Gagan (13) assignment_3_mos


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Gagan (13) assignment_3_mos

  1. 1. Management ofServicesAssignment-3Case Study : GiordanoSubmitted By:Gagan Pardeep; Call no.102013Submitted to:Prof. Mukesh NauhwarIndus World School of Business Greater NoidaDate: 22nd Feb. 2012
  2. 2. 1. Describe and evaluate Giordano product business and corporate strategies? i) Product Strategy: Giordano portraits itself as being more than just a retailer of casual apparel. It was 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 Giordanos merchandise. Giordano is able to provide a high level of customer service through a concerted effort, which involved every employee of the company. However, it is also essential to recognize the importance of the management and leaderships commitment to be customer-oriented and to provide high quality service. 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. Being customer-oriented allows Giordano to focus on what the companys products mean to the consumer. Customers are often encouraged to request certain product adaptations if current products fail to meet their expectations. For instance, Giordano removed its logo from some shirts. Another example is Giordanos invitation to customers to set the price of its jeans. Giordanos other product strategy is to sell a small number of core products in its stores. While other retailers have 200-300 items, Giordano features no more than 100 variants of 17 core items. Flexibility and speed is essential in the retailing industry, especially when the fashion trend is evolving constantly. Maintaining a restricted range of core products has allowed Giordano to respond to market changes faster than its competitors, and to keep costs down. ii) Business Strategy: There are three generic strategies: o Cost leadership, o Differentiation and o Focus, and various combinations of these three pure strategies. Giordano seems to pursue a combination, i.e. a focused differentiation strategy. The primary source of differentiation comes from Giordanos commitment to quality, in terms of the products it sells and the service it provides to customers. This can be illustrated by its dedication to2|P ag e
  3. 3. training and motivating its front-line staff as well as its no-questions asked return policy. Giordanos 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. Giordano is 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 Blue Star Exchange (BSE) line clearly indicates its commitment to the existing value-for-money segment, but at the same time it is upgrading its core brands 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 i.e. the inability to move to new niches. iii) Corporate Strategy: Giordano initially adopted a vertical integration (backward) strategy, as it had 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 amongst suppliers (manufacturers) of good quality apparel became so intense that prices came down dramatically, and it became an opportunity cost to rely on Giordanos 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. This can also be evident in their allocation of investments to expand its retail outlets. This strategy is risky but consistent with Giordanos core competency i.e. in customer responsiveness as opposed to operational efficiency. 2. Describe and evaluate Giordano’s current positioning strategy. Should Giordano reposition itself against its competitor in its current and new market, and should it have different positioning strategies for different geographic markets?3|P ag e
  4. 4. Giordano was founded in Hong Kong by Jimmy Lai in 1980. In 1981, it opened its first retail store in Hong Kong and began to expand its market by distributing Giordano merchandise in Taiwan through a joint venture. In 1985, it opened its first retail outlet in Singapore. Responding to slow sales, in 1987 Giordano changed its positioning strategy. Until 1987, it had sold exclusively men’s casual apparel. When Lai and his colleagues realized that an increasing number of female customers were attracted to their stores, he repositioned the chain as a retailer of value-for-money merchandise, selling discounted casual unisex apparel, with the goal of maximizing unit sales instead of margins. This shift in strategy was successful, leading to a substantial increase in turnover. In 1994, Peter Lau Kwok Kuen succeeded Lai and became chairman of the company. Management Values and Human Resource Policies a willingness to try new and unconventional ways of doing business and to learn from past errors was part of Lai’s management philosophy and soon became an integral part of Giordano’s culture. He also believed strongly that empowerment would minimize mistakes — that if everyone was allowed to contribute and participate, mistakes could be minimized. Another factor that contributed to the firm’s success was its dedicated, ever-smiling sales staff of over 11,000. Giordano considered frontline workers its customer-service heroes. As Charles Fung, executive director and general manager (Taiwan) remarked. Giordano had stringent selection procedures to make sure the candidates selected matched the desired employee profile. Selection continued into its training workshops, which tested the service orientation and character of a new employee. Giordano motivated its people through a base salary that probably was below market average, but added attractive performance related bonuses. These initiatives and HR policies empowered its frontline employees and thus resulted in higher customer satisfaction. 3. What are Giordano’s key success factors and sources of competitive advantages? Are its competitive advantages sustainable, and how would they develop in the future? Giordano’s Key Success Factors i) Fast and Market driven new products development. ii) Systematically collects ideas from customers front line and experienced designers iii) Fast turnaround from market impulse, design, manufacturing to distribution to the shops4|P ag e
