostapenko, 2015). This can be done through strategic alliances or joint ventures with other established brands. The organization can choose diversification if it finds other industries more attractive and can enter into new products or categories to make business outreach larger customers and profitability (Hodges et. al. 2015).
Marketing strategy: This is another option available to the company so that its brand awareness can be increased by increasing its marketing activities and promotions through which the brand will be able to connect with more customers and better access to other markets (Varadarajan, 2015).
For this, the company can use RACES model through which the company can manage is strategy and engage customs more efficiently and effectively for long term.
The RACES model helps an organization in strategic planning through which a firm is able to combines all the aspects of an organisation strategy to check the validity of options to help make strategic choices (Mihm et. al. 2015). This can help enhance the strategic direction of an organisation increasing the
- Resources:The resource activity analyses the needed and required resources that are available and how easily are they obtainable. If the resources of the company are rare then it will enhance the comparative advantage among competitors and industry.
- Acceptability:Acceptability activity focuses on the leadership quality, the stakeholders and the internal power sharing through which the agreement between the internal and external stakeholders is reached to a satisfaction level (Gulati al. 2020). Further, the regulatory bodies, laws and regulations, and other stakeholders that highly influence the organisation must accept and agree with the policies and strategies of the organisation.
- Consistency:Consistency activity related to how well the organisation is fit within the culture, enhances its brand reputation, and built business architecture. Organisation must be adaptable towards the implications of modifying the strategy as and when needed.
- Effectiveness:The effectiveness activity focuses on present strategy issue which is faced by the organisation and how well the strategy responds towards resolving the issue. Atelier must focus on providing better options of doing the similar thing or making modifications to the current process for obtaining better productivity and efficiency.
- Sustainability:This activity leads to gaining the long-term advantage to a strategic direction in a way through which the strategy adopted by the organisation must be rare. The unique strategy would make an organisation successful and stand out from its competitors which will lead to gain a competitive edge over the competitors and to a more sustainable and successful profitability in future.
Proposal and Strategic direction
| Foundation
Mission The mission of Atelier Chiang Mai is to produce high quality fashion clothes at reasonable prices which are unique and environmental friendly (Chiang-mai-clothing, 2021) Core values: · Growth prospects · Customer oriented · Integrity · Professionalism · Quality and assurance · Community service and human rights |
Strategic objectives and organization goals
Financial Growth in revenue (20%) and productivity improvement (30%) Customer Provide professional service and get two new premium clients every month. Operational Innovative and unique product development (Poonsriviwat, 2021). Develop virtual office and overhead department. People and learning · Training to employees · Involve community · Follow human rights · Environmental respect |
Strategic direction
Expansion in Asian countries Stability and combination strategy.
Growth in current countries Diversification Market penetration
Develop a market strategy Indulge in social marketing and digital marketing with traditional marketing approach in local areas. Use TV endorsements, newsletters and blogs, emails and discount coupons etc. (Wheelen et. al. 2017). |
Corporate strategies to follow
Allocation of resources: This includes the resource allocation in a most optimum way so that the resources strategic direction can achieve better profitability. Organization design: the structure of the organization must be efficient enough to support decision-making. Choose a matrix structure to enhance productivity and functionality. Portfolio management: The portfolio management must formulate the different strategies that assist in expansion and managing products globally. Focus on strategic tradeoffs: This would help the firm in expanding easily and will place better negotiations. |
Time duration
3-5 years
12-18 months
6 months
|
| Competitive advantage
We are best at · Innovative and unique products · Quality assurance and delivery · Ethical environment and sustainability · Premium products · Integrated service such as fabric, patterns, designing, sewing, marketing etc. (Tudor, 2018) |
Key performance indicators
Sales – $125,000 Number of clients- $220 % increase in customer base yearly -55% Vision How organization looks like To be known as a premium fashion brand experts for both individual customers and other brands (Tudor, 2018). |
Develop PESTEL and SWOT annually
Search for new suppliers in other countries |
12 months
6-12 months
|
|
| Business strategies
· Differentiation strategy · Innovation · Quality · Develop infrastructure (Vishnevskiy et. al. 2016). · Intellectual property |
Implementation
· Hold effective strategy meetings · Appoint a strategy manager · Delegate accountability |
Explanation of proposal and strategic analysis:
The expansion strategy would help them in gaining larger customer base and introducing their products into new markets through strategic alliances, acquisitions or joint ventures and provide easy entrance into new markets and would help Atelier Chiang Mai in gaining customer satisfaction, more profitability and optimum utilization of production capacity (Jenkins and Williamson, 2015).
The diversification strategy would help them in diversify into new markets or develop products for low-income groups in the form of casual fashion that will enhance their overall brand image and global presence (Oladimeji and Udosen, 2019).
Through growth, strategy would be able to grow in their current countries by earning more market share and developing products that meet the requirements of local customers. This will require investment in technology and R&D but it will benefit Atelier Chiang Mai in long-term and fulfil their medium term objectives. Currently most important thing that the firm should focus is on is developing a market strategy through which they be able to penetrate the market as they in they involve dealing with premium customers who are ready to pay high prices for a unique piece with other services.
