VF Corporation's Expansion in Asia

This assignment tasks students with analyzing the strategic management of VF Corporation, particularly its attempts to expand into the Asian market. Students must examine the company's strengths and weaknesses, identify opportunities and threats specific to Asia, and ultimately assess VF Corporation's competitive advantage in this emerging region.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the university
Student ID number
Module Code- Strategic Management PM 303
Deadline-
Author Note:

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Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
External Environment Analysis.......................................................................................................5
PESTEL Analysis............................................................................................................................5
Industry Competition.......................................................................................................................6
Porter’s Five Forces Analysis..........................................................................................................7
Ansoff Matrix..................................................................................................................................9
Figure No 1-Ansoff Matrix..............................................................................................................9
Value Chain Analysis....................................................................................................................11
Figure No 2- Porter’s Value Chain Model....................................................................................11
Critical Argument of the Options..................................................................................................13
Components of Internal Analysis..................................................................................................13
SWOT Analysis.............................................................................................................................13
Table No 1- SWOT Table..............................................................................................................14
Business Level Strategy.................................................................................................................16
References......................................................................................................................................17

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Executive Summary
As the title suggests the following report is based on the strategic management of a branded
garments and sports apparels manufacturing organization. The report begins with a decent
introduction of the mentioned business organization and progresses with the discussion of
different strategic aspects of the organization and has critically evaluated each and every models
and theories that are provided here. The detailed critical analysis has been helpful for the
successful completion of the report.

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Introduction
The current business environment with the emphasis on the ability to complete locally
and in the global markets companies must be able to respond to the rapidly changing conditions
of the market. The companies must be capable of seeking and developing different strategies that
will help them to maintain a competitive advantage in the market. Vanity Fair Corporation is a
apparel and footwear company that started its operations in America in the year 1899. Currently
the company has more than 30 different brands under its belt and they are organized into five
different categories. These categories fall under;
a. Outdoor and action sports
b. Jeanswear
c. Jeanswear
d. Sportswear and other recent brands
e. Image wear
The main aim of the following report is to provide a critical analysis of the external
environment of the mentioned company to expand its business worldwide especially in China.
The aim to expand its business in China is basically because of the upcoming Winter Olympics
to be held in the country in the year 2020. The success of the business will rest on the
formulation of an efficient strategic plan of the business. The use of different strategic models
can be of great help to the growth of the business of the organization.

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External Environment Analysis
PESTEL Analysis
1. Political- The political scenario of most of the Asian countries is not stable and thus the
company would find it quite disturbing to carry on business in this part of the globe.
However an efficient communist party of China is liberal towards business and has
opened up its market for all foreign companies, which is a great opportunity for the
organization to start its business in China.
2. Social- The Company must follow all the social and cultural aspect of the mentioned
company before venturing into the new market. VF Corporation must ensure to complete
a detailed survey on the social and cultural traditions of the place where they are
venturing for an entry.
3. Economical- Initially it will be tough for the organization to establish its presence in
emerging Asian countries as GDP and Per capita income in many such countries are quite
substandard in comparison to the other counties of Europe (Eden and Ackermann 2013).
4. Technological- Technological factors are one of the most important elements of the
modern business organizations. Latest technologies acts as a game changer for the
organization to attain a great competitive advantage over their rivals
5. Legal- Legal aspects of the host country must be well known which will help the
organization to formulate the business strategies accordingly.

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6. Environmental- The management of the company must ensure ethical and fair
environmental practices to make sure that the organization has a green policy towards
achieving a clean and green future for the business.
Industry Competition
The sports apparels industry has been projected to generate annual revenue of $184.6
billion by the year 2020 growing at the rate of 4.5% during the forecast period. The growth of the
industry has been mainly due to the growth of the market in the last couple of years that have
made the organization one of the best in the business. The focus of some of the prominent
companies operating in the particular segment has shifted towards opening retail stores in the
emerging economies to expand their geographical base and increase the customer base of the
organization. Some of the key findings in the Apparel market are listed below;
1. Increasing disposable income, preference for quality sports items, changing lifestyle have
been the main source for the rise in the apparels and footwear industry in the emerging
markets of Asia.
2. The retail stores segment will be growing at an apparent rate of 3.1% during the year
2015 to 2020.
3. Different survey results have predicted Asia Pacific as the largest sports apparel market
by the year 2019.
4. Men’s sports industry has been the largest revenue earner in the particular segment and
thus it has all the potential to be one of the top revenue earners amongst all the other
sectors of business.