  5. 5. iv) Relies on effective technology to assist on organizational their design process communications and on Giordano’s part effort others intangible sources must continually be made of advantage, which are to obtain and utilize difficult for competitors to feedback from target copy and implement customers effectively. v) Attracting and retaining good staff in design its important however development of these Key areas is beneficial. vi) Operation, Logistics and IT: Excellent Management of systems and integration of activities, e.g. stocks obsolescence costs are minimized due to Giordano’s efficiency in logistics and operations may be copied or even exceeded with an acquisition of superior systems. However, there are not many competitors who would be able to achieve that level in near future. 4. Could Giordano transfer its key success factors to new markets as it expanded both in Asia and other parts of the world? Retailing in Asia is going through massive changes, due to the entry of international chains into Asian markets: as a matter of fact it is the industry with the greatest increased purchasing power. Traditionally, Asias retail advantage was seen as low costs due to low labour costs and rentals, but the Asian retail landscape has undergone much change since the 1960s as a result of its economic growth and social emancipation. Todays retail market is highly cosmopolitan, complex and sophisticated with nearly every international brand and retailer found there. Among the strategies adopted by Asian retailers are niche marketing and regionalization and they have also forged strategic alliances with other larger retailers. With a rapid economic growth, a rising population and changing lifestyles, the Asian market offers an attractive trading environment both for retailers and manufacturers. The trading environment and marketing environmental factors in the different regions are diverse, so businesses can take advantage of the vast range of opportunities adopting flexible marketing approach to local needs. Consumerism has been an enormous stimulus to the Asian national economy so that, recently, also the Asian market has been permeated by5|P ag e
  6. 6. the "shop till you drop" syndrome. As East Asia emerges as the worlds fastest-growing consumer market, manufacturers and retailers are seeking the right balance between global, regional and local brand policies to secure the loyalty of buyers in an increasingly competitive business environment. As Western nations struggle with problems of maturity and slow growth, Asian companies, previously preoccupied with exports, are now turning their attention in increasing brand loyalty mainly in the Asian consumer. Foreign multinationals are also moving into East Asia in growing numbers or expanding their operations in the Asian market. China, from where company hails is one of the biggest and fastest growing markets in Asia so company has knowledge about at least Asian market and as company expand this knowledge will undoubtedly provide advantage. Leverage on existing technology is another factor for Giordano’s success and it can use such technology as and when it moves to other destinations and thus can score success. 5. How do you think Giordano had/would have to adapt its marketing and operations strategies and tactics when entering and penetrating your country? i) Concentrate on the similarities between countries e.g. Indian market is still touch and feel based market so they must have to be present at as many locations as possible (higher penetration). ii) Careful to consider national and cultural differences in some aspects of its marketing mix including emerging marketing tools and medium like internet (growth of e-retailing in India can not be ignored) and at the same time making optimum mix. iii) Even the most sophisticated training program won’t guarantee the best customer service if they are not trained to serve in an Indian environment, where customers are very tough and difficult to satisfy. iv) Giordano should manage to deliver a high level of service.6|P ag e
  7. 7. 6. What general lessons can be learned from Giordano for other major clothing retailers in your country? i) People aspect Investment on training & Development, CRM: companies should invest in its people especially in frontline employees as they are face of organization and represent whole organization, its values and its culture. They are the one interact with consumers and customers and thus influence the customer satisfaction and retention. People (employees) being one of the ‘P’ of marketing especially in service industry, it is critical to maintain them in order to provide better quality and thus higher satisfaction. Investment in people may not give short term returns but after certain time it push the bottom line up. Company invested in maintaining customer relations maintain its database and providing then various retention incentives through various loyalty schemes. ii) Operational aspect Utilization of technology: Giordano has leveraged on existing technology mainly on IT, internet and telecom. It has used various new applications of technology e.g. ERP for managing its inventory and stocks so that neither there is excess of products on selves of retail store not there is stock out. The inventory and stock information is shared with its suppliers so that they can also be updated about which product is moving fast and which is slow and thus they can also plane accordingly. These technological applications can be adopted my any setting and any organization. iii) Social aspect CSR: Giordano’s CSR activities like World Without Stranger are well recognized worldwide and it also helped it to build its brand equity. Such initiatives will surely be beneficial in long run and will provide a strong brand affinity from customers and an empathetic response from governing or regulating bodies. iv) Service Aspect Emphasis on supplementary services: Giordano, along with its product offering also emphasized with its services at all point of contacts. It trained and empowered its employees to meet highest7|P ag e
  8. 8. level of customer satisfaction at any moment of truth. Its emphases on services like unlimited trials, free exchange - without a single question, and serve with a smile made its customers only its for lifetime.8|P ag e