Case Study Giordano Answer PPT PDF

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11/03/2020

GIORDANO: POSITIONING FOR INTERNATIONAL EXPANSION OVERVIEW Success of Giordano:

 Provision of excellent customer service,  Understanding consumers’ needs and wants,  Strict selection and training of staff,

 Short design to production cycles,  Excellent inventory control and turnover. With a strong emphasis on customer service and value-formoney, Giordano was able to differentiate itself from its competitors.

The major question is: How can Giordano maintain its competitive advantage in the future?

 Critical Evaluation of its sources of competitive advantage and key success factors,  Consider repositioning itself in current and new markets.  Furthermore, Giordano needed to examine which key success factors could be maintained or even strengthened, and which of its key success factors would likely be eroded over the coming years.  Furthermore, Giordano had to consider whether, and if yes, how its key success factors could be transferred to other country markets that it planned to enter.

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1. Describe and evaluate Giordano’s product, business, and corporate strategies.

Product Strategy. Able to successfully incorporate customer service as part of its product. Besides its brand name, logo, style, and quality, excellent service has become part of the tangible products sold at Giordano stores.  Customers have come to associate service excellence as an integral component of Giordano’s merchandise Able to provide a high level of customer service through a concerted effort, which involved every employee of the company.  The importance of the management and leadership’s commitment to be customer-oriented and to provide high-quality service

Product Strategy.  Besides incorporating service as part of its product, Giordano focuses

on the concept of value-for-money.

Giordano is constantly aiming to improve the value of the product. Encouraging customers to request certain product adaptations if current products fail to meet their expectations: Removing its logo from some shirts and Invitation to customers to set the price of its jeans. Flexibility and speed are essential in the retail industry, especially when the fashion trend is evolving constantly. Maintaining a restricted range of core products has allowed to respond to market changes faster than its competitors  Keep costs down.

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Business Strategy.  There are three generic strategies advanced as business strategies (Porter): cost leadership, differentiation, and focus, as well as combinations of these three pure strategies.

Giordano seems to pursue a combination, that is, a focused differentiation strategy.  The primary source of differentiation comes from Giordano’s commitment to quality in terms of the products it sells and the service it provides to customers.

Dedication to training and motivating its front-line staff as well as its noquestions asked return policy. Giordano’s strategy is focused on customer responsiveness (understanding what its customers want and putting their interests first), as well as on a specific niche—value-conscious consumers who want affordable yet trendy casual apparel with reasonable quality.

Business Strategy. Changing its focus to expand the market niche that it has been serving to include a more up-market segment. However, this is done carefully to prevent a loss of existing customers who may become confused by the value proposition that Giordano provides to them. For instance, its launch of the Bluestar Exchange line clearly indicates its commitment to the existing valuefor-money segment, but at the same time it is upgrading its core brand’s position so that customers may eventually perceive that Giordano stands for more than just low priced apparel. With the successful launch of the new product line and re-launching of

Giordano Ladies and Junior, Giordano appears to have overcome the main problem that niche strategies face, that is, the inability to move to new niches.

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Corporate Strategy.  Adopted a narrowed vertical integration (backward) strategy: manufacturing plants in the Philippines and Mainland China, while also sourcing from external suppliers. This was deemed necessary to allow better cost and quality control, and the strategy worked until the currency crisis hit Asia. Competition among suppliers (manufacturers) of good-quality apparel became so intense that prices came down dramatically, and it became an opportunity cost to rely on Giordano’s own manufacturing division for supplies. There could be other reasons, such as rising operating costs, putting pressure on the firm to look for alternative sources of supply.  In fact, in 1999, the Philippines plant was closed down, and Giordano is now concentrating on their core business in retailing/distribution Allocation of investments to expand their retail outlets.

Corporate Strategy. To ensure the suppliers are able to meet Giordano’s demands in terms of speed of response to the market conditions, Establishment of a manufacturing joint venture in 2005 with one of its longstanding suppliers. The China facility’s proximity will enable it to be integrated seamlessly into Giordano’s network and play a useful role in their JIT supply chain management. You can argue that this strategy is risky but consistent with Giordano’s core competency, that is, in customer responsiveness as opposed to operational efficiency.

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2. Describe and evaluate Giordano’s current positioning strategy. Should Giordano reposition itself against its competitors in its current and new markets, and should it have different positioning strategies for different markets? Giordano’s strategies are distinctive enough to create a clear image in the minds of the consumer: the superiority and visibility of the differentiating advantages used by the company Current positioning to be that of “value-for-money” or “quality merchandise at affordable prices” (product differentiation). Identify the positioning strategy to be: High level of service provided to customers (service differentiation) Sales staff is dedicated, ever-smiling, well-mannered, and helpful (personnel differentiation). Filling a gap in the market for trendy, yet reasonably priced unisex apparel reinforcing the positioning with the appropriate marketing communications and the delivery of quality service.

2. Describe and evaluate Giordano’s current positioning strategy. Should Giordano reposition itself against its competitors in its current and new markets, and should it have different positioning strategies for different markets?

