SG7001 Managing Strategy and 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 and 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). It has various advantages through which it established itself in the Asian market. Here, we have applied porter’s generic strategies.

The generic porter model is designed based on three strategies to attain a competitive advantage in the market. The three strategies include:

Figure 1: Porters generic strategy

(Source: Michael Porter’s five generic strategies, 2021)

Cost leadership: The cost leadership strategy focuses on producing at a lower cost. This structure-dependent on variable factors of industry and economy such as economies of scale, technology access to raw material, labour cost through which a firm can achieve and sustain cost advantage and perform better than its competitors (Lotempiolaw, 2018). Atelier Chiang Mai has an advantage in the form of infrastructure, craftsmanship skills, educated and talented labour fabric cost, and availability and minimum salary, which provide a clear advantage for producing such a high premium brand at low cost. This helps the firm to keep profit margins high. Cost leadership is the main competitive advantage that allows the firms sustain itself (Michael Porter’s five generic strategies, 2021).

Differentiation: These are the strategies based on how the firm can show uniqueness in terms of its products or attributes so that a large number of customers can be attracted, and the firm can uniquely position itself with its premium pricing and brand facilities. Atelier Chiang Mai can produce high fashion brand apparels at affordable prices. Besides this, they offer multiple services such as fabric Sourcing, fashion designing, pattern making, and sampling finishing options, fashion advice and many more (Porter’s Generic Competitive Strategies (ways of competing, 2018). This makes them stand out from competitors and, therefore, can sustain through differentiation strategy in the Asian market. They produce high-quality clothes and textile accessories and offer contractual guarantees focus on quality control, environmental issues, and flexible clothing production partners with reliability and quality services.

Focus strategy: The focus concentrate on a particular market by understanding the dynamics and the requirements of the customers either with a low-cost strategy or a unique specified product. The focus strategy includes two categories focus and differentiation. With the low-cost focus strategy, companies ensure that these services are provided to a niche market at a lower cost. The differentiation focus concentrates on providing something extra to the specific market segment (Bayraktar et. al. 2017). Atelier Chiang Mai is a brand that focuses on creating apparels that match European standards and, therefore, their focus on producing differentiation at affordable prices and producing unique fashion pieces (Chiang-Mai-clothing.com¸ 2021). Therefore the company concentrates on a differentiation focus strategy for customers who look for something unique and extra.

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.

Atelier Chiang Mai can provide quality goods and other unique services. They aim for a focus differentiation strategy (Islami et. al. 2020). They provide services such as marketing a brand, starting a new clothing line; besides these, they are also very flexible in quantity produced. They deal in all small, medium or large scale production. Their apparels are of high quality and keep in consideration the environment and their employees. They offer quality controls, ensure deliveries, take care of the shipment process, etc. These integrated services make them innovative and create differentiation focus in their products and services (Chiang-Mai-clothing.com¸ 2021).

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 till 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 in last two years but still lacks the international presence.

Restricted to Thailand and china for supplying raw material:

The company has been limited to Thailand 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 

Corporate level strategies are the strategies that provide a direction for a form to achieve its objectives of growth in sustainability addressing issues like intent scope nature products services and Markets (Hill, 2017). These Strategies consists of four strategies as stability, expansion retrenchment, and combination strategy.

Figure 2: Types of corporate level strategies

(Source: Corporate-Level Strategy, 2021)

The stability strategy focuses on continuing its present strategy at the corporate level by focusing on present products and markets and makes no changes to its activities. The expansion strategy also known as growth strategy focuses on extending the capacity and scope of business by investing into either technology or in new markets or new product through a merger, acquisition, or strategic Alliance. The retrenchment strategy focuses on decreasing the scope of activity or operations or to minimize its cost or selling out or liquidation of the firm due to financial losses (Furrer, 2016) The combination strategy consists of all the three corporate strategies so that firm requirements can be fulfilled where the firm chooses to stabilize some of the areas or diversify in other markets for few products and services or retrench few products which are loss making.

Corporate strategy to address above issues:

The company must focus on expansion strategy through which it can enter into new markets as the company offers premium high quality products which are unique and personalized, this will; help the firm in entering other markets, which will resolve its limited presence issue and also will help them in stabilizing in their current markets (Ginevičius and Ostapenko, 2015). This will lead to better profitability and productivity. This can be done through strategic alliances or joint ventures with other established brands. This will provide Atelier Chiang Mai with easy access to international market, enhanced their brand visibility and will increase larger customer base with hared resources and goodwill of the company.

