CASE STUDY Easy Jet: Low cost air travel

Introduction

EasyJet Airline Company Limited (styled as easyJet) is a British airline headquartered at London Luton Airport. It carries more passengers than any other United Kingdom-based airline, operating domestic and international scheduled services on 500 routes between 118 European, North African, and West Asian airports.[2] The parent company, EasyJet plc, is listed on the London Stock Exchange (LSE: EZJ) and is a constituent of the FTSE 250 Index.[3] As at 30 September 2009, it employed 8,000 people, based throughout Europe but mainly in the UK. Online travel sites have flocked the Internet in the recent years making travel much easier than before. With the number of online visitors rising every year, the travel market in Europe is estimated to reach Euro 20 billion by 2006 (Europemedia 2002). Success in this market is inherent in deliberate strategic e-business and e-commerce modelling. This is evidence in the following report on easyJet.com. The EasyJet fleet consists of the following aircraft (at May 2011):

EasyJet fleet

AircraftIn Fleet

Orders Passengers Notes

Airbus A319-100

150 8 156 Largest A319 operator

Airbus A320-200

29 40 180Includes 2 orders inherited from GB Airwaysto be delivered in 2013

Boeing 737-700 3 0 149 Being phased out by November 2011

Total 182 48

EasyJet is the largest operator of the Airbus A319. Subsidiary airline EasyJet Switzerland operates 17 Airbus A319 and two Airbus A320 aircraft under Swiss registrations, in addition to the above. The average age of the EasyJet fleet, at May 2011, is 3.7 years.

History

The airline was established in 1995. It was launched by Greek-Cypriot businessman Stelios Haji-Ioannou with two wet leased Boeing 737-200 aircraft, initially operating two routes: London Luton to Glasgow and Edinburgh. In April 1996, the first wholly owned aircraft was delivered to Easyjet, enabling its first international route, to Amsterdam. Until October 1997, the aircraft were operated by GB Airways, and subsequently by Air Foyle as EasyJet had not yet received its Air Operator's Certificate. EasyJet was featured in Airline series broadcast on ITV which followed the airline's operations at London Luton and later at other bases. EasyJet's founder, Sir Stelios Haji-Ioannou, was featured heavily in the series

Product and services of the Easy JetThe Airline’s product is customer. To keep this customer they provide customer service by providing lower cost air travel.

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Key facts

Easy Jet is a well establish international airline with strong profitable track record. EasyJet was floated on the London Stock Exchange on the 5th November 2000. In October 2004 the FL Group, owner of the airlines Icelandair and Sterling, purchased an 8.4% stake in EasyJet. Over the course of 2005, FL increased its share in the company periodically to 16.9%, fuelling speculation that it would mount a takeover bid for the UK carrier.[14] However, in April 2006 the threat of takeover receded as FL sold its stake for €325 million, securing a profit of €140m on its investment In November 2005, Ray Webster stood down after 10 years as EasyJet's chief executive officer (CEO) and was replaced by former RAC plc CEO, Andrew Harrison.

EasyJet financial performance

Year ended

Passengers flown

Load factor

Turnover (£m)

Profit/loss before tax (£m)

Net profit/loss (£m)

Basic EPS (p)

30 September 2010

48,754,366 87.0% 2,973.1 154.0 121.3 28.4

30 September 2009

45,164,279 85.5% 2,666.8 54.7 71.2 16.9

30 September 2008

43,659,478 84.1% 2,362.8 110.2 83.2 19.8

30 September 2007

37,230,079 83.7% 1,797.2 201.9 152.3 36.62

30 September 2006

32,953,287 84.8% 1,619.7 129.2 94.1 23.18

30 September 2005

29,557,640 85.2% 1,314.4 67.9 42.6 10.68

30 September 2004

24,343,649 84.5% 1,091.0 62.2 41.1 10.34

30 September 2003

20,332,973 84.1% 931.8 51.5 32.4 8.24

30 September 2002

11,350,350 84.8% 551.8 71.6 49.0 14.61

30 September 2001

7,115,147 83.03% 356.9 40.1 37.9 15.2

30 September 2000

5,600,000 263.7 22.1 22.1 11.9

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1. List all the ways in which EasyJet achieves low cost operations.

=The low cost lines like EasyJet have revolutionized the airline industry in Europe. Modelled on SouthWest Airlines in the USA, these airlines have not only helped create a whole new market of cost-conscious travelers but have taken market share from established operators like British Airways and become the most profitable airlines in Europe. To be profitable, these airlines have to achieve low costs to match the low fares,which are the main attraction to their passengers.With its head office as a large tin shed adjacent to the main taxiway at unfashionable Luton Airport, all of EasyJet’s operations are aimed at minimizing costs. This is done in a number of ways:

Use of the Internet to reduce distribution costs. EasyJet sells around 95 per cent of all seats over the Internet. Its online booking system uses a variable pricing system to try to maximize load factors.(Prices start very low – sometimes free, and rise as seats are filled.) The fuller the aircraft the lower the unit cost of travel.

