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1 Running Head: ANALYSIS OF CHARLES AND KEITH CORPORATE STRATEGY

Analysis of Charles and Keith Corporate Strategy Student’s Name- Divyansh Jalan, Lakshit Goyal

2 ANALYSIS OF CHARLES AND KEITH CORPORATE STRATEGY Executive Summary Charles and Keith, the famous stylish shoe brand from Singapore was established in 1996 and from that time attracted the industry insiders’ interest and the approval of the people who are fashion-conscious. Having succeeded with its outstanding high-end fashion accessories and shoes, the company won the hearts of many, putting it among the most marketable fashion footwear brand in the global scene today. The company has grown and expanded in different parts of the world, including Asia, Europe, and the Middle East. The global uniformity of the brand is under the control of the Charles and Keith International division, which is strategically guided by its effective franchise model. The company, committed to fashionable purchasers, creates a unique line of fashion-forward products which cater to market trends and demands. Focus on fashion trends and product design is the appealing motivating force of the company as the brand continues providing customers with a range of stylish accessories and footwear for complementing and completing their wardrobe. This report will comprise a comprehensive analysis of the corporate strategy of Charles and Keith. It aims to analyze the company's both the internal and external business strategy. The report will include an introduction, which discusses the company's background, and then an assessment of the general environment of the company, particularly focusing on PESTLE Analysis, Porter's five forces and SWOT Analysis. Further, the report will present an overview of the competitive analysis of Charles and Keith, and then the general environment of the company. Besides, the report discusses the company's vision and mission, as well as its strategic direction including key resources, core competencies, capabilities, value chain, and cost structure. Lastly, the company will identify and discuss the firm's broad business level and corporate strategy, the implementation issues facing it, and the strategic evaluation of the firms' performance in relation to strategy.

3 ANALYSIS OF CHARLES AND KEITH CORPORATE STRATEGY Introduction Charles and Keith is a multinational firm located in Singapore operating in the fashion industry. The company offers both women's and men fashion collections. The company's products range from sunglasses, wallets, belts, shoes, and ties. The corporation was founded in 1996 by two brothers Charles and Keith Wong. The company is a fast fashion brand, and primarily focuses on accessories and footwear (Boon, 2013). Capturing contemporary style and modern luxury through providing a "smart twist of a timeless classic with international influence," the company focuses its commitment on details, aiming at crafting "emblematic looks" for the sophisticated and elegant (Tan, 2009). The company is famous for its females' footwear such as pocketbooks and purses. The firm began as a small and simple shoe outlet at Amara Hotel arcade, Singapore. Before long, the trade name turned out to be very popular and after seeing the potential for further expansion. The company expanded its operations to the South East Asiatic market. After a few years of service, the company grew further to different countries. Besides, in Singapore, the company was the first merchandizing firm to create an online shop. Currently, the has set up over 20 business setups in major trading centers and residential towns in Singapore and is today an international brand with more than 190 franchises in 27 countries across the Middle East, Europe, Asia and Africa (Charles Keith, 2018). The company is now among the leading firs in the footwear industry. This report thus presents an analysis of the company's corporate strategies, analyzing its internal and external environment, strategic direction, and its broad business level corporate strategy. The general environment of the Company PESTLE Analysis Political factors The political environment in Singapore is very stable for the fashion industry, given that government regulations and policies have a strong influence on the industry, especially relating to the manufacturing business and import-export trade barriers (Enterprisesg.gov.sg, 2018). Since Charles and Keith is a multinational firm, it faces tough political hurdles in Singapore which have impacted its importexport business. Economic factors The company's economic environment is relatively stable because the target market of the firm is the elite class people and only the women with high incomes are the ones who buy the company's products (Enterprisesg.gov.sg, 2018). Thus, economic changes like interest rates, exchange rates, and inflation do not influence the company to a higher level. Social factors

