International Strategic Management and Innovation

This report focuses on the strategic management and innovation in the international clothing industry. It analyzes the macro-environmental factors, micro-environmental factors, and competitive success factors. The report also discusses the business model and strategy of Primark, a UK-based fashion retailer, and the importance of innovation in reducing competition complexity.

International Strategic
Management and
Innovation

Executive summary
Clothing industry is one of the important industries in the market. It is analysed that it get
day to day rise in the global economy's growth. World clothing industry is very competitive for
fashion retailers. There are many firms take an active part in the clothing industry such as H&M,
ZARA, Primark, etc. It shows that this industry is increasing rapidly. This report is on the basis
of strategic management internationally and innovation. Fashion industry is increasing at a fast
speed and becomes complex for retailer that how they can save and expand their profit margins.
It is very necessary for an organisation that they should manage their strategy in such a manner
that they can take competitive advantage. It can be done through with the help of innovative
ideas.

Table of Contents
Executive summary..........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
TASK...............................................................................................................................................4
Analysis of macro-environment.............................................................................................4
Analysis of micro-environment & competitive success factors.............................................6
Analysis of business model and business strategy.................................................................8
Analysis of innovation strategy............................................................................................11
Appraisal of organisation’s strategic situation.....................................................................13

INTRODUCTION
The world clothing industry is continuously increasing in competition and dynamic
environment, it is very necessary for an organisation that they should focus on strategies in order
to deal and handle with them. Clothing retailers has three important elements such as increases of
online stores, trends in fashion industry, and managing of supply chain. It is identified that every
company has adopted different types of technologies so that they can look different from other
competitors but due to high competition they cannot look different. Every organisation is able to
adopt technologies. But still they are lacking in the business environment. It is identified that
fashions retailers are adopting fast fashion strategy that means now retailers are provided goods
at low cost which run only for one season. They identified that business environment get more
complex and that's why they cannot success. But it can be possible with the help of
understanding the market behaviour and their activities. In this context, Primark is undertaken
for analysing the micro and macro environment so that they can understand the nature of market.
Primark is the UK based organisation that serves a high range of products such as women
fashion, children-wears, footwear, accessories, etc. This report covers business strategy and
models in order to get success and sustainable growth. It also covers innovation strategy so that
they can reduce the complexity of competition.
MAIN BODY
TASK
Analysis of macro-environment
It is very important for an organisation that they should understand the macro
environment factors so that they can reduce the risks. It is identified that they should take a
corrective action in order to analyse the market. For that purpose, they need to analyse the key
trends of macro environment so that they can get successful organisation. It is identified that
macro environmental factors are not in hand of the organisation that means they are not
controllable by organisation. It is necessary that overcome with the preparations. Macro
environmental analysis as per the case studies it covers economical, environmental and
technological factors. There are some important key trends that influence organisational'
operation and are the part of macro environmental factors are mentioned below:
Economic

According to the case study, it is identified that fashion industry in world market is very
large as it has approximate value $1.5-3 trillion in 2020. This shows that market of clothing
industry is continuously growing between 2.5 and 5% every year. It is very sensitive for the
economy growth rate. There are some important competitors including industry which is a very
important role as it assist them to increase economic growth such as Zara, TJ maxx, H&M.
Covid-19 influenza epidemic gives a great impact on clothing industry as many retailers lost
their business which is started from China. It effects on transportation cost, energy cost, cotton
cost, etc. These all things have negatively impact on economic growth of country. That's why
every retailer faces much complexity such as low profit margins, changes in currencies and
prices in 2020.
On the other hand, Inflation gives a great impact on organisation's pricing strategies. It is
identifying that day to day increasing in inflation rates get becomes a big problem for the
consumers. As they are not have in position to purchase goods and services. Rise in the rate of
inflation reducing the purchasing power of buyers. It is identifying that more than 2% inflation
rate gives a great impact on the organisations as their potential buyers. If it will continue in the
organisation regularly then they cannot incur any profits. It reduces their profit margins and may
be getting in the situation of losses.
Technological
From the analysis of a case study, it is identified that all retailers such as Forever 21, and
marry other branded retailers that sets example in the market by adopting technologies. They are
focusing on digitalization of their business. They also focus on fast supply chain with online
presence and logistic capability. It is identify that Amazon is become the largest fashion retailer
which have already online store in USA. It already shows that they have a good supply chain and
ability to adopt technologies. This is the reason that day have online stores
Technology is increasing rapidly that means old machinery gets obsolete very fast. It is
identified that day to day technology get more undated and it becomes very typical for
organisation that how they can deal with up gradation of technology. It is very necessary for
them that they should do market research so that they can analyse the market trends in which
they identify the techniques used by other organisation. It is important for an organisation that
they should make sure about all tools and techniques that they used for the organisation. It is

