Business Strategy Report: Cotton On's Competitive Advantage

This report provides a comprehensive analysis of the business strategy of Cotton On, a prominent clothing brand. It begins with an executive summary and then delves into various strategic frameworks to assess the company's competitive position. The report explores the Triple Bottom Line (TBL) to evaluate Cotton On's performance across economic, social, and environmental dimensions. It then applies Porter's Five Forces model to analyze the competitive landscape, including competition, buyer power, supplier power, the threat of substitution, and the threat of new entrants. Furthermore, the report examines differentiation as a key strategy, focusing on how Cotton On distinguishes itself in the fashion industry. The VRIO framework is used to assess the value, rarity, imitability, and organization of Cotton On's resources and capabilities, and a SWOT analysis identifies the company's strengths, weaknesses, opportunities, and threats. The report concludes with a summary of the findings and recommendations for Cotton On's future strategic direction.

RUNNING HEAD: Business strategy
Hewlett-Packard
Business strategy
Cotton On
HP 15

Business strategy 1
Executive summary:
The report describes the Cotton on, clothing brand strategies it can use to undertake various
competitive measures. The first analysis done is triple bottom line which explains the various
factors of economic, finance and environment by which Cotton is affected. The other
strategic analyses used are porter five force models and differentiation to identify the
uniqueness and speciality Cotton on is possessing in fashion industry. The third analysis
explains the assets and capabilities Cotton on are possessing by using the frameworks VRIO
and SWOT.

Business strategy 2
Table of Contents
Executive summary:..............................................................................................................................1
Introduction...........................................................................................................................................3
Question 1.............................................................................................................................................3
Triple bottom line and its application................................................................................................3
Question 2.............................................................................................................................................5
Porter 5 force model:........................................................................................................................5
Differentiation as strategy.................................................................................................................6
Question 3.............................................................................................................................................7
VRIO analysis:....................................................................................................................................7
SWOT analysis...................................................................................................................................9
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12

Business strategy 3
Introduction
The Cotton on group goes consistently to Europe, UK, USA, China and India, continually
sourcing things that mirror their client. They invested time in finding the size, shading,
quality and many more of their products and value focuses to ensuring that the final product
will remain solitary in the retail condition. This is the motivation behind why Cotton On is
managing their image name and their nature of the brand.
Their stores have a solid existence and ambiance over every part of country. The
organization's corporate picture is shown through exclusive capabilities of visual marketing.
Subsequently this makes a one of a kind personality of Cotton On, so that customers would
not get confuse for alternate brands outside in the market.
Question 1
Triple bottom line and its application
The TBL is a structure that includes three measurements of execution: social, natural and
monetary. This differs from traditional strategy systems as it incorporates natural (or
ecological) and social measures. The TBL consists of usually additionally dimensions called
individuals, planet and profit.
Moreover, applying TBL in Cotton on will permit an expansive extension calculating impacts
crosswise over huge geographic limits or over a restricted geographic degree. A case (or
venture) particular TBL would gauge the impacts of Cotton on in a particular area, for
example, a group constructing a recreation centre (Hall, 2011). The TBL can apply to
business like Cotton on at the national level as well as international level.
The level of the element, degree of task, geographic area of business and many more will
drive a large number of the choices in Cotton on about what measures to incorporate. The

Business strategy 4
procedure of measures will at last be decided by executives and specialists and the capacity to
gather the vital information will decide what measures to incorporate in the business
(Gimenez, Sierra & Rodon, 2012). There are the suitable measures available of Cotton on to
use for manageability at the state or national levels, at last, information accessibility will
drive the TBL calculations.
The following three factors will determine the use of TBL in Cotton on:
Economic measures: Economic measures are factors that predict the planning with the
company on the concern issues and the flow of cash in Cotton on. The company should
observe wage or consumptions, business environmental measures, work and various business
factors. Particular cases include like Individual salary of employees of Cotton on, Cost of
underemployment in economy, Foundation churn, Foundation sizes, Occupation
development, Work circulation in division, Level of firms in every division of Cotton on,
Income by Cotton on and contribution to GDP.
Environmental Measures: Ecological measures define about Cotton on estimations of
distinctive resources and reflect potential impacts to its feasibility. It will combine elements
like air and water quality, resources usage, poisonous waste, and land cover. Having long-go
patterns accessible for all parts of world in each of the ecological measures would enable
Cotton on to recognize the effects a task or approach would have on the zone (Henriques &
Richardson, 2013). Particular illustrations which Cotton on should consider are Sulphur
dioxide focus, Convergence of nitrogen oxides by Cotton on practices, Chosen pollutants,
excessive nutrients, Power utilization by Cotton on, Petroleum product utilization, Strong
waste administration, Unsafe waste administration and many more.
Social Measures: Social measures of Cotton on include social responsibility fulfilled by
company in area of operation and will also incorporate training, value of social assets,

