Online Custom «Individual Case Study: V.F. Corporation» Essay Sample
Table of Contents
- What Will Be the Strategy to Ensure Supply Meets the Greater Demand?
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- Will It Be a Greater Number of Suppliers in Asia or Is Now the Time to Have Production Facilities Closer to the United States Market?
- How Many New Warehouses and Distribution Centers Will Be Required?
- How Should VFC Approach International Expansion?
- A Three-Year Strategic Plan for VFC’s CEO Eric Wiseman and His Top Management Team
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This book report will give answers to the questions concerning the article V.F. Corporation – 2011 written by John J. Burbridge Jr. and Coleman R. Rich. This article provides the history, general description of work, main competitors and financial statements of V.F. Corporation. This corporation operates mostly in the USA, Russia, India and China. The answers to the questions related to the article will be provided below.
What Will Be the Strategy to Ensure Supply Meets the Greater Demand?
VF Corporation will develop numerous initiatives to ensure that the supply produced by its companies meets the increasing demand. These initiatives will be implemented in all of the corporation’s companies located all over the world (in the USA, Europe and Asia). This will provide generalized vision on coverage of demand and enable timely rectification of all arising issues.
The first strategy consists in customers’ inquiries. Special interrogators will prepare questions to ask people in small and big shops and in shopping centers. The questions will be aimed to discover whether these people usually find the clothes they search for in the shops of VFC. It is also important to identify whether the quality of these clothes meets their demands and whether they find something that surpasses their expectations, etc. Both women and men, youth and older people will be asked these questions in order to determine opinions of different social groups. It is extremely important for VFC to understand opinion of different social groups because production of its companies is oriented towards meeting the needs of various clients. It also should be noted that such questionnaires will be created in different seasons, because the corporation should ensure that the supply meets demand of people all the year round. Moreover, the questions will be asked not only in oral form. In each shop, every buyer will be proposed to fill a questionnaire form, which will contain different questions in order to investigate consumer satisfaction with the proposed range of production. These questionnaire forms will be totally confidential. Moreover, special investigations will be carried out on the Internet. Nowadays, social networks and Internet itself play considerable role in life of almost each person, especially young one. People spend much time on studying modern trends and choosing clothes. Special inquiries will be placed on the most popular sites for investigation whether the customers are satisfied with the amount and quality of production proposed by VFC.
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The next strategy is aimed to elucidate whether apparel supply meets growing demand. Thus, it will analyze success of sales as well as reasons why people do not buy clothes in the shops, which propose the production of VF Corporation. Among such reasons may be lack of size, absence of desired color of clothes, etc. If managers notice that the above mentioned reasons become one of the most common causes why people do not buy clothes of VFC, they should inform the company’s top management about it. Decisions concerning the increase of the amount of production and its diversification can exclude these causes.
One more strategy consists in the analysis of availability of apparel in the shops. If managers determine that high demand on clothes leads to fast snatching up, which makes the boards remain empty for a long time due to untimely and insufficient supply, they should immediately inform top managers. Top managers should develop and implement initiatives for rectification of the above mentioned issues by increasing the supply and making the supply chain more effective and efficient. In any case, if top management recognizes considerable increase of demand in the future, it should plan to enhance the supply by producing more apparel, making more warehouses reserves, building or leasing more warehouses and distribution centers. It is also essential to acquire new production companies and brands, concluding agreements with new producers. The improvement of the supply chain may be reached due to implementation of different logistic decisions, such as increasing the number of used transport and choosing faster and cheaper routes of transportation.
The last strategy, which will ensure that the supply meets the increasing demand, consists in the deep analysis of competitors’ activities. Analytics should pay attention to differentiated production proposed by competitors and popularity of this production. If the rival company offers customers some discern apparel the demand of which is rather high, the managers of VF Corporation should pay their attention to this production. They can propose the similar or improved type of clothes to customers and attract their attention by such product differentiation.
