Strategic Management

Assignment - III

Submitted to: Submitted by:

Prof. Dr. Sanjeev Malage Amtarleena Sikdar

MFM - III
2014-16
National Institute of Fashion Technology, Bangalore
Zara:

SWOT analysis:

Strengths:

1. Strong branding- loyalty and awareness

2. Fulfilling demand in affordable yet trendy fashion
3. Fast delivery of new products and trends
4. highest numbers of products in the industry
5. Cost leadership strategy by aiming at cost efficiency
6. Highly efficient supply chain that supports fast fashion
7. Distribution efficiency by vertical supply chain
8. High frequency in the flagship stores in key locations
9. Multi-channel strategy
10. Extending online sales in existing market
11. Healthy financial performance

Weaknesses:

1. Pressure of cost leadership strategy in consideration to achieve high quality standard

2. Short lead time( only two weeks) forces less variation in style, design, colour and size
variation
3. Rapid growing effect lacking in e-commerce sector
4. Higher cost from vertical integration
5. Risk of single centralization
6. Cost up in overseas distribution, R&D and labour

Opportunities:

1. Global expansion in key markets like Asia and America

2. Going big and better in e-commerce sector and grow revenue through that
3. Company image and engagement for environment, labour, social and product
dimension
Threats:

1. Exchange rate fluctuations

2. Expansion strategy regarding market entry barriers
3. Change in customer demand, price sensitivity and trend and fashion ideas
4. Unsure success if entering markets which are less fashionable
5. Competitors such as H&M, GAP and Benetton and new entries in market that want to
recapitalize their profits in new markets.
6. Long term success in an competitive industry requires to maintain strong organic
growth
7. Group performance pressure to deliver high performance
TWOS matrix:

Opportunities Threats
1. Global expansion in 1. Exchange rate
key markets like Asia fluctuations
and America 2. Expansion strategy
External 2. Going big and better regarding market
in e-commerce sector entry barriers
and grow revenue 3. Change in customer
through that demand, shopping
3. Company image and behaviour, price
engagement for sensitivity and trend
environment, labour, and fashion ideas
social and product 4. Unsure success if
dimension entering markets
which are less
fashionable
5. Competitors such as
H&M, GAP and
Benetton and new
entries in market that
want to recapitalize
Internal their profits in new
markets 
6. Long term success in
an competitive
industry requires to
maintain strong
organic growth
7. Group performance
pressure to deliver
high performance
Strengths SO strategies ST strategies
1. Strong branding-
loyalty and awareness S1S9O1O2- Using existing S9S10T3- Using
2. Fulfilling demand in brand loyalty and awareness multichannel strategies and
affordable yet trendy and multichannel strategy to online expansion to grab
fashion expand market and flourish online shoppers that will help
3. Fast delivery of new in the e-commerce sector deal with the changing
products and trends shopping behaviour. Online
4. highest numbers of S3S4S6S10O2- The huge strategies can include
products in the number of products coming discounts to attract price
industry to the store within a very sensitive segment.
5. Cost leadership short cycle of time will help S1S3S4S6T5- To deal with
 strategy by aiming at increasing sale in the online the competitors Zara needs to
cost efficiency store as well, more the new make use of all its core
6. Highly efficient products more attractive strength that give it a
supply chain that online shopping experience. sustainable advantage.
supports fast fashion Along with this Zara’s
7. Distribution unparalleled supply chain S1S9S10O2- To overcome
efficiency by vertical will be helpful for product barriers in entering new
supply chain shipment delivery in case of markets they have to focus
8. High frequency in the online store and that will lead on their branding and also
flagship stores in key to high level of customer expansion strategy and
locations satisfaction. Also already multichannel strategy.
9. Multi-channel being started to sell online in
strategy the existing customer base it
10. Extending online will help out in expanding
sales in existing furthermore.
market
11. Healthy financial S5S11O3- Healthy financial
performance condition and saving costs
can help them focus on the
betterment of the brad image
in terms of engaging labour
and other social and
environmental activities
Weaknesses WO strategies WT strategies
1. Pressure of cost
leadership strategy in W3O1O2O3- To make it big W3T3- As shopping
consideration to the company needs to look at behaviour is changing to
achieve high quality the immense opportunity it keep pace with that Zara can
standard has in the online sector and tap on the online market with
2. Short lead time forces create or develop an image intense marketing and
less variation in style, that would boost online sales promotional activities that
design, colour and along with giving customers will ensure growth and also
size variation an exclusive experience. be able to stay at par with the
3. Rapid growing effect Also focusing on the online consumer base that in
lacking in e- marketing and selling in the inclining towards online
commerce sector key markets. shopping.
4. Higher cost from
vertical integration W2O2- To grow in the
5. Risk of single ecommerce sector Zara can
centralization keep its best selling products
6. Cost up in overseas in more variations
distribution, R&D permanently in its online
and labour. store.
Columbia Sportswear Company:

