Coach Inc.

In the fashion business, Coach Inc. holds a dominant position in the sale of handbags and opulent accessories. Coach Inc. has had significant expansion in recent years, which has been outstanding and served as proof of its success. The company's ability to consistently grow in the market fashion industry is a result of its clearly defined business strategies. Product innovation and differentiation are a key component of Coach Inc.'s business strategy, which has greatly contributed to the company's success. Unquestionably, a stronger brand name is one of the distinguishing aspects in which the organization has made significant investments. The brand image maintains a competitive edge and makes the company claim territories not only in the local markets but also globally. In respect to this, Coach Inc. is depicted to be one of the key players in the fashion industry and particularly in the selling of handbags. The company’s strategy to revolutionize its products and deliver outstanding products has led to significant fashion trends that are rich in differentiation.

Key Words: Coach Inc., Handbags, Competition, Value Chain, Capabilities















Coach External and Internal Environments

Coach’s exceptional brand has been a fundamental aspect and a primary driver in positioning the firm on a global scale. Notably, Coach Inc. continually maintains its product line in handbags and other leather accessories and ventures in differentiation which gives it a remarkable reputation in the industry. For this reason, Coach Inc. is able to maintain a competitive edge despite the stiff competition from its rivals such as Armani, Polo, Burberry, and Gucci. Innovations and product differentiation attest to luxury and durability of its products (Coach Inc., 2017). The products of the company are of high quality, and it charges affordable products and thus attracts consumers as well as outperform its competitors. The long-term goals have been achieved through the excellent brand name which elucidates to be the primary driver for its massive sales. This paper will analyze the external and the internal environments of Coach Inc. to establish the underlining factors behind its success.

Analysis of Coach Inc. General Environment Segments

Competition

The company's strategy to compete in the women's handbags and leather accessories has allowed it to be differentiated from its rivals and have a healthy competition. Every month, the company introduces new fashionable handbags of the highest quality into the market. It keeps its store updated with the current trends in the market, increasing the store traffic and in turn culminating to better sales. The company has a philosophy of “accessible luxury” which directs at creating highest quality to customers at reduced prices (Egner, 2011).

Coach brand image is a significant factor in the success of coach in the competitive environment. From its birth in 1941, it is well branded in the market as durable and good leather bag. Availability of the company is another stronger successful factor for the company. It has more than 200 stores domestically, and it has successfully established itself in 18 international states. The company also has a website which has extensive ranges of product. Besides, distribution is another fundamental aspect of the company, and it has managed to distribute itself via websites and stores domestically and globally. Furthermore, the company does sell its products through websites and departmental stores. With the company’s smart marketing and advertising strategies, it has managed to keep its competition (Emmanouilidou and Maria- Ioanna, 2015). The foreign markets also form a big section of the company’s triumphal victory in the market. It has penetrated the international markets like that of China, Japan, and Europe. Its product lines and expansion has made the company to realize a healthy competitive edge.

Customers

Coach Inc. aims at attracting and retaining customers. It has better customer services, and this is treated as a high priority to the company. The fact attributes to the huge sales it makes yearly which amounts to approximately $2.6 billion. Egne (2011) indicates that the company holds the largest market segment in handbags in the United States. It has differentiated products, and due to this, it has attracted the different segments in the market. Furthermore, it has a provision for providing lifetime warranties to every product bought from the company, and this has increased the rate of confidence that customers have with the company. The affordable prices charged attract customer and yield a sustainable competitive advantage. The customer focus has undoubtedly turned the company into a superior giant in the market and financial performances and caused it to grow at a faster rate and made it to gain market share increasingly. It is reported that in 2002, the company had a market share of 19% and by 2015 it was holding a share of % in the field of the handbag (Emmanouilidou and Maria- Ioanna, 2015). Furthermore, its objectives to expand both domestically and internationally has made it increase its market share.

Two forces of Competition Significant to Coach Inc.

Rivalry among Competitors

Coach operates in an industry faced with intense competition. The rapid and constant innovation of new products is a major sign of great competition in the market. There are continuous innovation cycles and launch of new products every year posing a significant threat to coach company. The growth of the industry products is high and is accompanied by higher profitability rates. Due to this reason, all the market participants aim at attaining industry success. In addressing this fact, Coach Company delivers quality products to its customers. Furthermore, its products are well differentiated and have unique designs that are appealing. Coach has also focused on establishing an individual and strong brands. A significant competitive weapon employed by Coach Inc. is the focus on the broader selection of product collections, stronger brand image, and best customer care services (Emmanouilidou and Maria- Ioanna, 2015). Furthermore, the company invests in advertising campaigns to inform consumers of the trendy products and attract more customer.

Threat of New Entrants

This analysis involves the threat that arises from entrant of a firm from outside the industrial sector and the threat from an existing firm in the industry to enter new market product segment or the geographical area in which coach operates. The threat from outside firm that does not exist in the industry is limited owing to the fact that huge capital investment is required. Besides, the new firm would face stiff competition and difficulties making it exist market. The brand preferences and high degrees of customer loyalty significantly reduce the entrants of new firms. However, the potential of an existing firm to enter the market segment and geographical area is high. The companies in the industry such as Burberry and Armani have numerous resources regarding their finance and production aspects. They are well informed of the areas that yield high profits, and thus every firm that is a competitor to coach has a higher probability of exploring new markets that are attractive. For example, the China market has been entered by nearly all the firms operating in the luxury industry particularly the selling of handbags. As a result, the market has been diluted, and the yields have significantly reduced.