4 ANALYSIS OF CHARLES AND KEITH CORPORATE STRATEGY The firm's social environment is significantly favorable in terms of its target market as brand consciousness is progressively growing in the customers each day and it is positively affecting the company since its urgent market comprise women who are brand conscious. Technological factors Concerning technological aspects, the firm's competitive advantage depends on innovation, and at the core of innovation is technology. The company continuously focuses on research and development and technology to develop new and innovative designs and adapt to the rapidly shifting consumer tastes and preferences (Enterprisesg.gov.sg, 2018). Overall, the company operates in an environment that is founded on high technology. Legal factors The company's operations are under rules and regulations which govern the fashion industry as stipulated by the government of Singapore, relating to production processes to keep a green environment (Enterprisesg.gov.sg, 2018). Therefore, the company must operate in a secure legal setting. Environmental factors Given that Charles and Keith is a multinational corporation, the international environment is hugely favorable for the company (Enterprisesg.gov.sg, 2018). The company must comply with the different environmental laws which exist in different countries it operates, for it to promote sustainable development in the market.

General Industry Environment Porter's Five Forces The threat of New Entrants Overall, the fashion industry in Singapore has a low risk of entrants. The sector is highly populated, and for new brands to succeed, they should use a considerable differentiation level. Besides, firms might find distinctive methods of growing famous and acquiring success. The growing popularity of trendy fashion in Singapore is evidence of this element (Kim, Kim, Choi and Lee, 2013). Also, investment is a substantial obstacle. In addition to infrastructure, a firm needs to invest in a distribution chain, marketing as well as labor force. Thus, the risk of new entry is an insignificant force in Singapore’s fashion retail industry. Threat of Substitutes There is a risk of substitution within the business. Because rivalry is stiff, no brand is guaranteed of continued sells and remain famous with a focus on the customers. All brands, including Charles and Keith have various competitors, and space is increasingly getting limited (Kim, Kim, Choi and Lee, 2013). Both low end and high-end segments have filled the fashion sector. There are different brands which can substitute Charles and Keith in the market such as Zara. Bargaining power of suppliers Suppliers do not have a significant power in the fashion retail sector. Charles and Keith is a big brand and its bargaining power can make it easily switch from between suppliers. Besides, it can utilize

5 ANALYSIS OF CHARLES AND KEITH CORPORATE STRATEGY financial muscles to drive prices (Kim, Kim, Choi and Lee, 2013). Thus, in general, the power of suppliers is very low, and so they have insignificant power to bargain. Bargaining power of customers Overall, individual customers in the retail fashion industry might have minimal bargaining power. But there are different factors which make the customers as a group a significant force. Charles and Keith employs various forms of customer retention strategies such as discounts (Kim, Kim, Choi and Lee, 2013). Therefore, overall, customers have substantial power in the fashion retail industry in Singapore. Even the customers do not have a direct influence; it can be indirect. The brand is trying to serve and influence the clients the best way they can. So, customers have a significant barraging power. Competitive rivalry The fashion retail industry is outstanding for the stiff competitive rivalry level in it. There are many brands with the same product offerings, making the competitive rivalry strong. Nevertheless, some brands as well influence loyalty based on quality and feature. Brands which have a strong brand like Charles and Keith may charge higher rates (Kim, Kim, Choi and Lee, 2013). Besides, the battle for attracting consumers is so intense that there is minimal room for new entrants. In general, the competitive rivalry is a fierce force in this sector, and famous brands like Aldo and Charles and Keith use offers, discounts, and marketing to compete effectively in the market. Competitor Analysis Aldo is one of the key competitors of Charles and Keith. The target marketplace of Aldo consists of males and females aged 16 and 45 years with a stylish, bold, and chic sense of fashion, moderate to high buying power and prepared use more to enhance their appearance (Aldoshoes.com, 2018). Nine West is another competitor of Charles and Keith. It is a sub-brand of the US designer, accessories and clothing company, The Jones Group, with a vision to "ignite desire, instill confidence and stimulate compliments." With a thirty years existence in the industry as well as its "Hot 9" collection of ‘musthaves" of the present time, Nine West positions itself as a "trusted fashion advisor in every category." The company claims to be renowned as a total lifestyle company which transforms appearances from the fashion stage to "real life fashion." The variety of products include accessories and shoes form males and females, and various regions of the globe, it has specific clothes and a collection for kids. Steve Madden US designer brand is also another competitor of Charles and Keith, owned by Steve Madden, the "fashion footwear mogul." The company's vision is to offer "young, fashion-forward women a unique way to express their individuality through style." Also, the brand positions itself as one which embodies a lifestyle yet hinges around the core notion of "embracing fashion" whilst maintaining the "funky independence" which initially distinguished the brand (Anon, 2018). Similar brands which are considered Charles and Keith's competitors are Hidesign, Phive Rivers and Da Milano.

