Applied Corporate Strategy Analysis of VF Corporation

This report provides a detailed analysis of VF Corporation's external and internal factors, including PESTLE analysis, Porter's Five Model, Value Chain, and VRIO analysis. The report also includes insights into the strategic evaluation of the company, including the SAF test.

APPLIED
CORPORATE
STRATEGY

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
1.External analysis including business environment and identification of number of
opportunities:..........................................................................................................................3
2.Internal analysis of the organisation:...................................................................................6
3.Strategic evaluation:............................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
APPENDIX....................................................................................................................................14

INTRODUCTION
Strategic analysis is a tool which helps the organisation in carry out the research towards the
external environment factors that the operational activities of the organisation. Such analysis
includes formulation of plan which is necessary for an entity to carry out their activities in the
smooth manner. This statement contains complete analysis of VF Corporation which in an
American company deals in the footwear and apparels for both men and women. VF corporation
was founded in the year 1899 having its head office in Denver, based on Colorado. Such report
will include complete analysis of the external factors faced by the company by carrying out the
PESTLE analysis of VF corporation which consist of their business environment and
identification of various opportunities. After conducting the PESTLE, Portal five forces has been
applied to check their strength and weaknesses to carry out their operations which shows their
internal strength. At the end of this report a strategic evaluation has been conducted that shows
their business performance around the corner (Amihud, Schmid, and Solomon, 2018).
TASK
1.External analysis including business environment and identification of number of
opportunities:
The business environment is nothing but consist of various factors that affect the functioning
of the company both externally and internally also which includes their suppliers, customers,
their employees and management personnel etc. The main purpose of PESTLE analysis is to
identify the factors that affects the organisation working and what policies the organisation
should adopt in order to overcome these factors so that business does not gets hampered. Below
is the PESTLE analysis carried out of VF corporation that affects the external environment of the
business:
 Political:
Political factors relate to the government and their policies that affect the business and
their operations. The example of political factors can be tax rates and policy with this
regard, export import policy that directly affects the business operations, inflation rates
etc that directly and indirectly affects the business (Arieftiara, Utama, and Rahayu, 2019).
At the time of political election also there are various changes that has to be taken place
that affect the corporate business. Footwear and apparels business directly affected by the

political factor as small change in the taxation policy itself may hamper the sales of the
product VF corporation is selling. However not only this industry the changes that has
been made by government affects other business and industry too on the largest scale.
 Economical:
It is simply related to economy and their preference towards apparel and footwear
industry. It is related to the purchasing power of the consumer, their wealth etc that
would affect the business. The economic changes are taken place with the help of centra
bank of the nation that makes different policies to run the nation and relevant businesses
(Bhattacharyya, 2019).
 Social:
Social factors related to cultural changes, health of the people, changes in population with
respect to growth rate, different categories of age groups etc and these factors also affects
the business and their sales volume accordingly. Changes in the above factors must be
consider by VF Corporation because such changes if not adopt in business would then
regard as threat and if they respect social norms and preferences of the customer then
there is always the opportunity exist for the company.
 Technological:
As the name suggests technology plays the vital role in success and failure of every
business and if business will not update their processes, then the advantage will be taken
over by the competitors itself and they will overcome them easily. For the apparels
industry it is important to adapt the technological changes on timely manner so that they
can perform will full efficiency and competitiveness. The technological changes simply
include selling the products not only from the store they had but also through website as
people does not have time to visit store, they want to shop according to their comfort. If
such changes are not adopted then sales volume will simultaneously go down for the
company (Billqis, Wibowo, and Hendrayati, 2020).
 Legal:
This factor simply means the laws and regulation which must be followed and complied
with by every industry and their relative businesses in order to carry out their business in
smooth manner. These laws if favours the business than will create lots of opportunities
for them if they cope with the government policies and work accordingly. The example

