Michael Kors Case and Matrixs\' PDF

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Summary of Michael Kors Case, Internal and External Factor Evaluations, SWOT Analysis, and Competitive profile matrix. Tim Palmer as teacher. ...

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Michael Kors Case I.

Probems: A. Loss of prestige due to overexpansion of market with lowered price offerings. Overexposure of brand could weaken reputation. B. No divisional Presidents (COO is also CFO and Chairman is also CEO) C. No vision or mission statement. D. Unlike competitors, Michael Kors doesn’t focus on the Asian Market.

II.

Alternative Action: A. Keep a prestigious and strong reputation of high-end fashion products by developing limited edition products that sell for more due to the rarity of the product. B. Hire experienced employees into the positions of CFO and COO so the company has separate employees in these positions. CEO could step back from his position of chairman to put all of his focus on helping the company. C. Create a vision and mission stat to move the company forward. These should help top management know where they are heading. D. Look to see how other American fashion companies are doing and have a team look into how to enter the Asian market and succeed.

III.

Recommendations: A. Cut back on your targeting markets. Keep target audience to a minimum. B. Keep employees to one position to keep their focus on one job. This can allow them to perform better in their area instead having to focus on two areas. C. Have a vision statement that is clear and create a mission statement that has all 9 elements.

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D. Conduct research about the current status of American fashion brands in Asian and see how they penetrated the market and make a plan that would integrate Michael Kors into the Asian lifestyle. IV.

Implementation: A. Put together a team of top designers to work together and come up with a specially designed product that is limited in stock, appeals to the customer, and shows that the company is a high-end fashion company. B. Keep current COO/CFO and place them into one of those positions and hire another to the other position. Same goes for the CEO, they should step down or give up their chairman status to better help the company. C. Have top management get together and write the vision and mission statement. They should then put in on the company website and send it out to employees and shareholders. . D. Look and see how other competitors entered the market and see how Michael Kors can do the same. Also create a division just for the Asian market and the development of it over time.

V.

Consequences: A. Intended: Keep a reputation of a high-end fashion company that sells top products. Unintended: Higher prices, smaller target audience. B. Intended: Providing more organizational structure to the company Unintended: Allowing employees to be more efficient and focus in one area for the company. C. Intended: To help the company move forward and to expand.

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Unintended: The statements might move them in a direction that they didn’t prepare to move into. D. Intended: To expand into a lucrative market and make Kors known more internationally. Unintended: If the company does expand into the Asian market they might have to come up with a new marketing strategy to cater to an asian audience.

Michael Kors Financial Review Michael Kors (Kors) is a high end luxury apparel designer, marketer, and retailer. Since Kors is a clothing manufacturer demand is consumer cyclical. When the economy is doing better consumers spend more on luxury goods than in recession. According to Morningstar Kors has a beta of .5, other sources had different values but were all below 1. Which shows they are less volatile than the market. Kors generates revenue in 3 segments of wholesale, retail, and licensing. Less than 5% of the revenue comes from licensing while retail stores accounted for 50% of all revenue. American markets are over saturated and has decreasing demand. While Asian luxury goods demand is booming and chinese GDP is increasing. Kors was able to increase their revenue by almost 30% by rapid expansion. However the net income is still behind competitors and the industry because of their high operating expenses of the locations. It is also noteworthy that they don’t use debt to finance strategies or operations. They also have almost a billion in cash. Michael Kors could use debt tools and their cash to invest in expansion or other strategies to support their financial position.

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Internal Factor Evaluation Strengths

Weight

Rate

Weighted Score

Sells Globally

.10

2

.20

Global Recognition as premium designer

.10

4

.40

Many products

.11

3

.33

Increasing Retail Sales

.16

4

.64

Extensive Customer Database

.04

4

.16

Michael Kors Month Volunteer Program

.05

3

.15

Lack of Men’s Items

.06

2

.12

Leases all store locations

.06

1

.06

No Vision/Mission Statement

.04

1

.04

Executives have too many roles

.10

1

.10

Stock declined 42% in Q3 of 2015

.08

3

.24

Overexposure of lower-priced offerings

.10

2

.2

Weaknesses

Total

1

2.64

5

External Factor Evaluation Threats

Weight

Rate

Weighted Score

Seen as a Takeover target

.09

1

.09

Unhappy Investors due to ever-expanding Clientele

.09

2

.18

Other Competitors (Coach, Ralph Lauren, Prada, etc.)