Will It Be a Greater Number of Suppliers in Asia or Is Now the Time to Have Production Facilities Closer to the United States Market?
VF Corporation will increase the number of suppliers in Asia instead of increasing the production facilities closer to the United States market. It is senseless to increase the number of production facilities closer to American market because of several reasons. First of all, according to the article, the demand of apparel in the USA is fully covered. The second reason is that, as it is mentioned in the article V.F. Corporation – 2011, VFC intends to increase its presence in Asia. Building relationships with greater suppliers in Asia will be rather reasonable step because it will provide the increase of production facilities nearby the future market. This will lower transportation costs as there will be no any necessity for long distance transportation; decrease time of transportation of apparel from places to warehouses and shops; lower expenses on custom clearance formalities; provide faster response to changeable market conditions (increasing or decreasing the demand, changing fashion); decrease necessity of building warehouses to store ready production, etc.
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Moreover, cooperation with Asian suppliers is more attractive to VF Corporation than cooperation with suppliers in other countries because of lower cost of production. The superfluity of labor force, lack of governmental regulation of labor process, absence of trade unions, and low labor security are the main backgrounds of low price of production in Asia. The cost of different materials, especially synthetics, is also considerably lower in Asia than in other countries all over the world.
At first view it can be considered that development of relationships with greater number of suppliers in Asia can lead to some logistics issues because of the necessity of produced apparel transportation to other countries all over the world. However, if to scrutinize the issue, it is obvious that logistic problems are minimized due to several reasons. The first one, as it was already mentioned above, is that the majority of production made in Asia will be also distributed and sold in this region. The second reason is that even if the necessity of long-distance transportation of produced apparel arises, it would not be a problem because of availability of numerous container lines which propose quick and low-cost transportation of production to any place in the world.
How Many New Warehouses and Distribution Centers Will Be Required?
The expansion of VF Corporation business will lead to the necessity to open new warehouses and stores both in the territory of the USA and abroad. Four new warehouses and four new distribution centers should be built in the territory of the USA: one in the East Coast of the country; one in the West Coast of the country; one in the central part of the USA: and one warehouse and one distribution center in Alaska. Hence, VF Corporation will be able to meet customer demands more efficiently in every part of the country.
Furthermore, new distribution centers and new warehouses should be built in the territory of the Russian Federation, as well as in India and China. One distribution center and one warehouse should be built nearby St. Petersburg since it is one of the biggest cities of Russia. From these distribution center and warehouse, the apparel can be spread all over the North-Western part of Russia. One distribution center and one warehouse should also be built nearby Sochi to spread the production all over the South-Western part of the country. There are no big cities where the production of VF Corporation will be in demand in the Eastern part of the country. Thus, building new warehouse and new distribution center in this area seems unnecessary.
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Two big distribution centers and two big warehouses should be built in China: in the northeastern part and in the southeastern part nearby big ports. As a first step, this will be enough for covering existing demand. However, there is a high possibility that VF Corporation will be obliged to build additional distribution centers and warehouses for meeting the demand of the most highly populated country in the world. Besides, one distribution center and one warehouse should be built in the central part of India. This will provide timely delivery of apparel into any part of the country. There will be nine new distribution centers, as well as nine new warehouses.
How Should VFC Approach International Expansion?
The international expansion can be achieved by thorough implementation of consistent expansion strategy. This strategy will be based on determination of locations where expansion will be the easiest and the most effective. It will study the market condition of current and possible competitors, determine the necessary amount of production for successful expansion of the new market, and evaluate people’s needs and perceptions. Its objectives are also to specify the type of production (sport clothes, contemporary clothes, ImageWear, outdoor and action sports clothes, Jeanswear) or combine all these types, which will be popular at certain locations. The expansion strategy will help build relationships with producers and suppliers nearby this location, as well as develop logistic network of transportation of goods from the places of production to warehouses, distribution centers and shops. Finally, it will involve building or leasing warehouses and distribution centers; hiring and educating personnel, and realizing a strong advertising campaign.
