Analysing Coach inc

The company Coach Inc. sells handbags as well as other high-end accessories. Coach Inc. has had amazing growth that is a testament to its performance and has shown to be impressive. The business has plans aimed at boosting market share and gaining an advantage in a fiercely competitive marketplace. This fashion-related business places a strong emphasis on product innovation and differentiation, and these aspects have been crucial to keeping the business afloat. Perhaps the company's brand name, which it has developed over the course of its existence, is more significant to this organization. Coach Inc. has been promoted locally and internationally thanks to the fantastic brand name both locally and abroad. Coach Inc. is depicted to be one of the key players in the fashion industry and particularly in handbags selling. The company has more potential of growth and the competitive price, integrity and the expertise design have increasingly led to the company’s success.



Key Words: Coach Inc., Competition, External Environments, Value Chain, Internal Environment.





Coach Inc. Company Analysis

Coach’s exceptional brand reputation has been a fundamental aspect and a primary driver in positioning the firm on a global scale. The company continually maintains its product line in handbags and other leather accessories and ventures in diversity which gives it a remarkable reputation in the industry. Therefore, it has managed to sustain competitiveness in the industry and realized considerable market share even though the market is characterized by stiff competition. Innovations and product differentiation attest to luxury and durability of its products (Coach Inc., 2017). The company attracts consumers as well as outperforms its competitors as its production is affordable and has high quality. Current paper will analyze the external and the internal environments of Coach Inc. to establish the underlying factors behind its success.

General Environment of Coach Inc. Company

Competition

The competition strategies that the company employs have been critical in increasing its market share. Its focuses on differentiating its product particularly in women’s handbags which is a key product aid in outperforming key rivals such as Apollo. Coach also aim at having quality and original products in the leather accessories. New and fashionable handbags are brought into the market every month. Notably, these handbags do not just have unique designs but also prove to be of highest quality (Devinney & Johnson, 2010). They also attest to the consumer demands. All the stores locally and globally have the current trending products in the market. For this reason, many customers are attracted to the company’s products and thus increasing the sales. More strikingly, Coach Inc. has a philosophy stating “accessible luxury” and with this, it ensures that it produces quality goods at affordable prices. Evidently, the brand name of the company has been a vital aspect in defining the success of Coach Inc. in the highly competitive industry. Since its establishment in 1941, Coach has created an outstanding brand image in the market and this arises especially from the sale of handbags. Another factor that has made it to be competitive is that it has established its branches in many nations and thus its products are readily available to its consumers. The company has over 200 stores locally and operate in 18 international markets. Indeed, this strategy has made the company to penetrate newer markets and thus increase the market share. Devinney and Johnson (2010) reports that the foreign market has been significant in shaping the success of Coach Inc.

Customers

Strategies to attract customers and retain the existing ones have been instituted. Coach is one of the companies in the world that highly value its customers. It has managed to do this through the excellent customer service. Customers’ needs and complaints are attended with promptness. In addition, the customer service department puts high priority to all customers. It is for this reason that it has massive sales every year. The yearly sales amount to around $2.6 billion (Trefis Team, 2017). Reports showcase that Coach Inc. clenches the biggest market segment in the sale of handbags in America. The strategy to have differentiated handbags along with other products enable the customers to have wide range of products to choose from the shelves. It also provides warrants for its goods and thus increase the confidence of the customers. Additionally, the customer have an advantage of accessing quality products at affordable prices.

Coach Inc.’s Forces of Competition

Threat of New Entrants

The industry has strong barriers that inhibit the entrance of new firms. The high capital investment that is needed to start a firm is a major impediment to anyone who wishes to enter the market. The high competition that is also evident also makes it difficult for any new firm to survive in the industry. The well established customer loyalty is also a key barrier. The new firms have problems in getting customers due to lack of trust (Trefis, 2017). Nonetheless, the existing firms have high potential of entering the market segment of another firm that exists in the industry. This is because of the loyalty of customers to the company that will guarantee sales and the existing resources that will make it possible to produce the products. The companies are well informed of the areas that have high profits and will thus seek to explore the markets.

Rivalry among Competitors

The fashion industry has an intense rivalry, and every firm comes up with ways of outsmarting the others. The immense competition is portrayed by the rapid innovations in the industry where the company comes up with new products that will attract and retain customers. The constant innovations depict to be a significant threat to Coach Company. The corporations make high profits, and this contributed to the growth of the entire industry. In attempts to address the issue of rivalry, the company delivers quality products. Its products are also differentiated. The handbags have designs that are unique and thus enhance its brand image. The broad selection of the products has enabled it to establish a huge market share. Coach Inc. takes approximately 28% market share in the US in the handbag market. The company competes with firms like Vera Bradley, Gucci, Vuitton, Juicy Couture and Marc Jacobs. The company is facing intense competition in Northern America from the fashion companies that are upcoming in the region like the Michael Kors, Tory Burch, and Kate Spade. The sales in this region of the upcoming companies are of tremendous growth. In 2015, Michael Kors registered a growth of 64.5%, 55.11% was recorded by Tory Burch, 47.6% was recorded by Kate Sade (Trefis Team, 2017). These figures overwhelmingly outpaced Coach Inc. which took a growth rate of 6.6% in the region. The increasing competition in the Northern US in the market of handbags and other accessories is a critical concern for the company’s level of stock in the future years. The decline in the store sales in the last quarter is likely to continue due to the intense competition that is evident in the North America.