of laws can be company’s act, labour law, taxation laws, licensing and permits, custom
laws for export and import of the goods etc. Threat will be developed for the business if
they make any noncompliance and penalty will be levied accordingly therefore business
activities must be followed ethically.
 Environmental Factors:
These factors are connected to the change in the weather condition, the environment,
pollution level, climatical changes etc that directly affect the apparel and footwear
industry as such business has to change their wear making on the basis of season. It is
important for VF corporation to adapt changes in their production on changes in the
weather so that their volume is consistently maintained or increased. If the climate
favours the business, then the business will boost up accordingly but if the climate does
not support the business, then, they need to modify their process accordingly so that such
threat would not harm them for the longer period (Carini, Rocca, and Teodori, 2021).
Porter's Five of Model:
 Rivalries competition (Strong Face) – The clothing and footwear industry is usually
maintaining the position and goodwill in the market because of increasing competitors in
the market. This Force identify the competitors in the market place. Rivalry competition
is extreme when there are lack of industry selling the same goods or services. It is the
situation where industry trying to attract more customer through giving them discount
and new innovative design.
 Bargaining power of buyers of customers (Moderate Force) - The customers play most
important part in the market and they have power to increase or decrease the position of
the industry. Customer usually shift the product by analysing the less cost, product
quality and quantity. If the lack of supplier for selling the same goods or services it
means consumer can easily shift from one substitute to others (Eccles, Lennehag, and
Nornholm, 2020).
 Bargaining power of supplier (Weak force) - It shows the potential of suppliers to sell
their products and services and also analyse the potential of the supplier to increase the
price of the products or services. It also identifies the availability of same products or
services supplier in the market. If lack of availability of the same supplier in the market it
means they have more power to control its cost.

 Threat of substitutes (Moderate Force) – It means if any new competitor company are
entering in the same market with new ideas than it will be threat for the existing one. It is
more likely to depend upon the company stability barrier if the company uses more
innovation techniques and preserve favourable position in the market than it is not
affected by the competitors.
2.Internal analysis of the organisation:
VF Corporation are dealing in clothing and footwear and the strength of the company is to
utilized their resources effectively and efficiently in their operations. These resources are as
follows -
 Retail Stores and Outlets – VF corporation operates more than one thousand departments
in all around the world that help them to attract their customer in wider range. It is also
useful for marketing their brand name in a huge platform of business economy. They
increase their production on the basis of customer feedback and by analysing demand of
the customer in the market (Gigauri, 2021).
 Finance – The company is very creative if they are only one in all around the world that
applies fund in their new innovation. It is useful for the company for more growth and
development in the market of footwear and clothing industry for future. VF Corporation
allow more funds to the industry for new techniques and innovation.
 Cash – The company is always trying to develop their financial position which comes
from holding cash capacity of the company, if the cash flow is higher and quicker than
the growth of financial position take place. It is advantage for the VF Corporation to save
more liquidity for future, it also helps in planning, organising for this it is easy for the
company to spread their company to more regions.
 Employees – The company holding more than 60,000 number of employees that are most
important assets for the company development as they help to increase sales of the
company products. From this company adopt new changes in the product by hiring more
employees. VF corporation take advantages from them to increase their customer base
(Hentschel and Smith, 2020).
 Manufacturing – As the company is good in transformation of their products than they
can easily make money which helps in bringing the resources for manufacturing. It is the
power of the company if their production capacity is high. It is an advantage for the VF

corporation as the performance of employees in producing the products is very high and
their efficiency of work as well and cash flow is high.
Disadvantages of the company are as follows-
 Human Resource - Human Resource is most important part of any company or
organisation as the company is having lack of strong human resource in their
management because of the firm only focus on the employees which already have ideas
for transformation. VF corporation is not good in managing their employees and also,
they don't give value to their employee’s ideas (Hunoldt, Oertel, and Galander, 2020).
 Marketing – Marketing is important in any field of business it provide growth and
development in the market but VF corporation does not try to bring efforts in the market
as they are not trying to innovate their products with new ideas and technology.
 Information – Information and research for any product is very important but the VF
corporation is not having as such knowledge of products which directly affects and
weaken their research and development department. It is important for VF Corporation to
appoint the employees who have knowledge for specific field.
 Assets Management – The company has bad records in terms of assets because company
has already made mistake at time of recording their assets. VF Corporation itself increase
the chance of risk, frauds or audit violation.
 External Stakeholders – The company is not showing original financial position to their
external stakeholder it means it is not showing clear picture of the company position
which effects stakeholder level of interest. Stakeholders of the VF Corporation put
company interest aside and focus only in their personal work.
Value Chain refers to the framework that specifies the product or services which have power
to convert from an idea to the reality. Porter's Value chain activities are as follows -
 Inbound Logistics – The company VF Corporation control the purchase department of the
company which are related to storing, receiving or manage incoming supplies. This
company is performing well as they outsource the work to the expertise all over the world
(Matiolanska, Lozano, and Nakayama, 2020).
 Operations – In operations the company perform a task where they changed raw material
into final product. The Company VF Corporation are ambitious as they provide more
good quality of products than their rivalries.