Ticketless travel. Passengers are emailed with their travel details and booking reference. This helps reduce significantly the cost of issuing, distributing, processing and reconciling millions of tickets each year. Neither does EasyJet pre-assign seats on-board. Passengers sit where they like. This eliminates an unnecessary complexity and speeds up passenger boarding.

No free on-board catering. Eliminating free catering on-board reduces cost and unnecessary bureaucracy. Passengers can purchase food and refreshments on-board.

Efficient use of airports. EasyJet flies to the less crowded airports of smaller European cities and prefers the secondary airports in the major cities. These also have lower landing charges and normally offer faster turnarounds as there are fewer air movements. EasyJet’s efficient ground operations enable it to achieve turnarounds of less than 30 minutes. This means EasyJet can achieve extra rotations on the high-frequency routes, maximizing the utilization of aircraft. EasyJet’s ability to offer point-to point travel means that it does not have to worry about onward connections for passengers and their baggage, further simplifying its operations.

Paperless operations. EasyJet has embraced the concept of the paperless office, with all its management and administration undertaken entirely on IT systems. These can be accessed through secure servers from anywhere in the world thereby enhancing flexibility in the running of the airline.

4.What are the risks associated with EasyJet’s strategy?

= The risks associated with EasyJet’s strategy are given below

Low price conveys an image of low quality; Image! Competing suppliers also reduce prices, nullifying the advantage Long term price expectations.

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2.Evaluate EasyJet’s operations strategy against Hayes et al.’s criteria of consistency and contribution to competitive advantage (see Figure 2.2).

3.To what extent does EasyJet’s concentration on low costs limit its ability to perform well against the other operations performance objectives?

= EasyJet’s concentrations on low costs limit its ability to perform well against the other operations performance objectives are

Internet booking Cut paperwork and administrative cost.

Product Strategy EasyJet & Ryanair have successfully attacked British Airways with their rapid

penetration strategy. (Price: low, Promotion: high)

Conclusion

The above report reflects easyJet.com’s dynamic strategy for its online business model. Through its web site, easyJet has been able to secure one of the top positions among travel related web sites. Not only this but the structure, design, usability and usefulness of the website have enabled it to secure leverage over its competitors. More importantly, easyJet.com has incorporated flexibility in its e-business model which enables it to foresee change and develop strategies to counteract accordingly. Consequently it has become one of the most successful web sites on the Internet.

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WHEN THINGS GO WRONG Eyes off the ball at Mercedes-Benz?

Introduction:

The name Mercedes Benz needs no introduction for the car enthusiastic people. Ever since its foundation this name has been associated with the world class brand of cars, trucks and buses. The two founding fathers, one is Mr. Karl Benz who first founded this company in 1871 and the two others Mr. Gottlieb Daimler and Mr. Wilhelm May Bach, who founded the division of Mercedes Benz called as Daimler AG in 1890.The headquarters of the Mercedes Benz is located at Baden- Wurttemberg and Stuttgart in Germany. Currently this company produces a wide range of advanced luxury cars, trucks and buses in its manufacturing facilities, based all over the world besides Germany.

Background

Mercedes spent £600 million researching and developing the 190 and subsequently said it was 'massively over-engineered'. The W201-based 190 was introduced in November 1982.

Local 'red tape' in Bremen (which produced commercial vehicles at the time) prevented Daimler-Benz from building the 190 there, so production was started in Sindelfingen at a capacity of just 140,000 units per year. Eventually after just the first year, Bremen was cleared for production of the 190, replacing its commercial vehicle lines, and there the 190 was built with the first running modifications since release.

The 190E model has a super-efficient distributor pump injection system. This uses the air entering the throttle body to adjust the air fuel mixture accordingly, eliminating the need for complex computers. As a result, the 190E is well known for lasting well over 300,000 miles.

Product & Services:

There range of products - Fulfilling every vehicle financing need.

One of the cornerstones of their success is the wide range of vehicle financial solutions, they offer to both dealers and consumers. Whether it's individual vehicle financing, providing equipment or capital loans to there dealers, helping a school district acquire school buses or getting a business a fleet of vans, it's all part of what they do.

Yet, with that there entire offer, they make sure doing business with them is simple. They employ state-of-the-art technology supported by highly trained professionals committed to seeing that each customer's needs are met. From online credit applications, account access and payments to global credit processing systems and Internet-based commercial auction services, They are putting the financial solutions dealers and customers want only a mouse click away. With the right people and the right tools, things work right. And that's what they are all about.