 Re-launched Giordano Ladies and Giordano Junior to carry a trendier line of apparel, with encouraging results. The recent slight shift toward a higher end from the current low-end value-for-money positioning in Hong Kong was not fully executed in its other markets. Customers in these markets may become confused as to what Giordano stands for, and this inconsistency makes effective service strategy implementation difficult, particularly as consumers are becoming increasingly mobile and travel more frequently between Giordano’s core markets. In addition, economies of scale in apparel purchase, design, and market communications may be diluted, if different strategies are followed across markets. If this trend persisted, Giordano may dilute its brand name and possibly might weaken its competitive advantage in other areas as well. Probably, Giordano would do better to keep a consistent positioning, keep its management focused on its core strengths, and send a clear message to all its staff and customers. Giordano should gradually and slowly move its positioning upward to meet the rising affluence, and hence the resulting desire for high-end apparel of its core target segment

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Proposed Relative Positioning Map Up-market

KEY E G New Specific segment

TH BA

GL

G Cur HT

BS

General appeal

BA – Baleno BS – Bossini E – Esprit G Cur – Giordano Current GL – Giordano Ladies G New – new, aspired position for all its country operations HT – Hang Ten TH – Theme

Value-for-money

Giordano acquire another existing brand or start up a new business entity under a different brand with its own positioning strategy. In fact, this is illustrated by Giordano’s recent venture, Bluestar Exchange, which catered to a more price-conscious, massmarket segment. But, this strategy is extremely risky due to the costs involved in building a new marketing strategy and brand.

To reduce the risk level, Giordano could establish joint ventures with local companies to market Bluestar Exchange in different countries: A joint venture with China Resources Enterprise to market Bluestar Exchange in the mainland’s low-end segment. It may come to the conclusion that having a consistent positioning may be the better option even if it means competing head-on with established brands

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To maintain its positioning in Hong Kong and over time slowly and gradually shift its position in its other markets slightly more up-market to follow its Hong Kong positioning. To move upward together with its core target segments, which is also developing upward in terms of education and increasing disposable income (most of Giordano’s Asian markets are developing fast). To maintain a consistent positioning across all markets, even when Giordano decides to enter countries with entrenched competitors with similar positioning. The main reason is that this would be expensive and high risk as less of Giordano’s core strengths could be transferred to this new market, and benefits from economies of scale could not fully be reaped (e.g., in terms of manufacturing volumes, marketing, training, etc.).

3. What are Giordano’s Key Success Factors (KSF) and sources of competitive advantage? Are its competitive advantages sustainable, and how would they develop in the future? A service strategy perspective: First, the apparel retail industry Giordano: Porter’s Five Forces framework. The impact of the five forces on the retail apparel industry: Suppliers have low bargaining power, as Giordano owns the brand name of

the end product as well as the customer interface. Production can also be easily switched from one manufacturer to another. Customers have little to no collective bargaining power. However, customers seeking value-for-money can easily switch from one retailer to another, compared to customers who seek specific apparel brands.

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Competitive rivalry is high and increasing in intensity in the casual apparel industry. This seems to be caused by lower growth rates, and the aggressive behavior of incumbents who currently focus relatively more heavily on nonprice competition.

Threat of potential new entrants is moderate as substantial investments in brand building and a network of outlets would be required. However, large international chains such as The Gap would have the required resources to enter should the markets appear sufficiently attractive. Threat of substitutes for casual apparel is low because of the lack of good substitutes; probably the cheaper imitation brands and unbranded products serve as the nearest substitutes, but the target market is likely to be different.

Porter’s Five Forces in the Retail Apparel Industry

RISK OF ENTRY BY POTENTIAL COMPETITORS = MODERATE  Investments in brand building and retail outlets needed

BARGAINING POWER OF SUPPLIERS = LOW  Suppliers can be replaced easily

RIVALRY AM ONG ESTABLISHED FIRMS = HIGH  Price and non-price competition increasing in intensity, slower demand growth

BARGAINING POWER OF BUYERS = MODERATE  Low switching costs but no collective bargaining power

THREAT OF SUBSTITUTE PRODUCTS = LOW Lack of substitutes for casual clothes

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• Using Porter’s Five Forces framework, it can be shown that the retail apparel industry is currently attractive to incumbents like Giordano, but with competition being the main threat, the importance of maintaining and developing sustainable advantages becomes apparent.

3. What are Giordano’s Key Success Factors (KSF) and sources of competitive advantage? Are its competitive advantages sustainable, and how would they develop in the future? Second, Giordano’s sources of competitive advantage and KSF could be identified and their sustainability evaluated. . Using Porter’s value-chain analysis, it can be shown that as an apparel retailer, Giordano captures much of the value in the marketing, sales, and service stages of the industry value chain.

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Porter’s Value Chain Analysis

Outputs

Inputs

Typical Value Creation in Apparel Industry

Design, Research & Development

Production

Logistics

Branding & Marketing

Sales & Service...