Business strategy 5
security and prosperity, personal satisfaction, and social capital (Hollos, Blome & Foerstl,
2012). The examples of social factors affected by Cotton on are unemployment rate, female
work drive support rate, Middle family wage of workers, Relative poverty, population with a
post-auxiliary degree or testament, commutation time, health balanced future and many more.
Question 2
Porter 5 force model:
Competition rivalry:
The organization faces countless competition in various forms, in distinctive sizes, fortes and
techniques (Gregory, 2015). Cotton on is facing competitive force from Biilabong and Rip
curl and from other local fashion companies. The Cotton on is having strong force of
competition because of low cost of switching, creating convenience for customers to switch
easily to other competitive brands.
Bargaining power of Buyer:
The bargaining of purchasers is the important part affecting Cotton on business. The
bargaining power in hand of buyer is high as ample of products available in market at lesser
cost than that of Cotton on. The power of buyer is affected by number of availability of
products in the market (Dobbs, 2014). The buyers of any company affect the business if they
are in enough number. The power of buyer is generally high as they many products as
substitutes of Cotton on for shift in purchase.
Threat of substitution:
The substitution force examines that substitutes will surely affect Cotton on fashion business.
Cotton on customer without ample of effort can switch to substitutes as there are many

Business strategy 6
substitutes, for instance local produce in region, clothes from supermarkets and many more.
The cost of switching to alternatives is low on the fact that customers need not to pay for the
switching procedure.
Bargaining Power of suppliers:
This force describes that suppliers is not having much consequence on Cotton on business.
Additionally, Cotton on has an arrangement for differentiating its production network. This
arrangement diminishes the impact of suppliers on the business in spite of the fact that all
suppliers are having a sufficient size contrasted with the Cotton on inventory network (Yunna
& Yisheng, 2014). The hint is that the bargaining power of the supplier in Cotton on affects
the viable environment for the buyer and affects the capacity to attain effectiveness.
Threat of new entrants:
This factor that is danger of new participants helps in expanding the focused nature inside the
business to a more noteworthy level. Then again the risk is instrumental in getting expanded
measure of limit the market. The earnestness and adequacy of the dangers postured
essentially on Cotton on is reliant upon the section or leave obstructions which are available
in the business (Magretta, 2011). It additionally is dependent upon the way the player who is
as of now existing in the business respond to the new contestant. On account of an amount
free economy, every one of the players like Cotton on attempt to accomplish development of
limit. Bur still the consequence of new threats is number of small and little player entering
the market.
Differentiation as strategy:

Business strategy 7
It is an idea which was first proposed in 1933, in the Hypothesis of Monopolistic
Competition. The product differentiation is the procedure by which an item is recognized
from others (competitors‟ items, or the firm’s possess items), by making it more appealing to
a specific target showcase (Johnson, et al., 2013). The differentiation is because of purchasers
seeing a distinction, accordingly, the distinctions don't must be huge, and separation can
simply be made by an alternate packaging, campaign, promotion or dispersion chain.
The Cotton on can play with the accessibility of its item. Cotton on can deliver only a few
number of the item, to produce it only a couple of times each year, or to offer it just in couple
of unique stores with a specific end goal to make it more rare. Differentiation additionally can
be founded on cost. Goods are considered as bundles of attributes which make them less
demanding to be thought about (McColl & Moore, 2011). Observed prices and observes
characteristics are, more often than not, related. The distinction by Cotton on among costs
relies upon the qualities that are exemplified in the item. If Cotton on needs to separate its
item by its value, it needs to have distinctive qualities.
The reason for differentiation by Cotton on is to show that the item is unique, and in this way,
esteemed by clients. Rather than offering an item whose comparison with substitutes will be
made as it were on price, the Cotton on can likewise separate its item with substitutes on non-
value factors (Nagurney & Yu, 2012). This will bring the Cotton on competitive advantage
and, to profit by this preferred standpoint, the organization can make promotion focused on
the uniqueness of its item, it is called exceptional selling proposition.
Question 3
VRIO analysis:
Valuable

