Hi Fashions Case Analysis

OBJECTIVES
1) To capture 2% of the total market and 5% of the T-shirt market in 6 months ranging from Sep 2011 Mar 2012. 2) To capture 6% of the total market and 10% of the T-shirt market in 12 months ranging from Apr 2012 Mar 2013. 3) To target market in Delhi, Punjab, Haryana and Rajasthan.

RECOMMENDED PRODUCT MIX

ASSUMPTIONS 1) Product Mix has been designed based on the contribution margins of the items. ITEM (MILLION UNITS) 1) T-SHIRTS (0.5) 0.35 (70%) S&M 0.5265 (50%) 80 & 85 0.58 (55%) S&M 0.15 (30%) L & XL 0.316 (30%) 90 & 95 0.475 (45%) L & XL 0.2106 (20%) 100 & 110

2) VESTS (1.053)

3) BRIEFS (1.055)

RECOMMENDED CHANNELS OF DISTRIBUTION

ASSUMPTIONS : 1) Volume of units is derived from growth rate of individual units 2) No. of outlets to be opened is based on average sale from those outlets. A) DURING PERIOD SEP 2011 MARCH 2012 1) Traditional channel of distributor, retailer and customer. 2) Through some branded retail outlets. B) DURING PERIOD APR 2012 MARCH 2013 1) Traditional channel of distributor, retailer and customer. 2) Aggressive selling through branded retail stores. 3) Can explore the option of e-commerce.

CHANNEL CONFLICT POSSIBILITIES

1) One set of conflict can arise when the company decides to explore the option of selling through branded retail outlets along with the conventional distribution systems. 2) If company decides to go for e-commerce considering high levels of demand for branded apparel among the young savvy urban youth, situation can create further conflicts between company and branded retail outlets. SOLUTIONS 1) One way to handle conflict situation is to allow your old distributors and retailers to fetch more margins by lowering your ex-factory price. 2) Other option is to offer some share of profits company is fetching from its modern distribution channels to its old distributors.

EXISTING PRODUCTION CAPACITY

Targeted T-shirts & Vests

Produced

Lag

Total

50,000

50,000

50,000

Briefs

40,000

40,000

40,000

EXISTING ORGANIZATIONAL STRUCTURE CHART

Managing Director

VP Manufacturing

VP Marketing

VP Finance

Department Head

Production Manager

Maintenance Manager

Quality Control Manager

Supervisor(3)

Supervisor(1)

Supervisor(1)

Workmen(15)

Workmen(5)

Workmen(3)

CAPACITY EXPANSION

Company need to increase its present production capacity to 63334 dozens per month of T-shirts and Vests to match demand of 9.12 million units. Existing capacity of Briefs has to be increased by 8402 dozens per month to match demand of 6.97 million units.

ASSUMPTIONS

The given production capacity of 50,000Dozs of T-shirts & Vests or 40,000Dozs. of Briefs is being produced by 15 workers under production, 5 workers under maintenance and 3 workers under quality control.. The existing capacity is being used for production of Briefs only. The increase in capacity will be used to produce T-shirts & Vests as projected by the new figures calculated along with the increased requirement of Briefs.

REVISED MANPOWER PLANNING

The new calculated production capacity for T-shirts & Vests as projected needs 63334 more dozen units. For this, we have employed 20 additional workers under production . These 20 additional workmen will produce the required 8402 Dozs. Of Briefs as well, completing the production requirement. Another 2 workmen have been added for Maintenance of the extended production. We have increased the Quality Control Workforce by 2 workmen to fulfill the increased production requirement.

REVISED ORGANIZATIONAL STRUCTURE CHART

Managing Director

VP Manufacturing

VP Marketing

VP Finance

Department Head

Production Manager

Maintenance Manager

Quality Control Manager

Supervisor(7)

Supervisor(1)

Supervisor(1)

Workmen(35)

Workmen(7)

Workme(5)

PERMANENT JOURNEY PLAN

Costing Production Planning Stock Distributor profile

ASSUMPTION

DISTRIBUTOR PROFILE
Producer-Distributor-Retailer-Customer: This can be explored as it is suitable for the producers with limited finance, narrow product line and who needs expert services and promotional support of distributors. This is mostly used for the products with widely scattered market. Retailers meet and communicate with final customers personally at their stores, right where the shopping takes place and most shopping decisions are made . This consumer interaction means that retailers can have a great influence in manufacturer brand equity, highlighting the importance of exploring opportunities downstream, closer to the customer. E-commerce explores the use of economies of scale and offers lower prices.

Thank you