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Key Facts:

DAIMLER CHRYSLER APPOINTED new CEO-Dieter Zetsche, quickly realised the problem-misfit of two companies and not focussing on main Mercedes Benz.A new plan announced today is calling for the layoff of 13,000 workers till 2009. They are also planning plant closures in order to reduce costs.He started working on demerger of the two companies which was completed in 2007 . Cerberus Capital Management(Equity firm)acquisition of an 80.1 percent stake in Chrysler for 7.4 billion dollars

Key competitor:

The key competitor of Mercedes Benz is Audi or BMW.

MARKET SEGMENTATION IThe compact car sector is the leading revenue source for the German car rental market, generating 40.7% of revenues. The intermediate car sector forms a further 27. 8% of Germany's market value, while the rental of economy cars accounts for a further 16.6%.

Market Segmentation IIGermany dominates the European car rental market, accounting for 36.2% of the Regional market's value. In comparison, France and the UK represent a further 19.3% and 16.7% of the European market respectively. 2: Germany Car Rental Market Segmentation I: % Share, b

Main unique features of the Mercedes Benz:

One of the Mercedes Benz founders Mr. Karl Benz has invented the first internal combustion automobile engine in the world. Also the credit of the revolutionary invention of the world’s first single cylinder four stroke engine goes to Mr. Karl Benz.

Mercedes Benz has been producing technologically more advanced vehicles than its contemporary competitors. Safety of the passengers has been the utmost important factor taken in to consideration by this company while designing all category vehicles ever since it has started production. Owing to this feature a genuine vehicle buyer in any part of the world gives first preference to the Mercedes Benz make vehicles. Every year the Mercedes Benz makes provision of a huge amount of money for the research and development work in its budget. As a reason they always they have an edge over other renowned vehicle manufacturers of the world ever since they have started manufacturing vehicles.

Moreover we can say that the Mercedes Benz has taught other vehicle manufacturers how to manufacture technologically advance vehicles and at the same time passenger safety vehicles. Mercedes Benz is the pioneer of featuring its vehicles with the Safety airbags, anti-lock brakes and the traction control system, in the world. This company has introduced the first 7 speed automatic transmission system in the world, called as 7g-Tronic. The credit of invention of the passenger pre-tension seat belts for the first time in the world goes to

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Mercedes Benz. In the event of vehicle crash this belt gets tightened almost instantaneously thereby saving the passenger from the forward crash. Also many other types of passenger safety devices like the brake assist and stability control are invented by Mercedes Benz for the first time in the world. One of the greatest features of the Mercedes Benz is that it not only invented these safety devices for the first time in the world but they also granted its license to the other vehicle manufacturers all over the world from the point of view of overall safety of the passengers.

Analysis

1) What has been the source of Mercedes’ competitive advantage?

Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors.Merecedes uses DIFFERNTIATION STRATEGY to seek competitive advantage. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products.It gives customers high end quality luxury products and customized .as per their needs

2) What seems to be the cause of its recent problems in operations?

The Main problem was not focussing on its main brand ”Mercedes” and trying too many things(launching a small car division) which were not its core competency .This resulted in lack of quality in its operations.Also , due to its merger with Chrysler, it tried to replicate economies of scale model of Chrysler , and failed miserably

3) Is it possible for the firm to simultaneously improve its performance in both productivity and quality?

Yes, it is possible for firm to improve its performance in such a manner. Toyota Lexus did this in such a manner, and this is explained clearly by The ‘sandcone’ model of operations excellence. The starting point, the base of the sandcone is excellence in quality. On this should be built excellence in dependability, then flexibility (which they take to include speed), then cost. They emphasize that efforts to further enhance quality should continue whilst commencing efforts to build dependability. Similarly, actions on quality and dependability need to continue whilst building flexibility. Finally efforts to reduce costs take place alongside continuing efforts to improve quality, dependability and flexibility.They claim that operational capabilities developed in this way are more likely to endure than individual capabilities developed at the expense of others

4) Where would you position Mercedes Benz on the Hayes and Wheelwright four-stage model? Give your reasons I will put it in STAGE 4. Its core competency-High quality products were used to provide a base for competitive advantage.

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CASE STUDY Operations strategy development at Askeys

Overview of the Company:Askeys have been operating in the ice cream accompaniments market since 1910. Our heritage and dedication to this market helps to ensure that Askeys is perfectly placed to understand the needs of today's foodservice, catering and ice-cream trade outlets.

Askeys was founded nearly 100 years ago when Laurens Tedeschi set up the business in Kensal Road, London and brought the ice cream cornet to the UK! Now we produce millions of wafers and cones every year, in all shapes and sizes to suit all occasions. Our cones are of exceptional quality, ideal for ice cream parlours, ice cream vans, the leisure industry and outside caterers.