Ways of Addressing the Competitive Forces in Future

Emphasis has to be directed in initiating practices which will enable it to become one of the best employers in the industry. This will be critical in enabling it to realize the long-term objectives. More importantly, the company will have workers that are object-oriented and thus help to attain the mission and the vision of the company. It should aim at attracting employees that have expert skills in various fields including management, marketing, and financial. Providing benefits to the exceptional performing workers will be a motivational factor that will be significant to the company. It has to support the goals of the employees including career development. Training of the staff will also be an important strategy that will enable it to equip the staff with the current trends in the market. It should also seek to penetrate newer markets to increase its market share and attract customers. Coach Inc. should not just concentrate on women's water but also diversify by venturing into the menswear such as clothes and shoes. Perhaps, investing in market research will make it understand the market and determine what the customers require. More attention has to be directed at the threats and the weaknesses of the company to identify the areas that are a drawback to the firm. Equally, it has to capitalize on its strengths and opportunities that exist to enabled it to grow.

Threats and Opportunities

Threats

A major theta is the stiff competition in the market that significantly reduce its profitability levels. The counterfeit products have also proved to be one of the primary threat. These products are normally cheaper than those of the company, and as a result, many consumers opt to buy them. Political instability in some of the countries that it is established in denotes to be another threat, and at times, this results in losses.

Opportunities

An opportunity of expanding through opening new stores both locally and in the international market exists. Also, it has an opportunity in it has an opportunity of attracting new customer through its products that are unique, quality and affordable.

Strength, Weakness, and Recommendation

Strengths

A primary strength is its good brand reputation and it’s the extensive business experience that has existed more than 70 years. It also has a strong financial position which enables it to open newer stores in new markets. The designs and quality are also are also critical strengths. The price stability that the company changes is also a strength.

Weaknesses

Coach Inc. concentrates in a smaller geographical location, and this is a major weakness. Even though it has tried to establish itself in a number of countries, many of its products are still inaccessible to many consumers. It also has not fully invested in menswear, and this weakness reduces its profit margins. These weaknesses are a hindrance to attain its mission and vision as well as an increase of market share. It has a limited bargaining power to its suppliers as it would encounter huge switching costs if it tries to change the suppliers.

Recommendation

Notably, the ever-increasing impact of globalization gives the company a primary reason to enact strategies that direct towards company growth both in the short and long term. The objective will be realized if Coach Inc. seeks to develop its market through geographical and e-commerce expansion. One of the underlining objectives should major in penetration of new markets in new places which seem to be promising for greater growth. The company has to fully participate in the annual fashion exhibitions with a goal of strengthening its brand name in the market. Product development is another recommendation that is appealing to the market. Formation of strategic alliances with other well-performing firms in the same industry will also enable it to benchmark and thus gain a competitive advantage. Again, it has to outsource and concentrate on the novel design of its products to attract more customers.

Coach Resources, Capabilities and Core Competencies

Resources

The company has tangible and intangible resources. The table resources include the trademark and patent, physical and financial resources. The company holds an international trademark in production, marketing, and distribution of the products. It has patent rights, design, and utility right. Its market capitalization is about 12 billion and owns many retail and wholesale worldwide. Other resources are the office equipment, financial resources, real estate, computers as well as furniture. The Human Resource Committee encompassing 17200 workers is a significant resource (Trefis Team, 2017). The intangible resources include the capacity to innovate and the brand name.

Capabilities

Coach Inc. Company has capabilities in carrying out distribution and selling channels which form up the supply chain. The products are distributed through wholesale. The design and management team is also a capability of the company, and it has undergone structural changes which are significant to the firm. Other capabilities include marketing and streamlined distributional strategy.

Core Competencies

The company’s core competency is embedded in its excellent brand reputation. The handbag product has been the significant factor that makes it be recognized and thus gives it a core competence. It has also established core competence in the handling of customers through the efficient customer service care. In respect to this, the company has gained customer loyalty. Besides, is the slogan of “accessible luxury” gives it a core competence in the price strategy (Devinney & Johnson, 2010). The unique designs and quality products that the company offers are a fundamental core competence.

Analysis of Coach Value Chain

The company’s products are manufactured externally and this involves a third party and licensing. Its products are sold in around 20 countries. Outsourcing of manufacturers has proven to be a cost-effective and made the company access to cheaper and vast sources of human capital (Coach Inc, 2017). However, outsourcing exposes the company to risks arising from the country and currency fluctuations. It carries out quality control activities to its employees and manufactures and therefore, identifies the loopholes that could be affecting the company. Its supply chain and distribution models are well established and have strategies in place that drive its success. The company’s resources, capabilities and core competencies also create value to the firm. Its brand name and the spirit of maintaining affordable prices of quality products increase sales. The excellent supply chain is efficient and cost-effective. The resources it owns both, physical and financial could be explored to create more stores and increase the revenue.

Conclusion

Undoubtedly, Coach’s brand name is appealing to many customers. It has a primary focus on restructuring its strategies basing on the set objectives in creating a great brand name that gives it a competitive advantage to its key rivals. The company is also committed to customer satisfaction, quality and affordable products. The analysis of Coach Inc. reveals that it operates in a highly competitive market. However, formulation of sound strategies that attest to its goals has been a driving force in addressing its threats and weaknesses and thus perfume well in the competitive market. Coach Inc. has a more potential for more growth, and initiating the stipulated recommendation will be one of the significant wheels in maintaining its success.



References

Coach Inc. (2017). Company Profile. Thomson Reuters. United States Securities and Exchange Commission Washington, D.C. Retrieved on October 27, 2017 from http://www.coach.com/company-information.html

Devinney, T., Yip, G., & Johnson, G. (2010). Using Frontier Analysis to Evaluate Company Performance. British Journal of Management, 21(4), 921-938. http://dx.doi.org/10.1111/j.1467-8551.2009.00650.x

Trefis Team. (2017). Coach Through the Lens of Portes Five Forces. Retrieved on October 27, 2017 from https://www.trefis.com/stock/coh/articles/205735/coach-through-the-lens-of-porter-five-forces/2013-09-13