There are some support activities which are determine are as follows –
 Firm Infrastructure – The company VF corporation is competitive in terms of accounting,
finance and superior management as the company need to modify their product or
services they have to plan or organise or manage their infrastructure.
 Human Resource management – They conduct some activities like recruiting, training,
development, selection, skill assessment and compensation. They are competitive in the
terms of management of the staff (Pidun, 2019).
VRIO analysis under which VRIO stands for value, rare, imitation and organisation and this
explains the various level handled by the organisation using their specific resources. Such
specific resources may include the stock, cash, tangible and intangible assets hold by the
organisation such as trademark, copyrights, goodwill etc Below is the table that showcase such
analysis of VF corporation in a detailed manner: -
Resources Value Rare Imitation Organisation
Local and global presence
of the company
Yes Yes Yes Yes
Intangible assets such as
intellectual property rights,
trademarks patents etc
Yes Yes No Yes
Ability to control legal and
regularity requirement
applicable on them
Yes No Yes Yes
Performance of leadership
team must be monitored
Yes Yes No Yes
Strategies in deciding and
modifying the Price
Yes No Yes Yes
Vision of the entity towards Yes No No No

future of the company
Positioning of brand value
when compare to
competitors
Yes No Yes Yes
Community relating to
suppliers, distributors etc
Yes Yes No No
Opportunities to enter into
new market or segment in
the competitive world
Yes No Yes No
Bundle of different product
lines and synergy effect
amongst them
Yes No Yes Yes
3.Strategic evaluation:
In order to carry out take over or acquisition of any other company, proper strategy has to be
implemented in the business. It is not always easy for the business to adopt single strategy after
considering strengths and weaknesses when decision of mergers and takeovers has been taken
place. The strategic evaluation has been carried out by implementation of SAF test which shows
three different criteria that must be followed by VF corporation in order to gain success in their
business. The three factors that is part of SAF test are discussed below:
 Suitability:
It is the most important part of SAF test as the organisation needs to understand that
whether the proposed acquisition is suitable for them or not in terms of benefits they
receive, future earnings, synergy benefits etc. VF corporation needs to ensure that
whether the proposed organisation is suitable to them in terms of environment,
capabilities, expectation of profits and so on (Rashidi and Cullinane, 2019).
 Acceptability:
VF corporation before making any acquisition must calculate the risk and return, the
impact on their stakeholder’s stake, the proposed offer they need to make to the target

company in terms of purchase consideration etc. Returns of the proposed company will
decide that whether the existing shareholders have some benefit from such acquisition or
not. In order to calculate the returns certain financial techniques needs to carry out such
as cost benefit analysis, shareholder value analysis etc so that actual picture of the
proposed investment is arrived. Similar to return the risk must be properly analysed
because there is certain amount of acceptable risk which can bear by VF corporation but
not more than that (Remøy, Rovers, and Nase, 2019).
 Feasibility:
It is important for the board member of VF corporation to ensure that whether such
acquisition is feasible in the long run or not for the company benefit as they need to
consider the impact therein on their existing resources, their strength to carry out such
takeover etc so that it will generate maximum contribution towards their success. The
financial feasibility can be evaluated on the basis of cash flow statement of the targeting
company which clearly indicate that whether such company is sound in terms of liquidity
for VF corporation or not. Not only cash flow, other factors will also be considered to
ensure the feasibility such as their management, labour force etc that shows their strength
and ability to handle pressure towards work in peak times (Sari and Lubis, 2018).