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Much attention should be paid to close cooperation with local analytics, managers and distributors. These people are knowledgeable about local laws and regulations. They can obtain reasonable information concerning market positions of competitors. They also better predict and timely correspond to changeable market conditions (for instance, the increase or decrease of demand).
As it was mentioned above, VF Corporation should perform thorough study of local laws and regulations. This is extremely important to avoid any barriers of new international markets expansion, such as additional taxations, quotas, restrictions, limitations of trade activities, surcharges, etc.
Much attention should be paid to the economic and political situation of the country where VF Corporation intends to expand. Local crises can lead to high vulnerability of demand and production prices. Different political decisions may either stipulate extenuation of trade relationships with other countries or stoppage of these relationships (by limitation of import or export, imposition of high quotas, and so forth). Studying social policy is also very important if the corporation intends to open its own shops and offer its production directly to customers. The corporation should clearly understand local regulations concerning protection of workers, on-the-job safety, minimum salary requirements, maximum work-hour limitations, overtime limitations, and so on.
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Moreover, much attention should be paid to investigation of the character and mindset of local population. The perceptions of people living in different territories differ greatly due to social, ethnic, religious and economic distinctions. It means that type of clothes that is acceptable, attractive and in great demand for the USA population can be unacceptable and non-demanded in Asian countries.
VFC should be ready for a long process of new workers’ employment. Thorough examination of personal skills and knowledge should be performed. Then, employees should pass special studies, where they will learn about mission and vision of the company, working specifics, rules, which should be strictly obeyed, and so forth.
Successful expansion of new international markets is usually connected with implementation of modern technologies. On the one hand, these technologies require high initial investments. On the other hand, they decrease production time, lower production expenses and labor contribution. It should be mentioned that employees have to receive strict instructions concerning the process of new equipment exploitation.
A Three-Year Strategic Plan for VFC’s CEO Eric Wiseman and His Top Management Team
The special strategic plan should be thoroughly developed and implemented in order to reach considerable growth described in the case study. First of all, corporation’s strategy should be prepared by the Strategy and Innovation Department. The main direction of this strategy should be presented to Chairman, President and CEO for obtaining their initial approval. After that, all details of the strategy can be studied. Managers should investigate perceptions of customers in order to determine what production should be produced as well as to define its amount. Special studies for determination of the amount and market position of existing and possible competitors should be carried out. Much attention should be paid to financial aspect of the above mentioned strategy. The amount of initial and following investments, the estimated amount of revenue, taxes and other financial indicators should be thoroughly calculated. The assortment should be developed and approved by departments which represent different types of apparel. The hiring process should be discussed with the Human Resources department. The arrangement of logistics is the task of Supply Chain department. The completed strategic plan will be presented to Chairman, President and CEO for final approval. All the above mentioned negotiations and approvals will take about three months.
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The next stage will be realization preparation. VF Corporation should primarily conclude contracts with producers and suppliers to start a production process. At the same time, a logistic network should be created. Special contracts should be signed with transport companies. Warehouses and distribution centers should be leased or bought. New shops should be opened. The hiring process and new employees’ education should be started. Special advertising campaign should be initiated as well. All these procedures will take about three months.
The next stage is realization, which predetermines opening new shops or work through distributors. Much attention should be paid to information collection concerning the amount of sold production, as well as raised issues and problems. Managers should timely rectify these issues and adopt necessary procedures for elimination of any problems in the future. This stage will take one year to be accomplished. After the completion of the first year, all the financial information should be collected and thoroughly analyzed. Managers should determine the strengths and weaknesses, any opportunities and threats of the plan. The future steps should be directed to the enhancement of advantages, using the opportunities (for example, expansion of new locations or market segment), reduction of disadvantages (for example, elimination of unnecessary expenses) and decrease of threats (for example, strengthening competitive position of a corporation). During the next one and a half year, all above mentioned procedures should be implemented under strict control of managers.