found that if organisation failed in using of current technology then their customer may be switch
to other organisation.
Environmental
It is found that the Sustainable Apparel Coalition becomes very popular which is found in
2010 for general clothing manufacturers. They give a great attention to the issues of
sustainability, ethics and social responsibility. Companies are the trendsetter but they provide
goods which is durable only for one season and that’s why they are not fulfil their corporate
social responsibility. They have to focus on quality as well as no harm of nature during the
production of clothes.
Analysis of micro-environment & competitive success factors
According to the case study, it becomes necessary for fashion industry that they should
focus on the factors which are come from their own industry. The market of world clothing
industry is identified that it increasing 2.5%-5% every year. That shows that companies need to
focus on identification of all factors which can be affecting on their growth and success. It is
necessary for an organisation that they should also look for micro environment factors so that
they can improve their success factors. Micro environment can be handling by fashion retailers
after analysis of all factors within world cloth industry. In addition to this one of the important
factors that should be analysed by organisation is to analyse competitive forces. It can be
understand with the help of Porter's fiver forces model which assist in getting information about
competition and take a competitive advantage. The analysis of Porter's five forces model is
mentioned below:
Threat of new entrants:
It is the first factor in which fashion retailers analysed the threat of new entrants in the
market is very easy and it can be clearly shown in the growth of clothing industry. The fashion
retailers get impact from the new entrant in the industry. If it is easy for new entrants to enter the
industry then it increases the competition and is a weakness for the fashion companies. But if
there are barriers to entry for a new entrant the business organisation can run smoothly and have
advantage. So the clothing retailers always want to work in industry where they have established
strong position and new entrants are unable to enter the industry.
Bargaining power of suppliers:

The next important factor has impact on the working conditions of clothing outlets. The
suppliers are important for fashion retailers as they are the one that provide goods to the
companies. If there are fewer suppliers in the industry they have high power and the business has
less negotiation power. If there are more suppliers in the industry the business organisation then
there is less power with the suppliers. But in the case of world clothing industry there is large
number of fashion suppliers available. So the business can switch the suppliers.
Bargaining power of buyers:
One of the important forces is bargaining power of buyers. If they have the high power of
bargaining, then they can easily reduce the prices of the products and services. It also diminishes
the profit margin of fashion industry. They threat to the companies by switching to other
organisation or maybe they are not buying the products. It is very necessary at that time that
organisation should improve their employee’s efficiency and productivity by providing training
and development programmes so that they can provide their best for increasing the quality of
products. With the help of this thing they can achieve their organisational objectives.
Competition rivalry:
World clothing industry is very competitive. It is important to measure the competition in
the industry. If there are more competitors in the industry then the organisation has to formulate
strong strategies that help them to gain advantage. It is vital to know about the strategies of
competitors so as to attract more customers and serve them effectively.
Threat of substitute:
It is identified in the fashion industry that they have less threat of substitution. It is
identified in the clothing retailing there is very less threat because no one can stole.
From the above discussion, it is identified that competition is increasing day by day so
that's why it is necessary for companies that they should analyse identify strengths and weakness.
With the help of identification of strengths and weaknesses it becomes easy for the companies
that what they have to do and in what manner. It is identified that if the companies have good
financial strengths then they look forward to further profitable investment so that they can take
competitive advantage by expansion of business. It is necessary for analysing their weaknesses
so that they can find ways in order to convert them into their strengths. A company can use their
strengths in order to reduce competitive risks. If they have talented employees then they can take
competitive advantage even in competitive world. It is necessary for the company that they

