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INTRODUCTION
JT’s has recently encountered the competitive crisis that recent developments were
threatening to undermine its hard-earned success. Bangkok’s increasing adverse
environmental factors such as auto congestion, escalating air pollution, and soaring
AIDS infection rate were causing foreign tourists- JT’s primary customers – to avoid the
city as a travel destination that constitute a significant decline in its profit margin.
Furthermore, JT’s shops were all located in Bangkok, its revenue and profitability was
falling.
To restore its sales revenue and profitability, I strongly proposed that JT’s should adopt
the franchising system to prosper its business and expand internationally as well as on a
long-term plan including changes in the company’s culture, changes to daily operation,
employees hiring and training, store design, and so on.
The purpose of this report is to evaluate the recent slowdown in sales and the
accompanying rise in sales, and suggest the necessary strategies for ensuring that JT’s
will offer the best solutions in restoring its sales revenue and profitability. Although the
report outline a number of options that could resolve the competitive crisis, the actual
impact of these measures is difficult to project, as it is just a theoretical win or “best
guess” view of what JT’s can expect to do in improving the customer service as possible.
Until the company actually implements these steps, however, we won’t know exactly
how much the competitive crisis can be resolved as it require the fully support and
involvement from all levels.
Report Organization
This report analyze the possible strategies to improve its sales revenue and profitability as
well as strategic planning on improving the changes in the company’s daily operation,
employees hiring and training, and so on.
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SWOT Analysis
A SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. Strengths and
weaknesses are internal to an organization. Opportunities and threats originate from
outside the organization. The SWOT analysis of Jim Thompson (JT) Thai Silk Company
is as following: -
Strength
• JT’s has an outstanding reputation for design and quality of native silk and dyeing
craft, and transformed it into a world-class designer brand. It become Thailand’s
leading retailer of native silk in 1994, commanding an enviable 2/3 market share of
the premium tourist market.
• JT’s has sound management practices and ongoing support and hard work from all its
dedicated company management levels that yield favorable return.
Weaknesses
• JT’s is too dependent on Bangkok’s tourist market. Thus, any dramatic drops at
Bangkok retail outlets may jeopardize the whole company.
• Sales to the domestic home furnishing market need to be further expanded and
marketing effort should also be intensified into this segment.
• In Bangkok, the business may be more emphasis on personal relationship and “under
table dealing”.
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• JT’s had neglected some major market such as the condominium market, that their
owner have plenty of money to pay for the very best, however, JT’s has garnered
very little of this market.
• JT’s too dependent on a few people on decision-making and it is not a healthy sign as
crisis may arise for the absence of them.
Opportunity
• The economy of Thailand is relatively free of controls on private enterprise that are
common in other developing countries. The Industries Promotion Act of 1962
provides companies operating in designated industries guarantees against
nationalization, and exemptions from import duties, export duties, and many taxes.
This is beneficial to JT’s on-going expansion.
• Degree of differentiation – JT’s serves a native silk and dyeing craft, and transformed
it into a world-class designer brand where their products can be differentiate from
competitors.
• The Thai “baht” is freely convertible into foreign exchange. Its value against the
dollars has remained very stable over a long period of time. For example: U.S. $ 1 =
25.28 baht (1993), 25.400 baht (1992), and 25.517 baht (1991). Thus, it is advantage
to the JT’s international investment and expansion.
• JT’s export sales throughout the globe was expected to increase due to initiative
planned for 1994 included international advertising program, larger than ever
mounted before; a new show room scheduled to open in London; and increased
effort in several growing Asian market including Korea, Taiwan, and the Philippines.
• Long-term marketing strategies may bring JT’s potential sales increase and
profitability in the long run.
Threat
• JT’s was threatened as in the rival companies that began to spring up all over
Bangkok. The entry of new competitors provides close substitutes for each other in
silk industry.
• Dollars sales at JT’s flagship retail outlet had declined 11% since the peak level
reached in 1990 and the company’s overall retail sales had dropped in recent year.