Vision and Mission The mission statement of Charles and Keith is to become the leading company in the women fashion industry globally, dealing with female footwear, handbags, and accessories. To achieve its mission, the company aims to offer high-end experience to its clients through providing high-quality services at shops and 24-hour support at its social media platforms and website. Therefore, the firm's ultimate mission is to commit itself to perfection, putting into consideration people as the company's most vital asset. To meet this mission, the firm offers training to its employees to have values of customer

6 ANALYSIS OF CHARLES AND KEITH CORPORATE STRATEGY focus, passion, openness, respect integrity, and unity and work to empower and inspire persons. On the other hand, the company's vision statement states that the company aims to be the most esteemed fashion brand by making its offerings affordable for top-class women and create much income through the delivery of quality fashion to women (Charles Keith, 2018). Regarding its performance in various markets, its aim is to penetrate new segments, especially male fashion clothing segment in the future. Core competencies, fundamental resources, capabilities, cost structure, value chain Charles and Keith success can be attributed to the competent employees who have been a crucial resource to the company. The management team promotes an innovation culture as well as teamwork that motivates workers to perform better to achieve the set goals and objectives. Nevertheless, the leading suppliers of the firm are in Malaysia and China, and it gets most of its raw materials from these two nations (Charles Keith, 2018). On top of that, the firm has set certain manufacturing facilities in these nations. The company's core competencies are its delivery of high-quality, unique designs which are reasonably priced. Another core competency of the firm is research and development, in which the company has a research and development team which goes around various towns on a weekly basis to research on the current fashion trends and create product ideas from their research (Charles Keith, 2018). Therefore, the firm has a reliable supply chain and supplier network which makes up its value chain components. The main activities of the value chain are production and distribution while the company's secondary activities include technological changes, innovation, and research and development. Concerning the cost structure, many operations of the company are funded through equity, and the firm has effectively grown its net profit in the recent years through minimizing the operational costs and acquiring cheap labor force from countries like China (Charles Keith, 2018). Based on the company's income statement, in 2017 the company had a net profit amounting to $22734 million, with average revenue of $1,052,980 and operational costs of $1,024,988.

SWOT Analysis Strengths  Strong brand awareness  Excellent brand positioning  Brand portfolio  Long term experience in the industry  Online presence  Strong management team

Weaknesses  High product prices  Uncomfortable footwear  Imitation of products  Lack of advertising in a rapidly changing fashion landscape  Lack of scale due to the volume, leading to high cost per unit

7 ANALYSIS OF CHARLES AND KEITH CORPORATE STRATEGY Opportunities  Expansion of goods and services  Brand endorsements by celebrities and models  Expand beyond Asia  Partnering with foreign businesses like Zara

Threats  Intense competitions  Changes in consumer tastes and preferences  Economic factors like depression  Lack of consumer loyalty in a rapidly changing industry where consumer tastes are hard to forecast