In the decades that Askeys have been operating we have expanded to include the Occasions range:- a wide range of luxury fans, curls and a selection of dessert baskets for an indulgent after dinner experience. Our excellent range of Treat! topping sauces compliment any dessert and Crackin'! sets hard on ice cream. We also produce a range of crumb products, which are widely used by caterers and other food manufacturers as toppings, or as ingredients for cakes and biscuits.

As well as growing as a business in its own right, Askeys was acquired by The Silver Spoon Company in 2004 and operates alongside a number of well known brands – Crusha Milkshakes, Allinsons Flour, Billingtons and of course Silver Spoon sugar. We pride ourselves on our high quality food production facilities and quality control procedures. We are committed to customers in foodservice markets, the catering industry and in the ice-cream trade. As an expanding business we are dedicated to exploring new markets, expanding existing ones and new product development.

Products:

1. Askeys Baskets2. Askey Cones3. Askeys Curls & Wafers4. Askeys Toppings5. Treat6. Crackin'!7. Occasions8. Cones & Wafers9. Crumb

1. How has Askeys’ operations strategy changed over the years?

Askeys has been manufacturing ice cream cones, wafers and other biscuits normally eaten with ice cream since 1910.

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The business was sold to Kellogg’s, the American food manufacturing giant, most famous for its breakfast cereal in the 1970s.

Under their ownership, Askeys was used solely as a manufacturing site, with all marketing, sales and distribution, together with all support services such as purchasing and personnel being run from Kellogg’s UK head office in Manchester.

However, through the 1980s, the market was changing and sales through supermarkets became much more important. By the 1990s, the vast majority of Askeys products were sold via the major national supermarkets.

In 1995, Askeys was acquired from Kellogg’s in a management buy-in led by two experienced food industry executives, financed by venture capitalists.

In 2004 Askeys was sold to The Silver Spoon Company, Britain’s largest sugar and sweetener producer.

The Askeys’ operations strategy changed over the years because of: Time Money Availability Seasonal demand Operational efficiency

2. In which aspect of performance has Askeys’ operations had to excel in order to compete in its chosen markets?

The performance that has Askeys’ operations had to excel in order to compete in its chosen markets is flexibility with acquisition.

In 1995, Askeys was acquired from Kellogg’s in a management buy-in led by two experienced food industry executives, financed by venture capitalists. The new owners set about extending the product range. Over the next decade other ice cream biscuits were added to the Askeys range, including the waffle cone, supplied to ice cream manufacturers for the production of ‘cornetto’ type ices, and a wide range of fans, curls and dessert baskets aimed at the catering trade (including fast food outlets and restaurants) and home sales via supermarkets.

In 2004 Askeys was sold to The Silver Spoon Company, Britain’s largest sugar and sweetener producer. The company says it intends to continue expanding the business through exploring new markets, expanding existing ones and new product development

This major two step help Askeys order to compete in its chosen markets.

3. Which of the four perspectives of operations strategy best describes the operations strategy process at Askeys at the different stages of its history? Give your reasons.

The four perspectives of operations strategy best describes the operations strategy process at Askeys are:

1. Quality: the product they produce is very much quality product2. Flexibility: the company is gradually a flexible company with different product. 3. Time : When the time is not favorable they manage the different product to survive4. Cost: The price of their product is high in market rather than others.

Flexibility is the most competitive operation strategy to development of Askeys Success because when they produce ice-cream cone then the off season they are not in loss position.

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These were mostly sold to ice cream parlours and kiosks, ice cream vans and other outside caterers. Sales to this market were highly seasonal, and also weather dependent, and so such stocks were considered essential if peak summer demand was to be met. So they convert their business product and company type different. In 1995, Askeys was acquired from Kellogg’s in a management buy-in led by two experienced food industry executives, financed by venture capitalists. The new owners set about extending the product range. Over the next decade other ice cream biscuits were added to the Askeys range, including the waffle cone, supplied to ice cream manufacturers for the production of ‘cornetto’ type ices, and a wide range of fans, curls and dessert baskets aimed at the catering trade (including fast food outlets and restaurants) and home sales via supermarkets. A range of crumb products, used by caterers and food manufacturers as toppings, or as ingredients for cakes and biscuits was also developed. They also experimented with the manufacture of non-related products with the installation of a ‘dry mix’ plant. This was intended to be used for the production of powdered soups and desserts. The handling and packing of such large numbers of low value extremely brittle products like ice cream wafers and cones was considered best entrusted to human dexterity.

