Applied Corporate Strategy Assessment: Strategic Analysis Report

This report provides a strategic analysis of VF Corporation, a company that deals in footwear and apparel. It includes the application of PESTLE analysis, Porter's Five Forces model, VRIO analysis, and value chain analysis. The report also evaluates the company's acquisition strategy using the SAF test.

Applied Corporate
Strategy Assessment:
Strategic Analysis
Report

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
State the external analysis......................................................................................................3
State the internal analysis of the organisation........................................................................6
Define the strategy evaluation..............................................................................................10
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategic analysis is known as a method that held typical research in an organisation and
also for the external environment. This analysis is done when the company formulates a plan that
is done for the smoother functioning of the activities in the organisation. (Bohland and
Schwenen, 2022). In this respective report there is a deep explanation of the external analysis
with the application of PESTLE Analysis and also by justifying the opportunities and threats.
Then for examining the strengths and weaknesses of the resources utilized by the company,
industrial analysis there is an application of Porter's Value Chain that specifies its
competitiveness. Then there is an evaluation of strategy of the company, VF Corporation is a
American company that deals in the footwear, apparel and it was founded in 1899. Its
headquarters are based in Denver, Colorado.
MAIN BODY
State the external analysis
The business environment is the total of the grouping of all the drivers that affect the
business internally and externally like to the customers, employees and the operations of
business. PESTLE analysis tells the ways in which external factors that can influence the
organisation. This is effective in the application of corporation strategic analysis. There is a
model named PESTLE analysis stated below that analysis about the external environment of the
organisation -
 Political factors – These types of factors are driven by the way the government has been
intervening in the operations of the businesses. This reflects from the changes in tax
policy, tariffs, bureaucracy and trade restrictions. Due to the elections in the government
there is a change in the leading political party which can eventually change their policies
(Bühring, 2022). As a threat the footwear and apparels industry's working in the nation
have to change their way of operations as well. They have an opportunity towards the
minimizing of trade restrictions.
 Economical factors – These factors are having various aspects of the nation's economy
that would impact the footwear and apparels industry indirectly. The economic indicators
that measure the level of changes in an economy are indicated by government agencies
and the central bank of nation in the terms of economic growth rates, exchange rates,

interest rates, inflation and unemployment rates. These factors can be an opportunity on
the basis of trends and it can be a threat to the industry if the trend changes.
 Social factors – They are such as cultural aspects, perceptions, health, population growth
rates, quantity in age groups, attitudes and beliefs of the people are diversifying in the
nature. When the footwear and apparels industry deals in a new area and the change in
these factors will be a threat if they don't consider these factors for their working
accordingly. It is the opportunity for an industry when they give respect to the social
norms of the society in which they interact.
Illustration 1: PESTLE Analysis, 2016
 Technological factors – The factors that represents in the terms of research and
development, automation and changes in technology affects the operations of the
company. It will be a threat to footwear and apparels industry if they can't meet their
requirements in the technology according to their capabilities and compatibilities. For
example, the industry has an opportunity to digitalize their tangible data in order to make
a quick access to the information of the company and this improves the efficiency in their
operations (Veloso Saes and et. al., 2022).
 Legal factors – These factors take into consideration to the legal forces that helps in
assessing the laws and rules generated for the footwear and apparels industry which must

be followed by the companies working in it. These laws are an opportunity if the business
is allowed to do a certain activity according to the law, this represents the relationship
between the business and the government. It will be a threat to the industry if they don't
follow some laws like industry regulation, licenses, permits, labour laws and intellectual
property (Zhang and et. al., 2022).
 Environmental factors – They are concerned with the ecological impacts on the
footwear and apparels industry. The industry should adopt on the way of tackling the
changes in an environment such as weather conditions, pollution, temperature, natural
disasters and climate changes. The favourable changes in the climate can be an
opportunity for the industry but the threat is when the company has to adjust according to
the unfavourable climate changes.
Porter's Five Forces of Model demonstrates the analysis of external forces that impacts
the competition and pricing of the industry's products and services. There are five types of
external factors that affect the industry that are specified below -
 Rivalries competition (Strong force) – The footwear and apparel industry has to
maintain the share market as the market growth rate is low which applies a strong force,
there is an high aggressiveness of firms that applies a strong force and there are moderate
quantity of companies that applies a moderate force (Chalapud, 2022).
Illustration 2: Porter’s five forces template, 2019
 Bargaining power of buyers or customers (Moderate force) – The customers ca
directly affect the performance of the industry as they have low switching cost by the