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VF Corporation faces strong challenge from different international as well as regional giants
in the apparels and footwear sector of the industry. The management of the organization has
taken some efficient strategies to compete with the likes of Nike, Adidas and other different
brands that produce almost the same type of products. The establishment of retail stores,
acquiring a number of different small enterprises and signing up agreements and deals with other
organizations has led the company to success.
Porter’s Five Forces Analysis
Porter’s Five Forces concept provides guidance for scanning the issues that are specific to
the industry where the mentioned company operates. The company has to provide the customers
a competitive price for all the products it launches in the market and also has to make sure that
the products have a considerable amount of difference with the other rival products (Eden and
Ackermann 2013). There will be a huge demand for the products in the market where the initial
investment is very low or substantial in amount. The products will see a huge growth rate once
they enter into such markets.
Threat of Substitutes- The companies thrives on branding and this particular activity will help
them to create a proper brand name of its own. VF Corporation has the critical task of attracting
the customers by offering them the right value for the products. The management of the company
must be innovative enough and in the process must implement different strategies and measures
to counter the threat of substitutes. Another fear lies on the emergence of small companies which
tries to imitate the technologies from the large companies and produce the products in a much
cheaper price. This results in increased competition in the market as because the lowering of the

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prices of the products forces the large companies to reduce the prices in a similar manner to
make sure that they retain their competitive advantage in the market.
Bargaining Power of Buyers- The bargaining power of buyers is a competitive threat to the
organization if the product produced by the organization is easily available in the market. The
power of the buyers increases automatically as a result of such a market condition resulting in the
fall in the price of the product. The growth in the number of the different apparel companies in
the market has resulted in the increase of competition. The management of VF Corporation has
to amend the competitive strategies of the company every now and then to make sure that they
are in lines with the latest trend.
Bargaining Power of Suppliers- VF Corporation produces quality sports and other merchandises
for various purposes. There are some unique parts of the product which are supplied to them via
the suppliers. The company totally lies at the mercy of the suppliers and thus an increase in the
price of these parts by the suppliers will have to be obliged by the Company as they are left with
no other options.
Rivalry in the Industry- There is a number of other companies in the market similar to VF
Corporation that produces quite a number of same products like the ones produced by the
aforesaid company. Wall Mart and some other retail stores has a number of different products
like winter jackets but North Face which is a dedicated line of winter clothing of VF Corporation
has a better brand image than all the other products in the market. The present level of
competition will restricts the new companies to enter in the same segment. Therefore the
advanced level of competitive advantage in the market helps the organization to minimize the
rivalry in the industry.

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Ansoff Matrix
Figure No 1-Ansoff Matrix
Source- ()
Market penetration- The large number of orders by the existing consumers have been a source
of great revenue for the organization. The varied range of products starting with the apparels and
footwear and other sports accessories have helped them to earn a competitive advantage in the
following industry. According to Eden and Ackermann (2013) winning back customers from the

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rival companies and industries is one of the major aims for each and every organization. On the
other hand Peppard and Ward (2016) argues that converting the non users of the products to
regular users is what decides the market penetration levels of the organization. Opening retail
stores and reduction in the price of the different products can also be beneficial for VF
Corporation.
a. Development of Sports Product- According to some eminent researchers like ()
modification of the existing garments and sports accessories has helped the
organization to drive its way towards growth. However recent reports have emerged
on the different quality levels of the garments which is surely to affect the sales of the
organization. As mentioned earlier the establishment of a number of premium retail
stores by the mentioned organization caters to the growing demands for the
customers.
b. Development of Sports Product in the future- VF Corporation have started to expand
its worldwide presence and have targeted the Asian market especially China for the
same. The main reason for selecting China has been the upcoming mega sports event
in the form of Winter Olympics in the year 2020. A market study by the management
team of the company has revealed the tremendous opportunities for growth by the
organization. Wheelen Hunger (2017) has argued that the most important task of the
organization to ensure its sustainability is to expand its marketing segment and open
up new channels for distribution.
c. Diversification- The acquisition of some regional Chinese companies has opened up
the possibility of the organization to diversify its supply in the new market and
compete with the existing rivals.

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Value Chain Analysis
Figure No 2- Porter’s Value Chain Model
Source- (Slack 2015)
Primary Activities
a. Inbound Logistics- The operations department of the organization receives stores and
handles all the different types raw material needed for the proper delivery of the products.
b. Operations- The transformation of the raw materials into finished products with the help
of skilled employees is one of the key aspects in the value chain model. According to

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(Slack 2015) the more efficient the operations department the better is the quality of the
goods produced.
c. Outbound Logistics- Outbound Logistics is another main part of the Value chain. The
main task of the organization is to store, distribute and deliver the finished goods to the
end users. Outsourcing and delivering the finished products can be beneficial in the
growth of the organization.
d. Marketing and Sales- The promotion and marketing of the products of VF Corporation
via different media channels will be beneficial for creating awareness of the products.
The management of the company can also endorse sp[orts personalities and other
regional or international celebrities that will help to promote brand awareness for the
products of the organization.
e. Service- A proper after sales service will be very essential for the organization to help
build a customer loyalty. The high level of customer service provided to the customers is
essential for high customer satisfaction (Hill and Jones 2013).
Secondary Activities
a) Firm Infrastructure- Firm infrastructure includes all the departments of management,
infrastructure, legal and finance which work in proper co ordination to keep the stores of
the company operational. The well designed and pleasing stores of the organization are
complemented with good customer care service.
Human Resources Management- VF Corporation has a well trained group of committed
workforce that work together to bring success to the organization. The employees of the
mentioned organization are taken well care of. Apart from receiving on par salaries they are