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CASE STUDY EXERCISE Giordano

INTRODUCTION:

Giordano International was founded in Hong Kong in 1981 and is now one of the worlds leading international retailers of apparel and accessories for men, women and children. From its beginnings as a manufacturer of casual clothing in the 1970s, Giordano has developed into one of the world’s most renowned, apparel retail brands. By focusing relentlessly on its five corporate business values of Quality, Knowledge, Innovation, Service and Simplicity (Q.K.I.S.S), Giordano has grown from its single Hong Kong store in 1981 to the present network of over 2,200 stores in the Middle East, Asia, Australia, and India .Giordano International has been recognised on an international level for its corporate governance and Giordano's global success story has also featured as a Harvard Business School case study..

 GIORDANO MIDDLE EAST  

Giordano Middle East was established in March 1993 as a joint venture between Emirates Trading Agency (ETA), Dubai, and Giordano International Ltd, Hong Kong.

  ABOUT THE COMPANY

"To make people feel good and look great”. This straightforward mission has served the Giordano Group well since 1981 in guiding its growth from a manufacturer of casual clothing into a leading international retailer of apparel and accessories for men, women and children. By providing attractive everyday fashion in a comfortable environment, it has built a family of brands synonymous with quality, value and customer service.

Giordano embodies the contemporary lifestyle choices - simplicity in design and quality in substance. Its total commitment to superior service and outstanding quality and value has enabled the company to successfully execute on its multiple-market and brand strategy. It has successfully established retail operations in over 40 countries worldwide while continuing to develop and grow the brands Giordano, Giordano Concepts, Giordano Ladies, Giordano Junior and BSX, each with its own individual market positioning and retail identity.

The heart of the Giordano system is that it is totally customer responsive. Information, speed and simplicity are the key components driving the entire operation.

By keeping things simple, operations are streamlined and this allows for speed which in turn allows the creation of value as time is money. Through keeping matters consistently simple, Giordano can offer its customer the convenience of knowing where to get their essential and everyday apparel problem solved. This in itself is good service.

SEGMENTATION

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In the Middle East apparel market, Giordano is probably one of the top five clothing retailers in the whole Arab world. The brand now operates over 188 stores in 15 countries across the region that includes the Gulf Cooperative Council (GCC) countries, Jordan, Iran, India, Syria , Bulgaria, Georgia and Armenia.

The brand's offering of essential, timeless, relevant and easy to mix and match apparel, has proved popular for all age groups and nationalities, demonstrating the global appeal of the brand.

MISSION: To make people fill good and look great.

VISION: To be best and biggest world brand in apparel industry

MERCHANDISE EXCHANGE:

Any GIORDANO store will gladly assist you in returning or exchanging unused Merchandise within 7 days of purchase at the original selling price provided merchandise is returned with an Original Receipt and Merchandise Tag.

Merchandise exchanged after 7 days or without an Original Receipt will be at the current selling price, provided it is not used, washed or altered.

ACHIEVEMENTS :

Giordano Middle East is the first apparel retailer to receive the Dubai Quality Appreciation Programme award.

Giordano Middle East has also been recognized for its high standards of service and has been consistently recognized and  awarded the Best Service Performance Brand by the Department of Economic Development in Dubai, as part of the Dubai Service Excellence Scheme.

  PRODUCT :

Giordano's consistent focus on simplicity, quality, service and value has helped it to create the signature Giordano look, featuring relaxed and easy-to-wear fashion pieces that can be easily mixed and matched to suit any occasion, mood or place. Customers can be assured that nothing will look out of place. The result is a collection of essential, relevant and functional apparel and accessories that suit the contemporary and comfortable lifestyles of its customers.

G – Cool Jeans & Khaki Polo 2011 Jackets Sweaters

KEY FACT:

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Careful staff selection Realistic Preview of Job and Organization Focus on Nature and quality of job experience Common elements of firms that operated in Cycle of Success Employee’s awareness of their roles in customer satisfaction and Economic success Scorekeeping and Feedback Integration of employees into a winning team

ANALYSIS OF GIORDANO

SWOT Analysis

Strength

1. Products are various and categorized like ladies, kids, etc so it reaches all ages and unisex

2. Providing a professional service so customers feel comfortable and concentration on quality at the service core

3. Many people have known Giordano as quality brand

4. Giordano was able to consistently sell value-for-money merchandise through careful selection of suppliers, strict cost control, and resisting the temptation to increase retail prices unnecessarily

5. A dedicated workforce in all outlets that provides quality service: In order to maintain this Giordano follows stringent selection procedures to ensure only desired employees are chosen, conduct workshops on “attitude training”, follows rotational on the job training method and performance related pay systems on the basis of periodic performance evaluations

6. A quality staff recruitment for a high quality and loyal staff in Giordano from a careful staff selection

7. A well chosen supplier to get the finest supplier and keep innovating to create creative products and high quality materials