.10

3

.3

Sales Dependent on State of the Economy

.06

3

.18

Changing Fashion Trends

.11

3

.33

Expand men’s items

.12

3

.36

Introduce Divisions within the company

.11

2

.22

Expand to more markets/ geographical areas

.14

3

.42

Purchase stores

.07

2

.14

Product Expansion (kids’ clothes, giftware, furniture, etc.)

.11

3

.33

Opportunities

Total

1

2.55

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SWOT Analysis Strengths

Weaknesses

Opportunities

Threats

1. Sells Globally

1. Lack of Men’s Items

1. Expand men’s items

1. Seen as a Takeover target

2. Global Recognition as premium designer

2. Leases all store locations

2. Introduce Divisions within the company

2. Unhappy Investors due to ever-expanding Clientele

3. Many products

3.No Vision/Mission Statement

3. Expand to more markets/geographical areas

3. Other Competitors (Coach, Ralph Lauren, Prada, etc.)

4. Increasing Retail Sales

4. Executives have too many roles

4. Purchase stores

4. Sales Dependent on State of the Economy

5. Extensive Customer Database

5. Stock declined 42% in Q3 of 2015

5. Product Expansion (kids’ clothes, giftware, furniture, etc.)

5. Changing Fashion Trends

6. Michael Kors Month Volunteer Program

6. Overexposure of lower-priced offerings

SO (S3, O1) ST (S2, T3) WO (W1, O1) Add to diverse number Continue to embrace Expand the men’s of products by the power of items and clothesline ntroducing more men’s outstanding design and to encourage more items recognition to combat men customers and competitors sales

WT (W1, T5) Keep up with fashion trends by introducing new trendy men’s items.

SO (S1,S2, O3) ST (S1, T5) WO (W5, O5) WT (W6, T2) Use the competitive Sell items that lose Use new products and Offering only high advantage of being well popularity in some accessories to boost priced items keeps the known as a premium areas in others who stock prices luxury feel to the designer to expand to may just be coming into products and company more geographical those trends and keeps investors locations happy

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Space Matrix for Michael Kors Internal Analysis

Ratings

Financial Position (FP)

External Analysis

Ratings

Stability Position (SP)

ROI

3.25

Demand Variability

-3

Cashflows

2.5

Price Range of competing products

-3.75

Competitive Pressure

-4.75

Working Capital

5

Inventory Turnover

4.25

Barriers of entry to market

FP Average

3.75

SP Average

Competitive Position (CP)

-2

-3.375

Industry Position (IP)

Market Share

-4

Growth Potential

3

Product Quality

-3

Profit Potential

2

Customer Loyalty

-6

Ease of entry to market

4

Product Life Cycle

-4

Financial Stability

2

CP Average

Y axis 3.75+(-3.375)= 0.375 Coordinates (-1.5, .375)

-4.25

IP Average

2.75

X axis 2.75+(-4.25)= -1.5 Conclusion: Vector Points in the Conservative Quadrant

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Competitive Profile Matrix for Michael Kors Michael Kors Critical Success Factors

Weight Rating

Weighted Score

Rating

Coach, Inc.

Ralph Lauren

Weighted Rating Score

Weighted Score

Brand Recognition/ Reputation

.275

4

1.1

4

1.1

4

1.1

Marketing

.175

2

.35

3

.525

2

.35

Price

.175

2

.35

3

.525

2

.35

.1

1

.1

2

.2

2

.2

Innovation and Designs

.125

3

.375

4

.5

3

.375

Quality

.075

2

.15

3

.225

2

.15

Expansion

.075

1

.075

3

.225

4

.3

Market Share

Total

1

2.5

3.3

2.825

9...