should analyse the market in order to analyse the competitive force. With the help of Porters' five
forces model they can identify the number of new entrants that become the risks for existing
company. It is identify that it is not easy for new entrants but they have knowledge of new
technologies and skills so that they can be become the threat for existing companies. It also
assists in finding the number of buyers and suppliers so that they can measure the risk of
overstock and under stock. It is very beneficial for the company that they can make differentiate
products so that it reduces the risk or threat of substitute goods. It is analysed that it also helps in
overcoming the issues of competition rivalry.
Analysis of business model and business strategy
A business can get successful only when the organisation can make the proper strategy
and used appropriate model. It is very important for them that they should use models with
critically evaluate each one. It is identified that a business can be become a successful only when
they arrange all things systematically. If they can make a plan that how they can perform their
duties in a proper manner then they can achieve their goals and objectives. An organisation aims
always that they can provide goods and services which assist in satisfying their potential buyers.
For that purpose they need to produce goods and services as per their demands and desires. It
needs a proper strategy in which they use different models in order to identify their potential
customers' tastes and preferences. They should also focus on the internal capabilities in order to
create value and successful business. It is identified that a business need to focus on creating and
adding value to their products and services so that customers get a reason for purchasing their
goods and services.
Value Proposition
Every business wants that they can give a strong statement that directly affect on the
sentiments of the potential customers. It is identified that Primark used money strategy in order
to add values in their products which impact on customers. In addition to this, Primark focuses
on four things that add values in their business that are respect everyone's dignity. Acting with
integrity, collaboration working conditions, etc. It shows that how Primark used their value
proposition in order to attract and invite their customers so that they can purchase from their
stores. But it is very necessary for Primark that they should ensure about the position of their
clothing as per the demands of customers. It can be done with the help so using Value
Proposition canvas that helps in measuring their performance. For that purpose they need to use

their company's value proposition i.e. Primark provides quality at low price that means they are
very focused on value for money. It should be match with customers' profile i.e. what they want
from company. It is necessary for an organisation that they should focus on each section of
company so that they can make strategies in order to add values. Their beauty products add
values to the organisation.
Value Capture and Value Creation for Primark
Every organisation want that they sustain in the market for long term period and that is
the reason that Primark is focusing on creating and capturing values. They are capturing with the
help of some important factors such as respecting of others’ sentiments, act with integrity,
collaboration, etc.
Business model canvas
Business canvas model consists of important activities that make the business successful.
It includes their key partners, activities, value proposition, customer segment, key resources,
customer relationship, cost structure, etc. All those things those are very necessary for an
organisation. It is identified that company always focus on the proper arrangement of all listed
things that are coming in the section of business canvas model. It is very necessary for an
organisation that they make their business successful.
Primark used a business model in which they provide lots of products that are women
clothing fashion. They are not limited to women fashion clothing as they are also providing
children wear, footwear, accessories, beauty, home ware, hosiery, etc. they provide a great
number of products to the customers which attracts consumers because they provide all these
goods at low prices. It is very great for customers that they purchase products at low prices. They
always focus on customer relationship because it is very necessary for an organisation success
and growth. It is identified that if they maintain relations with customer then they can achieve
their objectives and goals. With the help of customer relationship they can never switch to other
organisation. Their success and growth depends on the business model which they used for the
business operations. The company is operated by their parent company i.e. ABF. It is the
company that focuses on pricing strategy so that they can attract more and more customers in
order to increase their sales and revenues.
It is identified from the report of Keybanc that Primary provides goods and services at
low prices. They produced goods and services in order to retain their customers so that they

cannot not shift to another company. It is necessary for them that they should make strategy in
order to use appropriate business model. Primark is in the third position in UK after Inditex and
H&M. It shows that they used their model very well and do all activities in order to maximize
their profits. Their number of stores shows their expansion growth rate. It is identified that in
company had only 32 stores in 1995 in UK but at today's time there are a huge number of stores
are opened. Every year they can earn profits between 2.5 – 5%. It shows that they can do very
well in order to get successful in the global market. Their numbers of employees shows the great
integrity and collaborative working in the organisation.
Analysis of key resources and capabilities
A company can get success if they have enough and quality resources so that they can
take a competitive advantage n the organisation. It is very necessary for organisation that they
should analyse their resources and capabilities so that they can arrange activities accordingly.
Primark is the organisation that performs their activities in an effective manner as they have
important key resources that are their pricing strategy, number of products; a good experience of
retailing marketing, number is employees i.e. approximate 68000. They can produce all garments
at a very small time with low prices. It is identified that Primark cannot provide that much
quality of products as H&M and ZARA provides. But still they capture all market because their
prices are very low and every customer can accept their quality as they thought that it is enough
to wear a cloth for a season.
Primark's strategy
Primark is the organisation that focuses on maximizing their market share so that they
can lead to the market. It is not easy for them and for that purpose they need to formulate a
strategy in which they focus on all strategies that assists them to achieve their target market. It is
identified that their strategy includes the production of goods at low cost so that they can
maintain profit margin but that not easy for organisation because they provide goods and services
at low prices. It is analysed that Primark provide goods and services by promoting in the market
so that they can approach to more and more customers. Primark extensively use of social media
for the marketing purpose. It is identified that they had 6 millions of followers in Facebook in
2012. They also access Twitter and Pinterest for the purpose of marketing of clothing. But the
strategy is not over in this stage as they required a good supply chain so that they can increase
their profit margin. They adopt a strategy in which they focus on mainly few elements that are