8. Prices are reasonable and keeping it normal, not to raise it up

9. Giordano store’s are located in dense population and high traffic areas

10. Move fast on a market change

11. Smart in sales opportunity and minimizing store size for the efficiencies

12. Using high technology for fast distributions. Every sales and the barcode information will be identified and transmitted directly to the company main computer and sales distribution department

13. Giordano always make sure that the stocks are always available in the store

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14. Fast moving items to avoid old items piled at the warehouse or best seller items unavailable

15. Informations are fast spread to the productions so if there’s any slow moving item, Giordano will try to sell it as fast as possible and if it’s reaches the minimum number o selling it will be stopped

16. Customers are satisfied because out of stocks doesn’t happen often

17. Giordano using a smart information so they are different than others

18. Giordano aggressively promoting their brand through creative and focused campaign on customers so the marketing succesed

19. The employee have awareness of their roles in customer satisfaction and economic system

20. Integration of employees into a winning team

21. Giordano has many 1800 outlets in over 30 countries

22. Giordano offers value for money clothing with a good quality

23. Giordano maintains a flat organizational structure which makes it easy to make communication with employees within the company thus this leads to quick decision making.

24. Has excellent management and staff that offer excellent service

25. Tight inventory control that will not result in overstocking of goods

26. Has high advertising budget due to this their company is more recognizable.

27. Simplicity and speed of operations: Giordano maintained a flat organizational structure and this facilitated easy communication between people within the organization, helped to make speedy decision and to manage the project efficiently

28. A recognized brand: Giordano has received awards such as: The American Service Excellence Award, ISO 9002 Award and People Developer Award which helped Giordano to establish their brand as a familiar one in over 30 countries

Weakness

1. The model of the product is monoton example the simple T-shirt, jacket, etc

2. Since their stores are everywhere almost everyone wears them this could lead to

3. The IT strategy that they have adapted many not be suitable to other countries especially South East Asian countries since they may not support that technological structure.

4. Giordano’s failed ability to diffrentiate it’s core brands which is Giordano Ladies from its

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mainstream line.

Opportunities

1. Giordano just a have a store in Asia, maybe can expansion to a many country like Europe, America, Africa etc

2. Create a many models and make a innovation in fashion so people can be loyal in product of Giordano

3. Giordano needs to continually find new ways to improve and build it’s advantage outside and inside the industry

4. Needs to continue in strengthening its brand image through heavy advertising and excellent customer service5. Giordano has recieved many awards like the The American Service Excellence Award, ISO 9002 Award and the People developer image which can help the company maintain their brand image

6. Should constantly upgrade their IT systems to ensure easier communication among their staff and make it more efficient.

Threat

1. Giordano has many competitors such as Esprit, Bossini, hangten and many more

2. The enterance of many competitors in Asia.

3. Expansion into other continents like America and Canada that need to be researched carefully because this is important to success

4. Biggest threat comes from reputable players like The GAP because they have a various segment like Giordano have Giordano Ladies, Giordano Junior and etc. GAP have GAP Kids, etc.

5. Competitors and new entrants will successfully compete for good locations

6. Other competitors would be likely to try to emulate Giordano

7. Competitors could increasingly use technology to assist in their design process

COMPETITIVE ADVANTAGES:

Giordano’s key success factors and sources of competitive advantage could include:

• Excellence in design: fast and market-driven new product development, due to flat organizational structure, excellent organizational communication and dedication to the needs

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of customers (e.g., style, fabrics, etc.)

• Excellence in management of operations, logistics and information technology systems: this includes effective supply chain management, inventory control, distribution, and integration of purchasing and selling functions. Cost savings from efficient operations are transferred to customers, thus delivering “value-for money”. Essentially, the basic criteria of sustainability should be identified, i.e. It must be difficult for competitors to copy and/or it must take time to copy, to allow Giordano to maintain its advantage at least for some time. With continuous investment in human resources and organizational commitment to service orientation; constant improvement in design and in the efficiency of operations; and efforts in increasing marketing muscle by promoting its brand; most of the key success factors, except site selection, are somewhat sustainable in the medium to long term.

• Excellence in marketing and branding: strong positioning, brand equity for excellent service and ability to deliver “value-for-money”, consistent execution of advertising and promotion to strengthen brand image.

• Excellence in service: continual commitment to providing excellent customer service and response. This is the result of integration of the corporate philosophy and leadership, service orientation of supporting functions like human resource policies (e.g., selection, training and remuneration of frontline staff) and information systems, and performance monitoring (e.g., regular evaluations of service standards at store level and mystery shopping). For instance, excellence in design and service comes from the integration of many activities in the value chain; it involves intangible elements such as organizational culture; and it does not reside in any particular individual. Thus, it is more difficult for competitors to “poach” this source of advantage and overtake Giordano, as compared to simply acquiring superior technology or poaching good managers. Moreover, even if competitors were to obtain this source of advantage, it might be difficult for them to implement it as successfully, because many factors such as the type of organizational culture and leadership would vary from company to company. Nevertheless, Giordano should never rest on its laurels. Rather, it should look into new ways of improving and strengthening its advantage. One important way of doing so is to continually invest in its human resources; as Fung (former Chief Operation Officer and Executive Director, South-East Asia) rightly said, “People are the key”.