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awarded and recognized by the seniors of the company which makes them more dedicated
towards the organization. However according to (Hill Jones Schilling 2014) rather than awarding
the employees employee training programs are more essential for managing the human resources
of the organization.
Procurement- According to Hill and Jones (2013) the tasks involved in the procurement of the
raw materials like clothes, machines, well knit materials are essential for manufacturing different
apparels and sports garments. The Asian market is a dream place for quality textiles. VF
Corporation will no doubt have a large competitive advantage in the European market if they are
able to expand their presence in the emerging Asian markets like China.
f. Technology- The use of modern technology has been an effective tool for the mentioned
garments company to acquire a considerable competitive advantage in the market. The
installation of new technologies in the manufacturing units will surely ensure both the
superior quality and quantity of the products in the market.
Critical Argument of the Options
The analysis of the above models and theories has led to two different conclusions. The
first one is accepting the strategy of the organization while the other being the negative
standpoint which goes against the decision of the organization. However studies reveals that the
management of the organization has done quite a commendable job which will surely guarantee
the success of the organization in the coming future (Hill Jones Schilling 2014). The
technological advancements and the use of different innovative ideas have helped the
organization to become efficient in nature.

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Components of Internal Analysis
SWOT Analysis
STRENGTHS WEAKNESSES
 The mentioned brand has over 1000
different stores across the globe and has
an employee strength of around 50,000
 The brands of the company namely
vans and Timberland are perfect in
nature
 The diverse range of products is
beneficial to the organization as
because the items vary from
sportswear, Jeanswear, Image Wear and
many other clothing items.
 The absence of brand awareness in
emerging markets of Asia
 The scope for market share is very
much limited in nature
OPPORTUNITIES THREATS
 The emerging market of China offers
great perspective to the expansion of
the organization in Asia
 The upcoming Winter Olympics of
China in the year 2020 will serve as the
ideal platform for promoting and
selling their sports accessories and
apparels in China.
 The presence of other companies
producing sports apparels offers huge
challenge to the expansion plans of the
company
 The ever increasing growth in the price
of the raw materials has been a cause of
worry for the business organization

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 The economic condition of the Asian
countries
Table No 1- SWOT Table
Source- (Barney 2014)
a. Strengths- The presence of a large number of retail stores of the mentioned organization
across the globe with a healthy number of employee rate of 50,000 is a huge strength for
the organization as such a numerical supremacy can be beneficial for gaining a strategic
competitive advantage in the market. Apart from having a diverse range of products
under its fold, the presence of world class brands like Vans and Timberland makes a great
deal for the growth of the business.
b. Weaknesses- The most notable weakness of the mentioned business organization is the
absence of a proper brand awareness of the company and its products in the emerging
markets of Asia and its limited opportunity for growth in these markets. The limited
opportunity of the organization comes from the presence of other rival organizations in
these markets.
c. Opportunities- The decision of the management of the mentioned organization to start its
business operations in China can be helpful for the organization because of the vast
market and the high demand for such products in the country. The upcoming Winter
Olympics in China in the year 2020 can act as the perfect platform for the growth of the
organization in China. The demand for the sports items and accessories during and after
the event will favor the growth of the organization (Hill and Jones 2013).

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d. Threats- As mentioned earlier the presence of different companies in the same segment
provides a great barrier to the expansion plans of the company in the Asian market. The
cheap economies of the Asian countries are nowhere in comparison to the wealthy
European and Western countries. The willingness of the potential customers to buy the
product will be overtaken by the inability to buy the costly products of VF Corporation.
Business Level Strategy
As mentioned earlier in the project the mentioned apparels and footwear company is one of the
global leaders in branded lifestyle products in the mentioned category. The management recently
announced its decision to support for the superior returns of the profits of the organization to its
stakeholders (Barney 2014). The model of the organization consists of different powerful brands
of the hotel which are important to the success of the business organization. The management of
the company provides a total of 20% on the sales of the products to the shareholders for the last
five years. The different frameworks have helped to determine the strategic concepts of the
business organization and its impact in the emerging Asian market especially China. The
company has a projected target of $17.3 billion earning per share as revenues. The company has
recently entered into the outdoor and action sports category as it is one of the fastest improving
brands among all the other forms of sport. According to Steve Rendle, Vice President of VF
Corporation the most important five year targets as decided by the organization are;
1. North Face Brand is expected to grow 12% with revenue of $3.3 billion
2. Vans Brand have improved its market share and now captures 15% of the total market
share up from the original 13%

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3. The brand Timberland has also experienced a huge growth in the western markets as
sales revenue of the following brand accounted to around $2.3 billion