Figure 3: Types of expansion strategies

(Source: Corporate-Level Strategy, 2021)

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).

Figure 4: Benefit of marketing strategy

(Source:  Montgomery, 2019)

For this the company can use RACE model through which the company can market itself and engage customs more efficiently and effectively for long term.

The RACE model helps an organization in strategic planning through which a firm is able to manage its marketing strategy digitally and gain opportunities which are available from digitally marketing the organizations product and services (Kingsnorth, 2019). This consists of four activities:

Figure 5: The RACE framework

(Source: Chaffey, 2020)

Reach: This involves building awareness of a brand and its product and services through website or offline media or by building traffics through web presence like social media pages or creating multiple interaction using paid or unpaid promotions (Chaffey, 2020).

Act: This stage focuses on increasing interactions on websites and social media to generate better leads for online marketers. It persuades site visitors to take the next step and reach to the site and social networks. This allows the business to generate more leads and attract more customers so that a particular product or blog post takes a potential customer towards the company’s website through which the customers able to connect with the product and services.

Convert: This is a conversion stage where once the customers observe the products with offline and online media decides to take the next step of purchasing the product or services and doing e-commerce transactions or offline payments (Kingsnorth, 2019).

Engage: This is a long-term process through which a long term relationship is developed with the first time buyers so that the buyer can be turned into a loyal customers and repeat purchase can be enhanced by bringing effective communications on the site and social interactions by adding to consumer lifetime values as well as providing customer satisfaction and recommendations (Chaffey, 2020).

Proposal and Strategic direction

Explanation of proposal and strategic analysis:

This proposal is strategically apt for Atelier Chiang Mai as this proposal outlines the various strategies that the company must adopt in order to gain competitive advantage such as the generic strategy will help the firm in understanding that through focus differentiation they can gain competitive advantage as this will aid them in making more innovative products and also unique services integrated with other facilities. As they deal in quality products and uniqueness, this strategy will fulfill their long term objective of expanding in other Asian countries (Phadermrod et. al. 2019).

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).

Through growth strategy would be able to grow in their current countries by earning more market share and developing products which 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 fulfill 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 customer’s who are ready to pay high prices for a unique piece with other services. Therefore this market strategy which 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.

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 which will boost their profit margins. This will also require upgraded technology.

They must constantly invest in talented, skillful and Labor 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.  They must also do PESTEL and SWOT analysis for internal and external knowledge of their business environment. This 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 future 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

Bayraktar, C.A., Hancerliogullari, G., Cetinguc, B. and Calisir, F., (2017). Competitive strategies, innovation, and firm performance: an empirical study in a developing economy environment. Technology Analysis & Strategic Management, 29(1), pp.38-52.

Furrer, O., (2016). Corporate level strategy: Theory and applications. Routledge.

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.

Hill, T., (2017). Manufacturing strategy: the strategic management of the manufacturing function. Macmillan International Higher Education.

Islami, X., Mustafa, N. and Latkovikj, M.T., (2020). Linking Porter’s generic strategies to firm performance. Future Business Journal, 6(1), pp.1-15.

Jenkins, W. and Williamson, D., (2015). Strategic management and business analysis. Routledge.

Kingsnorth, S., (2019). Digital marketing strategy: an integrated approach to online marketing. Kogan Page Publishers.

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.

Phadermrod, B., Crowder, R.M. and Wills, G.B., (2019). Importance-performance analysis based SWOT analysis. International Journal of Information Management, 44, pp.194-203.

Tudor, L., (2018). Change in textile and clothing industry. Industria Textila, 69(1), pp.37-43.

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.

Online

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 3^rd May 2021.

Civilserviceindia.com. (2021). Growth strategies ? expansion, integration and diversification. [Online]. Accessed Through: < https://www.civilserviceindia.com/subject/Management/notes/growth-strategies.html>. Accessed on 3rd May 2021.

Corporate-Level Strategy. (2021). [Online]. Accessed Through: < https://businessjargons.com/corporate-level-strategy.html >. Accessed on 3rd May 2021.

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.

Michael Porter’s five generic strategies. (2021) [Online]. Accessed Through:<https://refreshbreeze.weebly.com/48-michael-porters-5-generic-strategies.html>.Accessed on 3^rd May 2021.

 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.

Porter’s Generic Competitive Strategies (ways of competing. (2018) [Online]. Accessed Through<https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-strategies/>.Accessed on 3^rd May 2021.

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