strong force and the quantity of buyers are so less which reflects weak force. The
customers can shift towards the other substitute that applies a moderate force.
 Bargaining power of suppliers (Weak force) – Where there is a large population in the
footwear and apparels industry then they will be having a high power in the bargaining,
this applies to the weak force. The overall supply of footwear is high so this gives them a
weak force and the moderate size of the number suppliers will be contributing to a
moderate force (Thrassou and et. al., 2022).
 Threat of substitutes (Moderate force) – The threat of substitutes have some factors
such as the moderate availability of them can be a moderate force, the industry performs
moderately in their per price of substitutes that gives a moderate force. The footwear
industry applies a low switching cost that applies to a strong force.
 Threat of new entrants (weak force) – The new entrants in the footwear and apparel
industry can disrupt the environment of the businesses working in it. The high rates of
brand development will affect the industry as a weak force, the big economies of scale
will also be a weak force for the industry and the medium cost of working in this industry
will apply a moderate force.
State the internal analysis of the organisation
VF Corporation deals in the footwear and apparels and it has some of the strengths in the
terms of their resources utilized in their operations that are as follows -
 Retail stores and outlets – The brand deals in over more than one thousand stores
worldwide that helps them to facilitate their customers to a wider area. This also
advantages VF Corporation to capture more customers and helps in brand awareness.
They can expand their production according to the favourable conditions in the new
upcoming markets.
 Finance – The company is very innovative as they are the only one in the whole world
that applies fund in their innovation. This is going to benefit them for the future growth,
this will bring a change in the growth of the footwear and apparel industry. For example,
VF Corporation just allocate their different quantity of funds in order to bring an
innovation (Chen, Chao and Liu, 2022).
 Cash – The company has been holding up a lot of cash as their assets and the cash flow is
so fast and high which helps them to develop their financial performance. This will

advantage VF Corporation to invest more for their future, help them in change of the
strategy, operations and they will be easily diversifying their company to more regions.
 Employees – The number of employees they are holding are more than 50,000 that are
the crucial assets for the company as they increase sales of the company hence this helps
them to hire more of them for the diversification of their products. This advantages VF
Corporation to increase their customer base.
 Manufacturing – As the company is good in diversifying their products and they can
easily generate their cash flow which helps in bringing the resources for manufacturing.
This is a strength to the company as they have a high productivity which advantages VF
Corporation with a high performance of workers producing the goods and they have a
high efficiency as well as high cash flow (Qureshi, Shamsi and Arif, 2022).
The company also disadvantage by some of their weaknesses and some of them are
specified below -
 Human resource – The company is not having a strong structure in the human resource
department as they maintain more employees in the firm which are having diversified
backgrounds. VF Corporation lacks in managing all the employees, they don't appraise
their employees and offer them an adequate and satisfied return for their high
productivity.
 Marketing – Their efforts in marketing are not well enough to bring them a growth, VF
Corporation has not been bringing changes in the marketing techniques and strategies that
needs to improve in the changing environment.
 Information – The company is not putting an adequate level of knowledge as they are
not doing the proper research which will make their research and development weak and
of less use (Chen and et. al., 2022). VF Corporation needs to hire the experts who have a
specialisation with the specific educational field.
 Assets management– The company has already mistaken at times in the accounting of
their assets which disadvantages them in a weak record of their assets. This increases the
chances of frauds or audit violation in VF Corporation itself.
 External stakeholders – The company is not much transparent to their external
stakeholders which effects their level of interests. VF Corporation's stakeholders put their

personal work life interests above the company's interests and this lacks their
contribution.
VRIO Analysis is a concept that explains the value, rarity, limitability and organisation in
the matter of company's resources. This explains the level handled by a company in these terms
for the specific resources (Fisher, 2022). The included resources of the company can be
identified as the physical entities, inventory, cash as well as the intangible resources are
trademarks, copyrights, intellectual property rights, relationship with the supply chain partners.
The VRIO Analysis of VF Corporation is described below within a tabular form -
Resources Value Rare Imitation Organisation
Global and local presence Yes Yes Yes Yes
Intellectual property rights,
copyrights and trademarks
Yes Yes No Yes
Talent to manage regulatory
ad legal obligations
Yes No Yes Yes
Track record of leadership
team
Yes Yes No Yes
Pricing strategies Yes No Yes Yes
Vision of the leadership for
next set of challenges
Yes No No No
Brand positioning in
comparison to the
competitors
Yes No Yes Yes
Customer community Yes Yes No No
Opportunities in the
adjacent industries and new
Yes No Yes No