CONCLUSION
Corporate strategy is related to various tactics regarding the merger and takeover the
enterprise need to follow so that they can get accurate decision on timely and suitable manner.
This statement shows the details of strategy analysis which must be carried out by VF
corporation and such analysis includes PESTLE analysis of external factors affecting their
business and operational events. Not only this, porters five forces have been evaluated which
shows that there are various types of forces such as strong force, weak force, moderate force etc
relating to supplier, rivalries that affect the business and their environment. An internal analysis
has been carried out regarding the organisation supplier, employees, etc that how they contribute
to the success of organisation by explaining their benefits. The value chain analysis has been
performed which explains about the primary activity of the entity, their logistic and operations
etc. At the end of this report the SAF test has been performed which explains about the
acquisition strategy that must be followed by VF corporation to survive their business in the
market. Not only this TOWS matrix has been created to highlights the improvement areas of the
company considering the competition in the market.

REFERENCES
Books and Journals
Amihud, Y., Schmid, M. and Solomon, S.D., 2018. Do Staggered Boards Matter for Firm
Value? Journal of Applied Corporate Finance, 30(4), pp.61-77.
Arieftiara, D., Utama, S., and Rahayu, N., 2019. Contingent fit between business strategies and
environmental uncertainty: The impact on corporate tax avoidance in
Indonesia. Meditari Accountancy Research.
Bhattacharyya, S.S., 2019. Development of international corporate social responsibility
framework and typology. Social Responsibility Journal.
Billqis, R.S., Wibowo, L.A. and Hendrayati, H., 2020. Corporate reputation and its impact on
customer citizenship behavior. In Advances in Business, Management and
Entrepreneurship (pp. 332-335). CRC Press.
Carini, C., Rocca, L., and Teodori, C., 2021. Sustainability regulation and global corporate
citizenship: A lesson (already) learned? Corporate Social Responsibility and
Environmental Management, 28(1), pp.116-126.
Eccles, R.G., Lennehag, T. and Nornholm, N., 2020. EQT: Private Equity with a
Purpose. Journal of Applied Corporate Finance, 32(3), pp.73-86.
Gigauri, I., 2021. Corporate Social Responsibility and COVID-19 Pandemic Crisis: Evidence
from Georgia. International Journal of Sustainable Entrepreneurship and Corporate
Social Responsibility (IJSECSR), 6(1), pp.30-47.
Hentschel, L. and Smith, C., 2020. Risk and regulation in derivatives (or why derivatives are a
blessing, not a curse). Journal of Applied Corporate Finance, 32(1), pp.36-47.
Hunoldt, M., Oertel, S. and Galander, A., 2020. Being responsible: How managers aim to
implement corporate social responsibility. Business & Society, 59(7), pp.1441-1482.
Matiolanska, A.P., Lozano, E.S. and Nakayama, A., 2020. Corporate image or social
engagement: Twitter discourse on corporate social responsibility (CSR) in public
relations strategies in the energy sector. El profesional de la información, 29(3), p.18.
Pidun, U., 2019. Corporate Strategy Process. In Corporate Strategy (pp. 253-278). Springer
Gabler, Wiesbaden.

Rashidi, K. and Cullinane, K., 2019. A comparison of fuzzy DEA and fuzzy TOPSIS in
sustainable supplier selection: Implications for sourcing strategy. Expert Systems with
Applications, 121, pp.266-281.
Remøy, H., Rovers, S. and Nase, I., 2019. Disposal strategies in corporate real estate portfolios:
Evidence from the Dutch banking sector. Journal of Corporate Real Estate.
Sari, M. and Lubis, A.D., 2018. The influence of organization's culture and internal control to
corporate governance and is impact on bumn (state-owned enterprises) corporate
performance in indonesia. J. Advanced Res. L. & Econ., 9, p.681.

APPENDIX
 Pestle Analysis: -
 Porters Five Forces: -
 VRIO Analysis: -

 Value Chain Analysis: -