Abstract 2
An Illustration of Jimmy Choo’s Performance 4
An Illustration of Jimmy Choo’s Performance in Various Markets 6
PESTEL Analysis Table 6
5 Forces Porter’s Model 9
Business Canvas Model (Osterwalder and Pigneur, 2009) 12
SAFe Analysis Table 17
Financial Analysis 19
Conclusion and Recommendation 20
Reference List 22
Abstract
The report analyses both internal and external environment for Jimmy Choo. The analysis has utilized different models including PESTEL, SWOT, five Porter’s forces and SAFe. The analysis has helped to identify internal capabilities of the company and the opportunities and threats presented by the external environment. The major opportunities for the company are product and geographical diversifications while threats are changes in consumer tastes and government regulations. Other threats include high consumer power, possibilities of new entrants, and competition. If the current legal framework in the UK and other countries change, the company will encounter challenges in complying with them. The SAFe analysis has showed that the company can use two types of strategies which are product differentiating and pricing mechanism. The product differentiation strategy will seek to set apart the company’s products and services from those of its competitors. On the other hand, the price mechanism strategy shall seek to create attract customers from middle class as opposed to the current pricing which target upper class consumers. After comparing the profitability of the two strategies, the product differentiation strategy was established to have higher profits than the pricing strategy.
Introduction
Jimmy Choo is a company that was founded in the year 1996. It is actively involved in making shoes as well as fashion accessories for its millions of consumers. According to Jimmy Choo Website (2016), the company is actively involved in the production of products that are high in quality. The founder of the company Sandra Choi who is also a niece to Mr. Jimmy Choo focused on the high-end type of clientele. These involve celebrities who request intricate detail to design patterns, structure, and the post buying effect that comes along with the purchase of a particular good. The company’s success was because of the appreciation of its products such as handbags, shoes and other accessories reflecting the contemporary celebrity. The increase in sales in its initial market in London led to its growth in other countries such as the USA, France, and Japan (Jimmy Choo 2016). One of the core brand values of the firm is the production of the highest quality of products for the consumers as well as maintaining a high level of ethics associated with making, distribution, and sale to the final consumer.
An Illustration of Jimmy Choo’s Performance
Source: (Jimmy Choo PLC, 2016)
As seen from the illustration above the revenue generated by Jimmy Choo PLC has been on an increasing trajectory from a figure of 300 million to a figure of about 318 million euros. In addition, the company’s revenue grew by a figure of about seven percentile on a basis of constant currency with the net income too increasing considerably. It is therefore imperative to ensure that the introduction of strategies aimed at increasing the level of performance of the firm, are coherent to the goals of the objective as much as increasing the profit levels of the established business entity.
For instance, the relevance of differentiation of products such as rising the height in mm of the shoe is more likely to increase the sales as such is the common trend in feminine shoes. For instance, the graph demonstrates one of the differentiation measures, which can be adopted. For instance raising of the height of the heel with respect to shoes such as the stiletto is bound to increase the profit margin, as well as become accepted in new markets.
For instance, the company will be able to increase its distribution of products in the Asian market by opening new DOS and transforming franchise businesses into DOS. An example includes market stores in areas such as Singapore as well as Malaysia. The lowering of costs on the other hand in a bid to access the average consumer who may not be able to purchase their original products will lead to a further opening of its markets in regions such as New York, Tokyo, Beijing, Shanghai and Paris. The differentiation of the original product will lead to the expansion of markets by the economically established individuals residing in Sloane Street, Beverly Hills and Harbor City.
The illustration below demonstrates the essence of accessing the Asian market, which shows high growth rate in double digits with respect to the overall Asian market excluding Japan at 20%. Japan on the other hand has a 29% growth rate. The differentiation stratagy and reduction of prices of some of the products will lead to an even further increase in the growth rate in both the American market, which is at 0.7%, and the European market at less than 5%.
An Illustration of Jimmy Choo’s Performance in Various Markets
Source: (Jimmy Choo PLC, 2016)
External Environment Analysis
PESTEL Analysis Table
5 Forces Porter’s Model
SWOT Analysis
Business Canvas Model (Osterwalder and Pigneur, 2009)
Capability of the Firm
The company has been very successful since it was established in the year 1996. First, it is renowned for its production of accessories such as shoes, handbags, belts, and clothes that represent current trends in fashion. The firm had an increment in its revenue generation by about seven percentile in 2015 as compared to the year 2013. The income generated in the year 2013 was about forty-seven million euros, which rose to about fifty million euros in the following year. Currently, the firm boasts of revenues of about fifty-one million euros as per the year 2015 and the revenues are expected to increase gradually in the coming years.
