Free «VF Corporation (Business Plan)» Essay Sample
1. VF Corporation works in apparel industry. This industry is particularly developed in the US, and it is growing and continues developing. The apparel market is huge. In 2013, total sales of closing stores in the US were more than $182 billion. This figure has a strong growth tendency, with exception of years 2008 and 2009 when sales decreased because of economic crisis. In 2009, total sales were $151 billion, and they grew gradually to $182 billion in 2013. Therefore, growth rate for 4 years was about 21% (Statista, 2015).
Moreover, it is also important to study groups of consumers in the market and their expenses. According to the statistical data, most expenses households make on apparel products (about 30%) go on adult women clothes. Clothes for adult men are on the second place, and footwear is on the third. Expenses on kid clothes and other apparel products are much lower. Therefore, it can be noticed that the most sold apparel products are clothes and footwear for adults, and those markets are the largest (Bureau of Labor Statistics, 2012).
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The apparel industry in the US is growing. At the same time, the number of employees in this industry is declining constantly. In 1990, about 900,000 employees worked in the industry. In 2000, the number was about 480,000, and in 2011 – only about 151,000. The average size of apparel manufacturing establishment has decreased, too. In average, 28 employees worked in one establishment in 2001, and in 2010 – only about 20 (Bureau of Labor Statistics, 2012). Such statistics was caused by the fact that many apparel producers moved their plants from developed countries to different developing countries where the costs of raw materials and labor are lower. In the developed countries, majority of designers and salespeople are employed in apparel industry. According to the statistics, exports of apparel products from developing countries are growing constantly. The leaders in apparel products exports are China, Bangladesh, India and Vietnam (Bernhardt, 2013).
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2. As it was mentioned above, most customers in apparel industry are women, and total sales are growing constantly. The industry has many competitors. They can be categorized as one or several groups of apparel products (for instance, sportswear, kid clothes, and so on), as well as sell many different types of apparel products. The largest companies in the retail industry are Zara, Nike, H&M, Ralph Lauren, and Adidas (MBA Skool, 2014). There are no substitutes for clothing as a whole. At the same time, one piece can be substituted with other of the same or another brand. The main suppliers are developing countries where apparel production is located. In 2014, the most popular suppliers were located in China (all apparel companies used it), Vietnam, countries of Central America, Indonesia and Cambodia (Lu, 2014).
Many new companies enter the market. However, there are many barriers to entry in the clothing market. The most important one is brand. If the brand is well known, it is more likely to be popular, even if its price is high. At the same time, if the brand is new and not known by the customers, it will not be sold in large amounts, even if the goods have low price and high quality. There are also other barriers to entry. Most of them are common to the whole retail industry. An important barrier is related to design and fashion trends. If the apparel producer or retailer wants to become popular, it should study current trends or develop its own unique trends (Wagner, n.d.). Important to consider the fast pace of style changes. If it fails to do that, consumers will leave it. One more important constraint that can cause problems is product localization and adaptation to foreign markets. If an apparel company wants to spread abroad, it should consider local language and fashions (Andrus, 2014).
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It is also important to study some current trends in apparel industry and market. Many famous apparel retailers try to follow them. Currently, online apparel trade becomes more and more popular. Therefore, most apparel retailers have online stores. They are convenient for customers who prefer buying online and help the company to cut costs on rent and labor (Wagner, n.d.). One more trend is optimizing online apparel trade for mobile phones in order to make shopping more convenient for the growing amount of smartphone and tablet users (Spears, 2014).
It is also important to focus on some current challenges in the apparel industry and markets. As it was mentioned above, fashions are important factors of consumer choices in apparel markets. However, not only those are considered. As online trade is growing, retailers compete in tries to make their websites, apps, social media presence and other elements of online performance more creative and convenient than competitors’ ones. Therefore, modern consumers consider not only brands and fashions but also online services. For instance, they can compare prices in several online stores or choose a store with better design or delivery terms. Therefore, online presence and adapting to current conditions can become a challenge for many companies.
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One more current challenge in closing industry is inventory levels control. As there are many types of clothes, it is hard to predict what will be sold better. Therefore, it is important to plan an appropriate inventory level to avoid deficits or surpluses in goods. Moreover, most companies purchase goods abroad, and delivery time as well as possible layovers should be considered. In addition, product sourcing can cause issues, too. China has been for a long time the most popular country of apparel production. However, as working conditions are improving and wages are growing, Chinese goods are becoming more expensive. Therefore, companies should find the countries to buy their merchandize for reasonable prices. Finally, corporate sustainability and social responsibility are important current challenges, too. In order to become responsible, an apparel company should provide good working conditions and make production friendly to the environment (Brunot, n.d.).
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3. VF Corporation has many strengths in comparison with its competitors. The company owns and sells apparel of many brands, and it is beneficial because more customers are likely to buy them. The brands are also divided in several groups: jeanswear, imagewear, outdoor and action sports, sportswear and contemporary (VF Corporation, 2015). As a result, the company is likely to find its customers from different occupations, hobbies and age groups. It is beneficial because many apparel companies sell only one type of apparel (for instance, Adidas – only sportswear). Therefore, VF Corporation benefits from its multibrand image.
VF Corporation is present globally. It is the largest apparel company in the world. The firm operates in 150 countries all over the world. It has 47,000 retailers in all channels of distribution. In addition, in order to manage the company better, several regions of management were developed: US Region, American Region, EMEA Region, and Asia-Pacific Region (VF Corporation, 2015). It provides benefits over other apparel companies that do not operate in so many countries and do not have so many retailers. VF Corporation has good financial results and a positive tendency in them. From 2010 to 2014, total revenues grew from about $7.7 billion to about $12 billion. Net income increased from about $570 million to about $1 billion for the same period. Dividend payout had a positive tendency, too (VF Corporation, 2014). Therefore, a company has a benefit of good financial performance, and it is likely to continue growth in the future.
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VF Corporation has a reasonable responsibility policy. For instance, it honors associates who participate in community services. The company resolves community social and environmental needs. "Explore Your Parks" program is devoted to environmental education. The company encourages environmental education and environmental friendly practices (VF Corporation, 2015). Reasonable responsibility policy provides benefits and social loyalty to the company.
A single weakness of VF Corporation that can be noticed includes problems on its factories. Such problems can spoil the firm’s reputation. For instance, in 2014, over 50 workers were injured on factory in Bangladesh. the company promised to inspect factories to avoid such situations in future (United Students Against Sweatshops, 2014).
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4. VF Corporation is a leader in apparel industry, and it has many opportunities for the future. As it is the largest in the world, it can spread further and open more locations all over the world. As the company owns many popular fashion brands, it can buy even more brands to expand. The company can use the benefits of global apparel market growth. VF Corporation is not likely to have powerful threats because it exceeds its competitors. The only threat is the loss of good reputation because of possible problems on factories in the future.
5. VF Corporation should satisfy the needs for a wide choice of apparel for different purposes and of good quality. The targeted consumers are consumers of all ages and different lifestyles and occupations because the company has various brands. The resources and capabilities to use include factories and suppliers, designers who create new fashions, supply chains, as well as stores and Internet trade. Vision statement is: “We will grow by building leading lifestyle brands that excite consumers around the world” (VF Corporation, 2015).