resources needed to enter
those industries
Product Portfolio and
synergy among different
product lines
Yes No Yes Yes
The company has diversified their revenue fields and separated their balance sheet from
the economic cycles which makes their global presence valuable. The global presence can be
imitated by the competitors and their organisation is diversified over the world (Naidu, Rao and
Sudabattula, 2022). VF Corporation holds intellectual property rights, copyrights and trademarks
as more valuable resource in the increasing competition, their IPR and other rights are rare in this
competition to be duplicated. Their talent to manage the regulatory and legal obligations can be
imitated by the competitors but the track record of leadership team cannot be imitated by their
rivalries. VF Corporation has pricing strategies that are frequently imitated in the footwear
industry, the company has organised their pricing analytics engine.
Value chain is the group of activities that specifics a product and service to be
transformed from an idea to the reality. Porter's value chain includes the primary activities that
are as follows -
 Inbound logistics – VF Corporation handles the activities related to the receiving and
storing the inputs for manufacture. They are well competitive in this as they outsource
this work to the specialised agents over the world.
 Operations – The company performs an activity of transforming the raw material into a
finished good. VF Corporation are highly competitive as they serve quality over their
products more than their rivalries (Forouharfar, 2022).
There are some support activities in the company’s value chain which are demonstrated as
follows –
 Firm infrastructure – VF Corporation is competitive in the matter of quality
management, accounting and finance as it has to diversify themselves so they have to
plan and manage for 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.
Define the strategy evaluation
The company has formed a strategy in the acquisition of the business. This is not easy for
them to choose the appropriate one strategy as per their strengths and weaknesses which
tells what is right for them and what is not. There is an application of the model SAF test
that makes sure about the three criteria that should be satisfying the acquisition strategy of
VF Corporation. The three terms on SAF test are explained further –
 Suitability – It is the most essential factor of SAF test, the company needs to check
whether their acquisition is suitable to the company or not. VF Corporation check
whether their environmental suitability, expectation suitability and capability suitability
are in the favour of the company. The suitability also affects the company’s requirements
in the different matters as specified (Garefalakis, 2022).
 Acceptability – VF Corporation should be acceptable in the matter of calculating the
risks, return and stake-holder's reactions that will be dependable on their acquisition
strategy. Their returns will be reflected by the advantages that the stakeholders get from
the acquisition. Therefore, the returns will be relied on the processes such as cost benefit
analysis, real options analysis and shareholder value analysis. The risks are calculated on
the basis of acquisition failure, financial losses and the risks can be known by effect on
liquidity, sensitivity analysis and stake-holder's reactions in the matter of acceptability of
their acquisition.
 Feasibility – The acquisition should be adopted by the company in a feasible manner, for
this VF Corporation needs to improve their resources, aptitude and abilities for the
proceeding of acquisition towards the company’s success. The financial feasibility is
known by the company’s cash flows and some financial tests performed which specifies
whether the company is feasible in the monetary terms. The company should also be
feasible in the terms of workforce, material and management power which the company
should possess in a convenient way.
TOWS Matrix
Internal Factors

External factors Strengths Weaknesses
 The company
has a large
group of some
experts and
professionals
who are highly
experienced
within the
company.
These experts
help VF
Corporation in
analysing the
acquisition with
another
company so
that they
wouldn’t have
to face any
difficulties
which will be
predicted
earlier.
 The company
has a
weakness that
it takes very
less initiative
in the terms of
their customer
acquisition
and they wait
for the time
the customers
approach
themselves to
the company.
This
disadvantages
them in
weakening
their
relationship
with
customers
(Lee, 2022).
Opportunity Strength/ Opportunity Strength/Threat
 The company
has a strong
desire to
acquire
another
 The company
have the
internal
strengths that
are benefited by
 The company
has to
overcome the
competition
with

company
which makes
them to
introduce them
to new
customers
which are
connected to
other business
(Greer, 2022).
the external
opportunities.
VF Corporation
has an
opportunity
through their
experts who
reveal for the
new companies
that can be
acquisitive.
increment of
their
capabilities,
expertise and
knowledge in
the research
and
development
for the
company.
Threat Weaknesses/
Opportunity
Weaknesses/Threat
 There is an
increased
competition in
the footwear
and apparel
industry that
decreases their
scope to
expand their
stores and
acquire
another
company.
 VF Corporation
doesn't initiate
and this will
decrease their
opportunity in
new customers
of the
acquisitive
company and
also certainly
lose their desire
to acquire more
companies in
future.
 Their
weakness in
taking less
initiative for
their
customers will
make the
competitors
more strong in
their course of
action and
planning for
their future
growth.

CONCLUSION
This report concludes with the description of strategy analysis which explained about the
external environment with the help of threats and opportunities for the industry that were
political, legally and environmental in a favourable condition for the industry in PESTLE
analysis. In the Porter's five forces model there were more force from the rivalries, weak force
from the bargain power of suppliers and threat of new entrants. The internal analysis of the
company stated advantages in cash, finance and employees, on the other side the company was
weak in assets management, marketing and external stakeholders. The VRIO mad a conclusion
that the company had valuable, rare, imitable and organised resources that was global an local
presence, hence the other resources should be improved by them. The value chain showed
primary activities of company that were inbound logistics and operations, the support activities
were firm infrastructure and HRM. The company successfully passed their SAF test in their
acquisition strategy, there was also TOWS matrix that concluded the company to improve upon
their initiatives and competition with the other businesses in the same industry.

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