Because the clothing retail sales is through the development trend in the fashion industry, driven by the main retail clothing company operating risk is much higher. Retail clothing company will have a lower ratio, optimal leverage for investors to feel comfortable to meet with the company, in both good bad ability of capital structure and their responsibilities. Market conditions may significantly affect capital structure situation of the company. Under the assumption that a company need to borrow money for new plant. If the market is struggling, meaning investors are limiting companies to enter, because of concerns about money, borrow may be higher than the interest rate the company will pay.
These characteristics, a complicated supply chain and wide availability of data make the industry a suitable avenue for an efficient supply chain. Also the fashion industry has been in a transition during the last 20 years: significant consolidation in retail, with most of the apparel manufacturing operations moving overseas and, in more recent times, increasing use of e-commerce in retail and wholesale trade. Historically, retailers have tried to exploit relationships with suppliers. Bargaining power of buyers is moderate because of the size and concentration of major retailers. To reduce power and you gain customers, retailers seek to differentiate products and to create stronger brands.
Nordstrom distinguishes itself from other retailers by positioning itself as an upscale fashion store with outstanding customer service, and its multichannel approach. Many of the same clothes offered by Nordstrom can be purchased elsewhere for less money. However, Nordstrom knows that you can’t get the same level of customer service anywhere else, and people are willing to pay more
1.1 Research questions and objectives Only few researches have been conducted regarding consumers’ perspectives on ethical and sustainability problems in the fashion industry and on the effect it has on their buying comportment. (Dickson, 1999). Therefore, in my research, I would like to develop a better understanding of the behaviour of the consumers towards sustainable ( environmental friendly) & ethical (social) fashion products and answer the following research questions: 1) Do consumers really care about sustainability or do they feel pressured by the society to do? 2) What premiums are consumers willing to pay in order to get a sustainable piece of
When deciding whether to purchase a Lululemon product, buyers consider the standard of quality the clothes are made out of. As a relatively expensive label, customers expect no less than a leading-edge fabric that promises comfort and durability to cater the needs of athletes. Rather than having to constantly replace their athletic wear, buyers demand a product that will promise longevity. A rising demand for many consumers are on the basis of whether a product is environmentally friendly or not. In meeting this demand, Lululemon chooses to use reusable bags as their packaging and uses organic cotton and other eco-friendly fabrics in reducing the carbon footprint left by clothes as much as possible.
During the last years, Gap has been facing struggles because of its clothing design and faltered misjudgment fashion trend. As a result, the company has suffered for disappointing earnings and sales. One of the reasons is because in the attempt to turn around the company, the raw material and labor cost increased which lead to an increase of 20% per item. As a result, now the company is facing struggles because foreign competitors such as Zara, H&M, Walmart and Target are stealing its customers with cheaper and fresher fashion. Another driving force that affects the fashion industry is the information revolution.
Marketing Analysis 1. Provide a brief summary of the situation at The Fashion Channel (TFC) including the reason TFC hired Dana Wheeler. (5 pts) The Fashion Channel, a newly successful cable news network, is widely popular and gained large profit since its creation in 1996. Its huge success its due to its 24-hour, 7 days a week broadcast of specifically fashion related content and ads. Other cable networks like CNN caught on to the huge potential and appeal to this fashion sensation, and have given TFC significant competition and TFC is looking to drastically change its marketing strategy through segmenting and positioning.
Hence, when it announces the acquisition, firm value may drop simply because investors conclude that the market is no longer growing. The acquisition in this case does not destroy value; it just signals the stagnant state of the market. Why do sellers earn higher return? Buying firms are typically larger than selling firms. In many mergers there are so much larger that even substantial net benefits would not show up clearly in the buyer’s share price.
The effect of increasing the wage of workers who are at the minimum wage can encourage them. The marginal cost of wage is recovered by less absenteeism, turnover, and more productivity. The labor factor has not a constant return to scale as the contrary of capital, it has to be skilled and there are some variations in its production. We have for example to take in consideration the cost training cost (a fixed cost) before making an output. Workers during this period of formation are a sunk cost because they produce no output or a low output.
2.0 Porter’s five forces of Levi’s Strauss Threat of new entrants – low • Entry into a market where the production volume is so high already is not really a threat because the cost of production goes down. • Levi’s can produce more at a lower price and possibly sell for more. Bargaining power of supplier – low • Competition within manufacturer is high since it is mass – produced. • Manufacturer is located in many third world countries: Central America, China, Cambodia therefore Levi’s can switch to other manufacturer easily. Threats of substitute product - high • Buyers are likely to shift to other products considering the weather conditions.