The business to be analyzed is the menswear company called The Outline, which sells basic clothes from high-quality materials with sustainable production approaches. After it was founded in Barcelona, Spain, in 2015, the firm’s nature was to provide men with a capsule wardrobe to reduce the need to buy various apparel. In 2020, The Outline broadened its client base by selling online, and in 2021, the executives decided to expand the whole business by opening a new branch in UAE.
Strategic Management Process for The Outline’s Expansion
The goals and mission of The Outline are based on a collaboration of sustainability and minimalistic high-quality menswear. Production includes zero-waste and recycling practices, and distribution primarily addresses carbon emission minimalization. The apparel is presented in capsule collections where all items match, and the high-quality materials increase product longevity. Men tend to be less attracted to fashion trends; therefore, classical and capsuled apparel from The Outline is a convenient and environment-friendly choice.
SWOT analysis for The Outline must include internal and external factors’ exploration to make the business maintain its position in the highly-competing clothes market. The company’s strengths are a sustainability-based mission and a specific segment of potential buyers with understandable needs and influence points. The weakness is a complicated, slow, and costly production process that affects the clothes’ prices. The opportunities are the growing trend of zero-waste and sustainability practices among consumers and, in the case of expansion, the demand for high-quality menswear worldwide. The threats are the domination of large brands in most countries and the possible difficulties in opening sustainable productions elsewhere.
The management strategy for expansion can be formulated with three main courses: manufacturing, advertising, and selling. Sustainability can be achieved in the production process by localizing the facilities and supplying raw materials from the closest regions. Research about the country and recourses must be conducted to avoid the threat of a new branch’s lack of environment-friendly practices. Marketing strategy needs to consider the potential audience, find the best channels to reach them, and begin actionable promotion before new stores launch. The selling products’ system has to evaluate the threat level from more prominent brands and choose the most convenient distribution.
The implementation of the strategy described above must begin at least six months before The Outline’s opening in the UAE. The time is necessary to work out the sustainable systems, regulate the juridical aspects, and establish the local production with the workforce and managers (Robbins & Coulter, 2017). Once implemented, the results can be evaluated based on The Outline’s popularity in the new location and its ability to follow its mission with the local manufacturing.
Establishment Process’ Evaluation
The internal factors to emphasize the process’s success are the ability to support main goals and find the niche of consumers in need of the product. External factors are word of mouth about The Outline and the increased competitors’ interest in high-quality essential menswear. Factors to discover weak points and threats are the inside difficulties in managing the manufacturing and outside legal or promotion problems.
The growth strategy for The Outline is initially based on expanding into new markets, starting from opening a branch in the UAE, however, extending the product line is also possible. Considering the growing trend in environment-friendly practices in production and daily life and the clear consumer segment for selling clothes, the most suitable strategy for The Outline’s growth would be concentration. If the business continues improving its production and increases its appearance in the worldwide apparel industry by expanding to other countries’ markets, it will soon become well-known and profitable (Robbins & Coulter, 2017). Different strategies like horizontal integration or diversification might go against the company’s goals, and vertical integration is too complicated and inconvenient for The Outline’s production.
Concentration is the appropriate growth strategy for the sustainable clothing brand because environment-friendly production is becoming popular in the industry and more important for consumers. Holtström et al. (2019) state that the “fashion industry needs to consider alternatives to growth through volume and a more life cycle-oriented approach to their products, from design to recycling” (p. 483). Consequently, The Outline can grow by pioneering sustainable production, opening branches and factories in various countries, and increasing competitiveness by reaching more consumers of the targeted segment.
BCG Matrix for Addressing The Company’s Growth Rate
The company’s strategic business unit plays a crucial role in implementing concentration as the growth strategy. Moreover, the clothes industry is highly competitive and includes brands with various missions and products, thus using the BCG matrix can help decision-making during The Outline’s expansion. In recent years, the fashion apparel industry’s market share is 4%, and its value is more than 400 billion U.S. dollars for menswear (Fashion United, n.d.). The most significant players are LVMH and Nike, which can be considered cash cows due to their low growth (Fashion United, n.d.). The stars are novel companies that offer uncommon clothes or have unique production approaches. Uniqlo is such an example with its implementation of technologies into clothes manufacturing. The Outline is dramatically tiny to compete with such companies, even though many of LVMH’s branches are located in Barcelona, forcing the brand to compete with them. As the business is only about to expand with the concentration strategy, the firm, in the best scenario, can be identified as a question mark, according to the BCG matrix.
The growing interest in sustainability can be beneficial for The Outline because the trend is attractive to investors. Also, modern consumers are more willing to change their habits toward helping the environment (Holtström et al., 2019). The Outline’s strategic business unit needs to research the possible ways to grow the capital required to open new manufacturing facilities and promote an environment-friendly style in menswear. Although the company is located between the dogs and question marks status in the BCG matrix, proper decision-making might move it to the star level.
Sustaining Competitive Advantage Determination
Determining the strengths and supporting the advantage is crucial for any company that operates in a highly competitive market such as fashion and apparel. For The Outline, addressing the needs of the niche audience is beneficial to maintaining growth. If designed and produced with qualitative materials, casual capsuled menswear will be in demand in developed countries. Besides, the customers’ loyalty would be set via the client-oriented approaches and the company’s mission demonstration.
The competitive force for The Outline can be determined and evaluated by applying Porter’s Five Forces Model. The strategy can identify the threat of new entrants, substitutes, and bargaining power of buyers and suppliers, and assess the current rivalry (Robbins & Coulter, 2017). Indeed, it is relatively easy to enter the apparel market or expand by opening new branches. The Outline has the competitive advantage in the original representation of sustainability and clothes production, therefore winning clients’ loyalty would help avoid damage from the new entrants and subsidiaries’ threats.
The buyers’ bargaining power is significant for the apparel market because the products are in high demand worldwide. The Outline’s niche, menswear, contains various buyers and sellers, thus identifying the benefits and influencing consumers’ willingness to support sustainability is crucial for the company’s competitiveness. Suppliers, on the opposite, do not have much power in the market because the materials and workforce are easy to find, move, and manage. However, The Outline can turn it into a competitive advantage by establishing local factories and managing the branches separately.
Even if narrowed to the menswear segment, the clothes market is structured as an oligopoly where a few firms dominate, and others exist by competing with each other. Some brands switch to sustainable manufacturing, and many small companies address consumers’ needs in particular regions. For The Outline, the strategy of operating as a local manufacturer is beneficial: their concentration caused by opening branches in different countries will lead to steady growth.
References
Fashion United. (n.d.). Global fashion industry statistics.Web.
Holtström, J., Bjellerup, C., & Eriksson, J. (2019). Business model development for sustainable apparel consumption. Journal of Strategy and Management, 12(4), 481-504. Web.
Robbins, S. P., & Coulter, M. K. (2017). Management (14th ed.). Pearson.