Business Level Model The company began by selling shoes bought from wholesaler suppliers. In order to grow, the company adopted a new business model for its label as it realized that the traditional model retailing footwear purchased from general traders was not sustainable. After the owners looked at the company’s potential to thrive in international markets, the company started to expand its business in foreign parts in 2000. First, the firm began in markets across Southeast Asia and from 2004, the company started venturing into the Middle East, where it first started with Dubai and subsequently Saudi Arabia, Oman, and Bahrain. As of 2005, the firm has expanded into Turkey and Egypt. Apart from the Middle East, the firm as well as boasted stores in other nations like Panama, China, and Japan (Boon, 2013). In 2013, Charles and Keith had about 400 shops abroad. On top of creating shops, the company made a sequence of growth in other business areas. The company was the first domestic trade firm to establish an e-commerce website in 2004. Such enabled the corporation to retail its merchandises to nations which had not launched retail presence. Further, in 2005, the company started the Pedro line of male footwear. Charles and Keith, in 2007 expanded their range of product to consist of accessories like belts and sunglasses (Boon, 2013). With the aim of penetrating the higher-end marketplace, the firm introduced the Signature Label that sold higher-quality and costlier shoes. Furthermore, Charles and Keith sought to expand its external network in China and Latin. To achieve that, the firm looked for new partners, where in Japan, for example, it collaborated with Onward Holdings with the aim of penetrating the company into the domestic Japanese market. Besides, for Jordanian and Saudi Arabian markets, Charles and Keith entered into a partnership with Alhokair Fashion Retail that deals with importing global products to these marketplaces. Over the past few years, the company partnered with L Capital Asia, after 20 percent of its stake was acquired by L Capital Asia for over$30 million (Boon, 2013). The corporation depends on its capability to manage its supply chain for making sure that its producers will remain producing footwear explicitly for the firm. Moreover, it as well targets

8 ANALYSIS OF CHARLES AND KEITH CORPORATE STRATEGY to keep its designers’ standards, ensuring that they are well-informed and trained of shifting tastes and preferences of consumers. The firm uses as much as 3% of yearly income it earns to train its designers, and send them abroad to carry out market study (Boon, 2013). Thus, the theory that best suits Charles and Keith is Miles and Snow Model, which identifies four unique strategies which companies use. The company can be said to be using the defender strategy, where a company is satisfied with its market position and works hard to defend it (Kim, Kim, Choi, and Lee, 2013). This is the case of Charles and Keith, which is continuously trying to protect its place in the market. Implementation issues One of the main implementation challenges facing Charles and Keith is the issue of sustainability. The company’s website displays something related to sustainability and corporate responsibility. While the company is committed to corporate social responsibility, implementing it is a big challenge. In general, big brands ought to be seen implementing certain kind of sustainability strategy. However, customers are very aware of how the brands and retailers operate in terms of their acceptable labor practices, waste manage disposal, safety and health standards, and how they treat employees (Heine, 2010). Thus implementing a sustainability at Charles and Keith has particularly been influenced by some of these factors. Another challenge the company is facing is implementing a strong supply chain due to the structural issues associated with global supply chain.

Strategic evaluation of the company's performance Charles and Keith is devoted to offering the best products for fashion buyers, through innovative and avant-garde design to meet the market needs and result in a fashionable trend. The company is devoted to creating a convenient and free shopping environment with the aim of creating a new shopping experience via superior shopping setting. The company's outlets in different countries reflect its consistent style and the pursuit of the same: useful features, exceptional design, quality material, and excellent technology (Gonzlez, 2010). In a satisfying environment, the company presents a broad range of products including shoes, handbags, eyewear, and small leather commodities. The setting and the products embody the craftsmanship of the well-known global brand, innovative ideas, and fashion style. From the humble beginnings of the company, it started as a seller from wholesale suppliers. The firm was regarded as a low-end store as many of their merchandises during that time were gotten from Malaysia and China. The company started to explore the niche market of creating its products line, with an advantage over its rivals because its designs were high-class when compared to those of the competitors. Also, prices were made affordable, thus gaining a reputation in Singapore (Boon, 2013). Overall, Charles and Keith specialize in women's accessories and footwear, and its overall brand strategy is to target a niche market made up of customers who idealize elegance and modernism with simplicity. Conclusion

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