Ways of Addressing the Competitive Forces in Future

Coach Inc. has to drive its focus in becoming a better employer in the fashion industry. This will enable it to realize its long-term goals as it will have employees that are object-oriented. For this reason, it should seek to hire motivated, skilled and dedicated workers. The company should also note that for it to attract exceptional workers with the required skills, it has to offer competitive salaries as well as a conducive environment that will be attractive to workers. Moreover, it has to give employees benefits and support career development along with offering training to the staff to equip them with the changing trends in the market. More importantly, Coach Inc. has to target new customers and enter into new market segments to increases its revenue scale along with the market share. It also has to drive more investment in the women and menswear mainly in the line of shoes, clothes as well as other luxuries products. The differentiation will make possible for it to spread the risks across the portfolio. Conducting surveys about the market will enable the company to find out what the customers want and respond to their needs promptly. Perhaps, if Coach Inc. enters the international markets and target at strengthening its products overseas, it will efficiently manage to outsmart its rivals. Also, the company has to pay close attention to its opportunities and strengths, weakness and threats to keep a competitive edge.

Threats and Opportunities

Threats

It faces an immense competition in the industry and thus a threat to its profitability and sustainability in the market. The continuous changes that happen in the industry on product trends and innovation are also a threat and costly. The threat of counterfeit products exists where the market has cheaper and poor quality items, and many customers buy these products. The customers also have limited buying and spending capacity and thus low volumes of sales. The competitors in the market have impressive records and have established a strong customer loyalty posing a threat.

Opportunities

The company has an opportunity of expanding and opening new market stores domestically and overseas. It has the financial resources needed to expand. It should look for newer global markets in countries like Brazil. It also has the ability to enhance production of luxury products and introduction into newer markets.

Strength, Weakness, and Recommendation

Strengths

The company has a stronger brand name which helps it keep and attract more customers. It also has an extensive business experience of over 70 years in the market industry. A stronger financial position is another strength that makes it outweigh some of the competitors in the fashion brands. It continuously introduces new and fresh designs of handbags and encourages an impressive customer service. The company is able to perform in a tight and a diverse economic environment, keep stiff competition with its competitors and has a high customer loyalty. The company's strength of offering competitive prices, quality products, stronger brand perception and having design expertise provide the testimonies of its success (Emmanouilidou and Maria- Ioanna, 2015). The company has comprehended the entire price terrain in which the various product portfolio it has and thus playing a vital role in its victory in the luxury market. Expertise in design has given the company iconic and brand signature, and it has eliminated the catastrophic of consumer confusion.

Weaknesses

One of the biggest weakness that is devastating to the company is having a smaller geographic concentration and focusing only on the domestic and Japanese markets. Most of its products are inaccessible to a large number of consumers, and the products which are sold in its outlets are at full price. With a lot of its products sold at outlets, the sales have been limited. The company has not fully invested in menswear which only accounts for 2% of its sales and has reduced margins over its products (Emmanouilidou and Maria- Ioanna, 2015). Its weaknesses have also provided a turndown in its performance. Its weaknesses of focus on smaller geographical area and inaccessibility of products to many customers significantly decrease the amount of revenue the firm makes yearly.

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. This 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, and this has to be 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. Coach does hold worldwide trademark rights that relate to its products’ production, distribution, and marketing. Besides, the design and utility patent rights are on its products. The financial resources year end 2016 stood at a market capitalization of 11.2 billion (Coach Inc., 2017). It has 342 retail stores and 121 factory stores by 2016 that are established both domestically and internationally. Coach has real estate, office equipment, office furniture, and computers. It has Coach’s Human Resource Committee and a total of 17200 employees by 2016. Coach intangible resources include the brand name and its capacity to innovate.

Capabilities

On supply chain, it has the manufacturing model, distribution, and the selling channels. The company outsources manufacturing by seeking external producers. It has 850,000 square foot distribution facility which serves the North America’s operational demands. On selling channels, its products are sold directly to customers or distributed through wholesale. The company's management and design team is another capability which has undergone structural changes for the past few years. Streamline distribution strategy and marketing are capabilities to Coach.

Core Competencies

It has a brand value which is the most recognized brand image in handbags. Price strategy is another core competence, and it charges a price ranging between $298 and $1000. Fashion design and marketing are also core competencies that give coach advantage over the others.

Analysis of Coach Value Chain

Coach’s products are manufactured externally involving a third party and licenses. Its products are sold in approximately 20 countries. Outsourcing of manufacturers has proven to be cost-effective and made the company access to a 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, identify 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. Company Profile. (2017). Retrieved on October 18, 2017, from http://www.coach.com/company-information.html

Egner Thomas. (2011). Strategy Analysis- Coach Inc. Munich, GRIN Verlag. Retrieved on October 18, 2017, from http://www.grin.com/en/e-book/135450/strategy-analysis-coach-inc

Emmanouilidou Eirini and Maria- Ioanna Chardakis. (2015). Coach Inc.: Analysis and Recommendations. The University of Sheffield International Faculty. Retrieved on October 18, 2017, from http://www.academia.edu/14982261/Coach_Inc._Analysis_and_Recommendations