number of products offered to the customers, pricing strategy, marketing strategy, supply chain,
etc.
From the above discussion it is identified that Primark is the third largest organisation in
the clothing industry in UK. They provide various types of products in which they mainly
covered women. It is very necessary for an organisation that they should make their strategy in
such a form so that they can get competitive advantage. It is necessary for an organisation that
they should make sure about their activities such as quality, price, and trends of fashion. It is
identified according to the VRIN model that their pricing strategy creates value for the
organisation. Every organisation trying to provides goods and services at a reasonable rate but it
is not comparable by Primark. As they provide fashion products at a very low rate that becomes
rare for the organisation. Their products are easily imitable so they need to work on them by
appointing designer in order to make more fashionable. They have many competitors in the
market such as H&M ZARA, etc. but they can take competitive advantage on the basis of their
price which is organisable competent.
Analysis of innovation strategy
Innovation is the key of success that means if the organisation wants to get a success and
sustainable growth then they should focus on improving their products and trying something
new. It is identified that clothing industry is in the highly competitive world so that's why it is
very necessary for them that they should make sure about products' differentiation and quality. It
is identified that Primark's products is not much qualitative as compared to their other
competitors. They are very normal but people can accept because of their pricing. It is great for
the company but at certain point of time they can be in the problem that how they can achieve
their market with low quality of products and service. So that's why innovation is very necessary
for them. Innovation is the change in the existing products and launching the new products which
is not established yet. That means products which is not present in the market before their
innovation. It is very necessary for every organisation that they should focus on innovative ideas
which gives solutions to the organisation. It is identified that it can possible for Primark if they
are using their key resources at a very good manner. Employees are the person who makes the
innovative ideas and gives to organisation in order to achieve their organisational goals and
objectives. It is analysed that if company can optimally used their employees then they can easily

attain their objectives i.e. innovation. For that purpose they need to make a strategy in which
they are ensuring about their products which fulfil their goals and objectives.
Primark’s innovation strategy
Primark's innovation strategy is the success criteria for the company. It is identified that
their success is depends on their business activities. In this time they try to analyse the market
which shows that every person is on social media so that's why they try to use digital methods in
order to increase their brands recognition. It is identified that day to day increase in competition
gives the stress for top level management of organisation that how they can deal with them and
make their position accordingly. It is identified that if a company can use new techniques then
they can reduce the competition. So for that purpose now Primark is focusing on the tools and
techniques which assist them to make a best innovation strategy. Formerly they sell their goods
and services through stores but due to continuously focusing on the innovation now they are
selling through online or digital mode.
Product: It is very necessary for Primark that they should innovation their products so
that they can achieve their objective and assists them to take a competitive advantage. When a
company want to innovation in their products then they need to make strategy in which they
decide that how they can change or modified their product for the purpose of innovation. It is
identified that Primark is not focus on product development but they are more focusing on new
business development.
Disruptive/ innovation: It is the tool in which organisation will not use willingly toll but
due to the trends or any other reason they have to use it for customers. It is identified in Primark
that they used digital or online business because they are forced by market that if they did not use
then they cannot compete in the market. So that's why they are now using social media such as
Facebook, Twitter, Pinterest, etc. for the purpose of disruptive innovation. It is necessary for the
company's survival.
From the above discussion, it is analysed that every organisation need to innovate their
products, process, etc. But it can effectively do with the help of a innovation strategy which
assists in making the business successful. Primark can be successful if they have to use
innovative strategy in a effective manner. Innovative strategy which can be understood with the
below points:

 It is very necessary for organisation that they provide strategic insight which assist in
increasing the customer base with the help of meeting customers' expectation.
 They have to identifies, quantifies and qualifies opportunities for the expansion of
business and achievement of new business development.
 They have to do a market research in which they identify the social and cultural trends so
that they can ensure about current and future needs.
 It is very important that they should improve current offering that provided by Primark to
their existing customers.
 After sales they have to take a feedback from their potential buyers for taking information
about the products performance. It is very helpful for keep up dates so that they can take
further decision accordingly.
 Now they have to research for formulating a business plan in which they make the
changes and create innovation in their business practice.
 They always take care about their customers' problem by giving solutions to the
organisation.
 They should understand that what is good for their organisation and customers. They just
not focusing on understanding but also they have to apply on their organisation.
 Now their technical department need to get innovative ideas so that can get best business
opportunities. But they have to be sure that their innovation does not harm anyone
including nature and environment. Their applicability should be practical in life.
 Last but not least all these points should be mentioned in the plan properly so that they
can implement this plant effectively and efficiently.
Appraisal of organisation’s strategic situation
It is identified that Clothing industry continuously growing in an effective manner. It can
be clearly show from their statistics that they have estimated value was $1.5-3 trillion in 2020. It
shows that they are continuously increasing their share between 2.5 and 5% per year. This data
shows that how much clothing companies can grow their business. It is opportunities as threat for
Primark. It becomes opportunities in the form of increasing their business share in the global
market with the adoption of strategy. But it is also a threat because it increases the threat of
competitive rivalry. Every clothing company such as ZARA, Inditex, H&M, etc. perform very
well in the market because they are providing good quality of products. It is identifying in the