Columbia Sportswear Company is a United States company that manufactures and

distributes outerwear and sportswear. It was founded in 1938 by Paul Lamfrom, father of
present chairperson Gert Boyle. The company is headquartered in Cedar Mill, Oregon,
an unincorporated part of Washington County, Oregon, in the Portland metropolitan
area near Beaverton. Columbia Sportswear also produces footwear, headgear, camping
equipment, skiwear, and outerwear accessories.

Columbia Sportswear distributes its products in more than 72 countries and 13,000 retailers.
Columbia also operates its own chain of retail stores, including its flagship store located
in downtown Portland, Oregon.
IFE-EFE Matrix:

The IFE(Internal Factors Evaluation) matrix

Strengths Weight Rating Weighted Score
Owners if multiple omni-technologies .15 4 .6
More than 70 years of experience .1 3 .3
Original founder family still runs the company .07 3 .21
Many jackets feature Columbia interchange system .09 4 .36
Solar panels at headquarters building .05 3 .15
Weaknesses
Dependent upon key personnel .1 1 .1
Success depends on company’s distribution system, .13 2 .26
information system and growth strategy
Advance purchases often leads to excess inventory .15 2 .3
Labour disputes .1 1 .1
Product Liability and warrant claims .06 1 .06
Total 1 2.44
The EFE(External Factors Evaluation) matrix
Opportunities
Innovation capabilities, high quality R&D .3 4 .12
Official Supplier to NBC .18 4 .72
Its a part of Outdoor Industry Association (OIA) .1 2 .2
Eco Working Group
Threats
Financial health of retailers .12 3 .36
Dependency upon key suppliers .08 2 .16
Change in historical weather conditions .1 2 .2
Seasonality .08 2 .16
Consumer preferences and fashion trend .04 1 .04
Total 1 3.04
The IE Matrix:

Total IFE matrix score

Strong 3.0-4.0 Average 2.0-2.99 Weak 1.0-1.99

Total EFE matrix score

High 3.0-4.0
I II III

Medium 2.0-2.99
IV V VI

Low 1.0-1.99 VII VIII IX

I, II, IV- Grow and build

III, V, VII- Hold and maintain

VI, VIII, IX- Harvest or exit

According to the total IFE and EFE score, they fall in the division II of the IE matrix. The red
spot shows the approximate position if we plot both the scores. This division suggests grow
and build strategy for the company.

Columbia has a much lower score compared to its competitors such as Cabela’s, Lululemon,
Under Armour Etc. The reason why Columbia has lower score is that their growth has been
very slow. The slow growth in combination with the economic recession gave them average
scores.
Bibliography:

 https://en.wikipedia.org/wiki/Columbia_Sportswear
 http://www.strategicmanagementinsight.com/tools/ife-efe-matrix.html
 https://nicoleskubic.files.wordpress.com/2014/02/columbia-strategic-audit.pdf
 http://www.ukessays.com/essays/marketing/company-analysis-for-zara-marketing-
essay.php
 http://www.volunteerhub.com/blog/the-tows-matrix-putting-a-swot-analysis-into-
action/
 http://www.managementparadise.com/balajiv.ganesh/documents/6231/zara---it-for-
fast-fashion/
 http://www.cyberessays.com/lists/tows-martix-of-zara/