• Good site selection: Giordano’s location strategy provides a competitive advantage because of its direct impact on ability to generate high volume customer traffic while keeping low margins.

For instance, excellence in design and service comes from the integration of many activities in the value chain; it involves intangible elements such as organizational culture; and it does not reside in any particular individual. Thus, it is more difficult for competitors to “poach” this source of advantage and overtake Giordano, as compared to simply acquiring superior technology or poaching good managers. Moreover, even if competitors were to obtain this source of advantage, it might be difficult for them to implement it as successfully, because many factors such as the type of organizational culture and leadership would vary from company to company. Nevertheless, Giordano should never rest on its laurels. Rather, it should look into new ways of improving and strengthening its advantage. One important way of doing so is to continually invest in its human resources; as Fung (former Chief Operation Officer and Executive Director, South-East Asia) rightly said, “People are the key”.

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In the long term, sustainability depends on the management of Giordano in being able to make Giordano a customer-, logistics- and technology-driven learning organization. As the preceding discussion clearly shows, the main source of Giordano’s success is the integration of its primary functions (e.g., logistics and marketing) and support functions (e.g., HR and IT) in its value chain. This is largely sustainable in the medium to long term, provided that Giordano continues (1) to invest in its human resources, (2) to commit to its service philosophy and customer orientation, and (3) to monitor the industry and competition for threats and opportunities.

. 7P’S OF GIORDANO

- Product

Giordano has its own apparel manufacturing division where many of its own clothing styles are produced. Giordano is also renowned for its basic and practical men’s, women’s, and children’s T-shirts and trousers, especially denims. The company is Asia-Pacific’s most successful retailer and sells its name under the brands of “Giordano”, “Giordano Concepts”, “Giordano Junior” and “Giordano Ladies”. Giordano offers many quality products such as t-shirts,polo shirts,jackets,pants,etc that are aimed at many target markets like young adults, adults, teenagers and even children. Giordano’s product made with high quality material. Giordano focuses on the concept of value-for-money. Giordano is constantly aiming to improve the value of the product.

- Price

Giordano’s current positioning to be that of “value-for-money” or “quality merchandise at affordable prices” [product differentiation]. The price of all Giordano apparel is affordable and acessible for the upper and middle class. The prices of their products range from Rp70.000- Rp 600.000. But the label does not matter, so the business has become value driven, because when people recognize value, that is the only game in town. So Giordano always ask ourselves how can sell it cheaper, make it more convenient for the consumer to buy, and deliver faster today than yesterday. That is all value because convenience is value for the consumer. Time is value for the customer. . Giordano use cost plus, the type of pricing that usually company is using.

- Place

Giordano store’s are located in big cities with high buying power, dense population and high traffic areas. Giordano clothing can also be bought online at the Giordano website with a WWS member card. Giordano in Singapore located its operations in densely populated housing estates in addition to its outlets in the traditional downtown retail areas.

- Promotion

Giordano spends a large proportion of its turnover on advertising and promotions. To keep listeners awake and excited, the product categories were on sale at each time slot were only released at the specified hour, so that nobody knew the next items that would be on this special sale. Listeners to the radio station were cajoled into coming to Giordano stores throughout the night. Giordano’s strength in executing innovative and effective promotional

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strategies. Aggressive advertising and promotions also played a significant role in the successful re-marketing of its core brand and re-launch or introduction of sister brands, Giordano Ladies, Giordano Junior and Bluestar Exchange. “World without strangers” their newest campaign has raised awarness among people in the world, this message of this campaign is clear that different genders, race, people from different cultural backgrounds can unite.

- Pysical Evidence

In markets with expensive retail space, retailers would try to maximize every square foot of the store for sales opportunities. Giordano have a strategy to involved not having a back storeroom in each store. Instead, a central distribution center replaced the function of a back storeroom. With information technology (IT), Giordano was able to skillfully manage its inventory and forecast demand. When an item was sold, the barcode information, identifying size, color, style and price was recorded by the point-of-sale cash register and transmitted to the company’s main computer. At the end of each day, the information was compiled at the store level and sent to the sales department and the distribution center. The compiled sales information became the store’s order for the following day. Orders were filled during the night and were ready for delivery by early morning, ensuring that before a Giordano store opened for business, new inventory was already on the shelves. There is also a unlimited time guarantee for customers and a three day reservation for goods that the customer would like to purchase

- People

Besides the willingness to accept employees mistakes, another factor that contributed to the success of Giordano was that it had a dedicated, trained, ever-smiling sales force. It considered front-line workers to be its customer-service heroes. People are the key. Giordano make exceptional service possible. Training is merely a skeleton of a customer service program. It’s the people who deliver that give it form and meaning. Giordano had stringent selection procedures to make sure that only those candidates who matched the profile of what Giordano looked for in its employees were selected. Selection even continued into its training workshops or attitude training. Employees must understand and appreciate every detail of the operations. Customers will also be greeted by well trainned staff who are mannered and care about the customer’s needs.