Development of Appropriate Strategic Choices
The period between 2015 and 2016 was one marked by challenges in businesses that dealt with the production of high products such as shoes, handbags and other products that are fashion oriented. For instance, there was a redundancy in markets in China and Russia on the relevance of fluctuations in the patterns of shopping among the consumers. Further, there was a variation in the in the shopping patterns in markets in the United States due to the reduction in economic growth in these regions and currency based fluctuations. The overall result was a decline in the performance of most companies around the world apart from Jimmy Choo business entity. From this perspective the best strategic decision, making stratagem is based on porter’s generic competitive strategies. Under this model, the position of the industry in the current market is crucial in determining the best-fit mechanism for adoption (Porter, 2011, p. 18). For instance, there is a need for a heightened differentiation of the products to facilitate the achievement of a competitive advantage.
Jimmy Choo business Luxury conglomerate has maintained above-average profitability levels as compared to other firms dealing in the production of similar products. For this reason, one of the strategies that can be adopted is the use of differentiation as mentioned (Johnson, Scholes, and Whittington, 2008, p. 47). In differentiation, the firm strives to become different from the other business entities by making products that are unique as compared to those of various business ventures. The other stratagem involves an observation on the cost leadership aspects especially if the firm aims at targeting the average consumer. As such, this means that the company ought to ensure that it places its focus on the pricing mechanism it utilizes to ensure that it satisfies the needs of all kinds of consumers (Johnson, Scholes, and Whittington, 2008, p. 32). For instance, Jimmy Choo ought to consider average users with low income but with a need to purchase high-end products. They therefore prefer not to make such purchases. Such involves targeting different types of consumers rather than what the luxury brand as the organization is previously accustomed (Johnson, Scholes, and Whittington, 2008, p. 49). Jimmy Choo’s consideration of customers in the middle-income brackets, as well as those in higher economic brackets, would result in focusing more on having a large number of clients.
Evaluation Criterion for Strategic Choices on SAFe Analysis
SAFe Analysis Table
Analysis Summary
Financial Analysis
Breakdown of the financial performance of the new strategy for Jimmy Choo
Conclusion and Recommendation
Jimmy Choo should execute Strategy A (Product Differentiation) because it more profitable than the other alternative. By implementing this strategy, the fashion company will be able to set its product apart from its competitors and communicate with the right audience about the premium quality of its products. Additionally, the strategy will allow them to serve offer their current customer better services than competitors as well as create perception of quality among its current and potential consumers. Unlike the other strategy which requires the company to change its current pricing mechanism, this strategy will enable the company to continue using the premium pricing strategy which it has been using since the day it was created. The implementation of the strategy will help it utilize it strengths and overcome weaknesses as well as exploit opportunities and deal with threats. Competition is a big threat for the growth of the company, and the strategy will enable Jimmy Choo to differentiate itself from its rivals and gain competitive advantage.
Reference List
Cowles, C. (2013) Jimmy Choo’s Sandra Choi on why platforms just will not die. Available at: http://nymag.com/thecut/2013/04/choos-sandra-choi-on-why-platforms-wont-die.html.
Dwyer, F.R. and Tanner, J.F., 2002. Business Marketing: Connecting strategy, relationships, and learning. New York: McGraw-Hill.
Dyson, R.G., 2004. Strategic development and SWOT analysis at the University of Warwick. European journal of operational research, 152(3), pp.631-640.
Hacklin, F. and Wallnöfer, M., 2012. The business model in the practice of strategic decision-making: insights from a case study. Management Decision, 50(2), pp.166-188.
Jimmy Choo (2016) Jimmy Choo. Available at: http://row.jimmychoo.com/en/about-us.html Johnson, G., Scholes, K., and Whittington, R., 2008. Exploring corporate strategy: Text and cases. Pearson Education.
Jimmy Choo PLC Preliminary Results for the year ended 31 December 2015 (2016) Available at: http://www.jimmychooplc.com/media/18528/FY15-results-22-March-2016-Final-External.pdf.
Porter, M.E., 2011. Competitive advantage of nations: creating and sustaining superior performance. Simon and Schuster.
Kleinman, M. (2015, June 23). Mellon Puts Legal Boot Into Jimmy Choo. Retrieved from Sky News, http://news.sky.com/story/mellon-puts-legal-boot-into-jimmy-choo-10354947