Therefore, the market strategy that will boost their product awareness and brand visibility in developing and developed markets will help provide them better access to customer requirements feedbacks and preferences. Social media platforms will help the organization in improving its brand image and customer base (Zaveri and Amin, 2019)
Atelier Chiang Mai must also invest in gaining more suppliers and reduce their over-dependency on Chinese and Thailand suppliers for raw material. This will help them in gaining more competitive prices and cost benefit that will boost their profit margins. This will also require upgraded technology. The corporate strategy of portfolio management and effective organization design will help the firm in successfully accomplishments of the expansion and better brand reputation globally.
They must constantly invest in talented, skilful and Labour and workforce so that the quality can be maintained and the expansion will be done efficiently. It must also focus on developing market penetration strategy on basis of cost leadership through which the firm will be more profitable as cost cutting would be done easily (Nickols, 2015). For entering new markets easily and their current markets diversification strategy would help in diversifying new products and services to increase their product line and customization feature which will increase profitability in future (Oladimeji and Udosen, 2019).
They must also do PESTEL and SWOT analysis for internal and external knowledge of their corporate strategy of effective portfolio management. It will help them in gaining extensive knowledge and analysis of competitive markets and current market, their strengths and weaknesses and how opportunities can be explored and threats can be removed. This proposal will help them in gaining new insights into strategic management of the organization completely and develop plans and strategies accordingly for better and efficient sustainability (Morecroft, 2015).
Conclusion
To summarize, Atelier Chiang Mai should focus on expansion and growth so that the firm will be able to position itself strategically in the global market. This will also aid the firm in enhancing its global presence, and larger customer base and market share. This will lead to optimal utilization of production capacity and resources for which will increase its profitability. Lastly, the company can induce more innovation and follow the policy of differentiation to address its customers globally and sustain the competitive advantage in the long run.
References
Books and Journals
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Bustinza, O.F., Bigdeli, A.Z., Baines, T. and Elliot, C., (2015). Servitization and competitive advantage: the importance of organizational structure and value chain position. Research-Technology Management, 58(5), pp.53-60.
Chaffey. D. (2020). Introducing the RACE Framework: a practical framework to improve your digital marketing. [Online]. Accessed Through: <https://www.smartinsights.com/digital-marketing-strategy/race-a-practical-framework-to-improve-your-digital-marketing/>. Accessed on 3rd May 2021.
Chiang-mai-clothing.com. (2021). Professional Apparel Manufacturer in Asia. [Online]. Accessed Through: <https://chiang-mai-clothing.com/>. Accessed on 3rd May 2021.
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Ginevičius, R. and Ostapenko, A., (2015). A quantitative evaluation of the company environment for the formation of its effective expansion strategy. Intellectual Economics, 9(2), pp.130-137.
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Knott, P.J., (2015). Does VRIO help managers evaluate a firm’s resources?. Management Decision.
Lotempiolaw. (2018). Interview with Damien para Co-Founder of Clothing manufacturer Atelier. [Online]. Accessed Through: < https://www.lotempiolaw.com/2018/07/interviews/damien-para-clothing-manufacturer-atelier/>. Accessed on 3rd May 2021.
Luo, J., Fan, M. and Zhang, H., (2015). Information technology, cross-channel capabilities, and managerial actions: Evidence from the apparel industry. Journal of the Association for Information Systems, Forthcoming, Georgia Tech Scheller College of Business Research Paper, (2016-056).
Mihm, J., Sting, F.J. and Wang, T., (2015). On the effectiveness of patenting strategies in innovation races. Management Science, 61(11), pp.2662-2684.
Montgomery. E. (2019). Why You Need To Review Your Marketing Strategy After Quarter. [Online]. Accessed Through: < https://www.threegirlsmedia.com/2019/03/04/why-you-need-to-review-your-marketing-strategy-after-quarter-1/ >. Accessed on 3rd May 2021.
Morecroft, J.D., (2015). Strategic modelling and business dynamics: A feedback systems approach. John Wiley & Sons.
Nickols, F., (2016). Strategy, strategic management, strategic planning and strategic thinking. Management Journal, 1(1), pp.4-7.
Oladimeji, M.S. and Udosen, I., (2019). The effect of diversification strategy on organizational performance. Journal of Competitiveness, 11(4), p.120.
Ranathunga Arachchilage, S.C.G., Payne, A. and Buys, L., (2016). Industrial upgrading in the apparel value chain and the role of designer in the transition: comparative analysis of Sri Lanka and Hong Kong. Asia Pacific Journal of Multidisciplinary Research, 4(4), pp.103-112.
Value Chain Analysis: An Internal Assessment of Competitive Advantage.(2018). [Online]. Accessed Through: < https://www.business-to-you.com/value-chain/ >. Accessed on 8th July 2021.
Varadarajan, R., (2015). Strategic marketing, marketing strategy and market strategy. AMS review, 5(3-4), pp.78-90.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., (2017). Strategic management and business policy (p. 55). Boston, MA: pearson.
Zaveri, B.N. and Amin, P.D., (2019). Global Marketing Strategy in Digital Era: Global Online Presence. In Breaking Down Language and Cultural Barriers Through Contemporary Global Marketing Strategies (pp. 103-112). IGI Global.
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