clothing industry that there are many factors that make the business successful such as
understanding of customers' expectations, tastes and preferences, market trends, technologies,
etc. If companies can able to understand these things then they can achieve their objectives and
goals easily.
It is analysed that it is tough for Primark because their products is not much qualitative as
compared to other competitors. So that's why Primark need to build a strategy in which they
should focus on each section so that they can take a competitive advantage. It is necessary for an
organisation that they should take a necessary corrective action in order to maintain their
position. Primark should understand their activities with the help of VRIO model. VRIO model
assist them to see their key operations and make them more effective so that they can compete
very well where they lacks. It can be understand below: Valuable: It is very important for an organisation that they should have more and more
things which come under this section because it reflects their positive image in the
market. It is identified that Primark has a wide number of employees that are valuable for
company as they are the reason for success and growth. They provide seasonal clothes
which they are making through cotton that is valuable for all those customers who are not
ready to wear clothes for long term period. It is very necessary for them that they should
make their process and products innovative. It is identified that Primark use digital media
in order to sell their goods in the market. This innovation raises their market share and
attracts customers. It is identified that customers feel very happy for their products as
their money is worth making for them. Product pricing strategy is valuable as they
reduced their profits margins and provide goods and services with low prices. Rare: Price of the products is rare in the organisation as it is analysed that no one other
competitors can make their products at that price. Their price is very low which is
beneficial for customers. This is the attraction point for organisation that they can achieve
their goals and objectives with the help of low price. It is necessary for them that they
have to make their products which are rare. Rarity defines the success criteria for
organisation. Imitable: Their products are easily imitable by any other organisation that becomes a
threat for the company. It is very easy for customers that they can switch to the other
organisation. Primark's products are not so effective and differentiate that other

organisation can not able to imitate them. It reduces the competitive advantage for
Primark if their products are imitable by organisation.
 Organization: Primark has a much organised structure and that is the reason for their
success. It is identified that if organisation wants to achieve their objectives then they
should have a organized structure in order to take a competitive advantage. It is identified
that Primark has a good capacity of understanding of customers demands so that's why
they have more chances of win to win situation.
It is analysed that Primark is in good at their strategy so they have chances of great
success and sustainable. In global market they can achieve their target market by their strategy.
Their strategy tells that they have to analyse the market effectively so that they can find the
factors appropriately.
It is concluded from the above discussion that an organisation need to market analysis if
they want to get success and growth in the market. It is very necessary for an organisation that
they should make sure about their activities which impacts on their profits and productivity.
There are many factors which are come from outside the organisation but it gives direct impact
on organisation' operations and functions. They are macro environmental factors which are not in
hand of organisation or they are not controllable by organisation. It is very important for the
company that they should identify and analyse all the factors so that they can reduce the risk.
Apart from macro environmental factors there are many things that need to be considering by
organisation within the company such as employees' productivity, financial assistance, other
resources, etc. So that's why they need to focus on internal capabilities which assist them to take
competitive advantage in the market. It can be done with the help of applying business models
and strategies. It is very necessary for company that their products are always different from their
competitors and it can be done only with the help of innovation. So they need to make a
innovation strategy which assist them to apply in the organisation.
From the above all discussion, it is analysed that Primary need to apply some suggestion
that are recommended below:
 It is suggested to the company that they have to make some changes in their products that
means they have to understand the importance of durability of the clothes.

 It is recommended to the organisation that they should understand the important activities
that are supportive and primary which makes their function very well. It can be done with
the help of applying value chain model so that they improve their activities accordingly.
 It is identified that competition is the big threat for Primark so that's why they need to
make strategies very well which assist them to a competitive advantage.
 Their products quality decides the success and growth of organisation so that's why they
need to produce good quality of products as similar to their competitors such as H&M,
ZARA, etc.
 For that purpose they need to do a research in the market which includes social, cultural
trends, etc. it is very beneficial if they give a overall focus on the strategies which helps
them to get sustainability.