The paper "Coach Inc Strategic Issue and External Environment" is a great example of a business case study. Coach Inc. started as a small family-run leather manufacturing entity in 1941. Through the years, the company became well-known for providing super quality leather goods that are classic in terms of style. The company also developed a strategy of setting prices 50% lower than those of brands that are more luxurious. Sara Lee bought Coach in 1985 and expanded rapidly with the policy remaining intact. However, the company started to lag behind its competitors with trendiness becoming an issue that led to a decline in sales.
The company adopted a turn-around plan that positioned it as an accessible luxury brand that was a source of competitive advantage. Coach went public in October 2000 which saw its sales quadruple from $555 million in 1999 to more than $4.2 billion in 2012 signifying success in identifying and capitalizing on opportunities quickly for growth. Coach Inc. provides to the market well-diversified products that consist of bags for men and women, leather accessories, leather apparel products, business cases, footwear, jewelry, travel bags, watches and fragrances. Coach adopts a multi-channel distribution strategy in two segments; Direct-to-consumer and indirect.
The direct-to-consumer is articulated by selling to consumers through stores operated by the company in North America, China and among other areas and the internet. Indirect segment sales are through wholesale customers in over 20 countries. The company mission is articulated in the following statement ‘ Coach seeks to be the leading brand in terms of quality lifestyle accessories offering classic, modern American styling. ’ Coach is actualizing its mission by focusing the sales on the three countries that lead in demand for luxury goods. Strategic issue The term strategic issue articulates an unresolved question that has a significant impact on the course and direction of a firm, and a decision is needed to solve it.
The strategic issue is a major factor and lies directly at the heart of a business entity. Coach Inc. offers unique, easy to recognize luxury products that are well made and offer excellent value. Coach Inc. designs and markets bags for men and women, leather accessories, clothing products, business cases, footwear, jewelry, travel bags, watches, and fragrances. The two key strategic priorities are articulated and include increased global distribution and improvement in same-store sales productivity.
Coach brands are positioned in the lower part of the affordable luxury pyramid. Larger opportunities are present in this particular market relative to that of the most exclusive brands. Coach has seen increased growth in the number of factory stores brought about by the economic downturn. The existence of factory stores that offer ten to fifty percent discount has enabled the company to maintain a full price policy in the full price stores.
The factory stores have a 75% inventory capacity specifically made for it, and the remaining 25% is made up of overstocked items and discounted items. The company’ s’ CEO substantiates the price cuts are critical to business success since 80% of clothing products sold to women are purchased from discount stores. The factory store strategy has capitalized on the brand image projected by Coach to ensure the identity is not diluted. The company, however, has an accelerated factory opening that analyst have become worried about as it will someday weaken the company image.
The dilemma faced has led to comments from critics stating ‘ to be unique and exclusive you cannot be ubiquitous. ’ Therefore, the strategic issue seeks an answer on will the factory stores dilute the brand image of Coach Inc. ?
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