-Process

The process of purchasing Giordano goods begins when we enter the store we are greeted delightly by the Giordano staff then we select the goods that we are intrested in,we then go to the fitting room to try it on. If we like it we then purchase it we can also get buttons sewed on for free by the Giordano staff and there is also a redemption for the goods if we are not satisfied by then. There is also an another method which is purchasing online if we are we WWS member we will recieve a 12% discount for purchasing online, becoming a wws member is simply easy simply register online to become a member.

MAIN COMPETITORS:

GAP,

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Esprit And Theme

CASE QUESTION ANALYSIS:

02. How consistent is Giordano’s operations strategy with its marketing strategy?

While consistent global branding should be established, different cultures may not associate with the product/ service or brand in the same way. When designing the product/ service and communicating its brand image, it should be sensitized to cultural differences in order to avoid blunders that other companies have made in the past.

Thus, what Giordano could learn from this, is that in order to rapidly gain market share and large volume, Giordano must be careful to consider national and cultural differences in some aspects of its marketing mix.

The operations strategy should complement marketing, but its focus would be on internal cost cutting and efficiency.

Globalization presents accessibility to cheaper or better resources, and higher volumes, leading to economies of scale and the learning curve effect.

More importantly, the key idea is to learn and develop rather than merely transfer or apply known or proven strategies.

The two dimensions of marketing and operations need to be addressed separately. However, the issue of standardizing or adapting the marketing program to the local context is a matter of degree rather than the absolute.

The key determinant is the consumer, who may have significant differences in preferences towards the product and promotional mix.

03. What are the biggest operations management challenges for Giordano as it expands into new market segments and territories?

Giordano Have to Do Repositioning If They Want to Enter New Market. Those steps are:

Giordano repositioned its brand to focus on value-added products and broadening it appeal by improving on visual merchandising and apparel.

The company also emphasized on the merchandise that is relatively mid-priced which means “inexpensive yet contemporary and trendy”, and offers quality, value and excellent customer services..

Thus, Giordano could find it worthwhile to alter their brand image into a more high-value, high-quality and therefore higher price market.

This could mean primarily repositioning Giordano as a higher priced and higher value brand. Giordano must continue to be creative in their promotions.

A competitor of Giordano is Esprit. They are seen as more upmarket than Giordano, whilst being stylish and trendy.

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On the other hand, the other successful strategies of Giordano in proving excellent customer services, information system and logistics and human resource policies and practices should be implemented tactically for different markets. It means customized strategies should be developed for different countries even within Asia because there are some variations between countries in terms of their economic, cultural and social factors.

As Giordano enters into new markets and face strong and similarly positioned competitors in these markets (e.g., The Gap in the US, Japan and most European markets), the pressure to adopt a slightly different position that suits the unique market situation of a particular country may increase.

04. What advice would you give to Giordano regarding its operations strategy in the future?

Recommendations for GIORDANO:

1. It is essential to start promotions to increase brand awareness when starting businesses in new market.

2. The location and site selection for establishing Giordano’s outlet in different country will be critical. The company should carefully select the site to position their stores which will be convenient for the customers.

3. Customer is the key and main factor for differentiation is customer care. The company needs to follow customized customer service strategy for each market segment

4. Giordano needs to find out possibility of outsourcing to maintain low costs

5. Extensive market research is needed to investigate designs and fabrics required by the target customers

CONCLUSION:

A potential strategy for Giordano could be to maintain its positioning in Hong Kong and over time slowly and gradually shift its position in its other markets slightly more up-market to follow its Hong Kong positioning. This strategy would have the added advantage that it would move upwards together with its core target segments, which is also developing upwards in terms of education and increasing disposable income (most of Giordano’s Asian markets are developing fast). We believe that in the balance, it would be better for Giordano to maintain a consistent positioning across all markets, even when Giordano decides to enter countries with entrenched competitors with similar positioning. Should these competitors be too strong, we feel that it would be better not to enter this market rather than try to establish a new brand and strategy. The main reason is that this would be expensive and high risk as less of Giordano’s core strengths could be transferred to this new market, and benefits from economies of scale could not fully be reaped (e.g., in terms of manufacturing volumes, marketing, training, etc.).

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