From the annual report (April 1993), the net profit was $ 181 (baht in million), it was
a decline compared with the previous years: $ 184 (1992), $ 195 (1991), $ 209
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(1990). This may decrease its stakeholders’ confidence and reliability to the
company.
• Since mulberry leaves constitute a silkworm’s chief diet, the Chinese government, in
the 1980s began to allow silk producers to cultivate other crops, led to reduction in
output of raw Thai silk that increase the native silk’s cost of production that may
affect the JT’s overall sales.
Problem Solutions
In light of the SWOT analysis and further development, the following four options for
the current and potential customers. The customer may have chances of vision
sensory of latest JT’s silk products that would stimulate and provoke their desire to
buy those products. However, through mail order, some customer may feel that they
don’t have the chances to inspect the products and sometimes the mail order
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2. Open a retail store in a major foreign city such as New York, Paris, or Tokyo. It is
no doubt a good platform to expand into international market making JT’s silk
the company if successful. However, when enters a new market, the first issues
faced are building brand awareness and learning about potential customers’ buying
to complete task, attitude towards conflict and so on. Moreover, the project
managers may feel tension and pressure when dealing with international cross-
3. Open a retail shop at a Thai beach resort such as Puket, Samui, or Pattaya. All
these three locations were growing very rapidly. The natural beauty of these three
locations may attract many visitors both from local or foreign countries. This has
served a mass market for JT’s to penetrate. Also, it may prosper the economy of
these three locations and improve the living standard of these areas. However, these
three locations, especially Pattaya was beginning to experience its own brand of
environmental degradation and the potential tsunami may pose a threat to many
foreign visitors as well as an alarming proportion of the bar girls, many of whom are
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4. Expand sales to the domestic home furnishing market. It is a “safe and sound”
way to prosper JT’s business because to penetrate a market that JT’s familiar with is
JT’s management board content with and dependant on the domestic home
furnishing market in the long term, and thus limit JT’s further expansion into
international market.
Personally, I prefer the last option that expand sales to the domestic home furnishing
market as this option no doubt is a most appropriate solution as refered to the earlier
SWOT analysis. The domestic home furnishing market experienced little adversed effect
from the city’s traffic congestion. Indeed, the market may have actually benefitted from
such congestion, since an increasing number of people were moving from the outskirts of
Bangkok to downtown condominiums near their work locations to avoid traffic jams
during commuting hours. A heady construction boom was taking place in the city, and
new units being built need furnishing. And JT’s reputation for creative design and good
quality were highly prized by interior decorators who acted as prime decision makers in
the market.
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Moreover, the home furnishing market presented JT with a major challenge, most
suppliers utilizing high-speed mechanical looms. JT’s weaving expertise, by contrast, lay
in hand weaving. To compete more effectively in the home furnishing market, JT would
improve its ability in this area, JT may purchase high-speed mechanical looms and
sending its operators to Germany to receiving training from the firm which had sold it
the equiptment. The technology transfer and frequent use of outside experts can be a
Additional Recommendation
I personally suggest JT’s should adopt the franchising system to prosper its
business. Franchising System is concept that franchises the business to keen investor. JT’s
owner/operator in the JT’s system, he/she will benefit from systematic procedures to
ensure successful opening of franchise store in the areas of site selection, building design
and décor, purchasing, marketing, employee training and ongoing operation. Also, every
owner/operator restaurant is locally owned and operated and thus the owner-operators
have such a strong commitment to their community and they feel a responsibility to give
back to their hometown communities and through their hard work. With franchised owner
operator system, the numbers of franchised shops will be unlimited, and it may help JT’s
to eclipse other competitors as the largest silk chain company in the world and to be the
fastest growing quick service silk company made possible through the efforts of
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dedicated franchisees, sound management practices and ongoing support for its entire
Conclusion
In conclusion, any effective strategic planning must include Competitor Analysis. JT’s
needs to determine both the nature and extend of competition and appraise relative
strength and weakness, in this assessment and it is little doubt that having systematic
planning as competition continues to intensify. Also, we should always bear in mind that
our customers are revolting! They are demanding more for less. They want world-class
products and services. They want it all and they want it now. If we cannot provide what