Business strategy 8
The primary need to apply this part on Cotton on is to recognize whether an asset is inclusive
of an incentive by empowering a firm to use opportunities or shield against dangers. Assets
are significant in the incident that they enable Cotton on to expand the apparent client to
esteem (Ahn, Kim & Forney, 2010). The assets that are not meeting pre-condition involve
focused withdrawal. It is necessary in regularity to audit the assets of Cotton on the basis of
changes in conditions of organization as well as environment.
Rare:
Resources that are obtained by Cotton on from various rare organizations are viewed as rare.
A rare and differentiated asset gives competitive advantage. On the other side, if the
condition when few companies like Cotton on have a similar asset or utilizations, the
capability of the rare assets shows inevitable outcomes (Den, et al., 2010). This is to analyse
how cotton on should use rare assets to bring out the similar systems and moreover Cotton on
should ensure that no other association should accomplish prevalent performance. The Cotton
on after applying rare concept should not ignore the assets that are profitable but are not of
rare capability. Losing significant assets and capacities would hurt company since they are
fundamental for remaining in the market.
Costly to imitate
The resources of companies like Cotton on are exorbitant to impersonate if a different
association that doesn’t have it can't copy, purchase or substitute it at a rational cost (Cardeal,
& Antonio, 2012). Duplicating can happen in two routes: by straightforwardly mimicking
(copying) the asset or providing the similar item/benefit.

Business strategy 9
A company like Cotton on has expensive resources which put difficulty on other companies
to imitate assets that can accomplish competitive advantage. Three reasons why assets can be
difficult to imitate:
Historical conditions: Assets are created because of registered events by Cotton on or over a
long time often which is not possible by others company to imitate.
Causal events: Competitors of Cotton on can't distinguish the specific assets that are the
reason for competitive advantage.
Social Complexity: The assets and abilities of Cotton on depends on Cotton on way of life or
relational connections.
Organized to Capture Value:
The properties don't present any favourable position for Cotton on and is not generating
revenue then it Cotton on should recomputed the value of asset or depreciate it (Hinterhuber,
2013). The Cotton on should restructure its frameworks, strategies, structure and culture to
have the capacity to completely understand the capability of its significant, uncommon and
expensive assets and abilities. At exactly that point the competitor’s organizations can
accomplish sustained competitive advantage.
The value of the assets revaluates from time to time and they should be amended by Cotton
on always to observe whether they are as significant as they used to be. Competitors are very
furious to achieve the same competitive advantage and will fast in reproducing the valued
asset, which implies that they will never again be uncommon. Regularly, new VRIO assets or
capacities should be created inside by Cotton on and by distinguishing them it can secure
wellsprings of competitive advantage more easily.

Business strategy 10
SWOT analysis:
Strengths:
One of the key strengths that Cotton on is possessing is its extraordinarily created inventory
network empowering it to get new products to the market, at a competitive price. It
additionally has a vast worldwide presence, enabling it to develop itself as perceived brand
(Helms & Nixon, 2010). The allotment for bringing new outlines onto the market is a quality
of the Cotton on and keeping the ideas locked into the stores, to a degree that customers will
be frequently returning to and refilling their stocks with Cotton on only.
Weakness:
Having recognized as a big fashion company, Cotton on is now need to produce a huge
amount of products, on a continuous basis, which detached the prospects for manufacturing
new and advanced design, at the upper end of the marketplace. Cotton on has become
familiar fashion brand; therefore, any products which are in nature of luxury according to
price category are doubtful to be believed by the customer base. With growing competition
emerging throughout the industry, buyers are looking for cheaper prices. This all practices are
increasing regularly and becoming weakness of cotton on to continuously expand on various
researches to be number one in market.
Opportunity:
Cotton on incessantly offering themselves within the fashion industry. Customers need
consistent updates, mainly in high street end of fashion, in directive to keep up with the
modern trends (Gimpel & Westerman, 2012). This means that Cotton on will be able to retain
a large customer base, by unceasingly refining its range and evolving new categories of

Business strategy 11
products, on a constant basis. Customers will tend to visit Cotton on stores more regularly
than other stores, due to the reason that latest products are constantly being introduced (Hill,
Jones & Schilling, 2014). This is a robust strategy and needs to be established by Cotton on,
as it offers considerable prospects to gather better consumer support, repeatedly.
Threat:
There are two types of threats being faced by Cotton on within the industry, mostly from
competitors that are offering reduce prices, for instance Primark and H&M fashion houses
that are charging a higher price for new and modified products in the time of fashion (Chan,
et al., 2017). The other threats are the superior businesses and those that are capable to
decrease their charges lower to those which Cotton on can achieve.
Conclusion
Cotton on is in good position within the fashion market, having recognized itself as a brand
name which produces superior products and at a low-cost. Despite this, it is significant that
the establishment faces the forces that are affecting the external environment of Cotton on
and uses its own internal assets to ensure that it retains a competitive advantage. The other
analysis done above are VRIO, SWOT, Porter and many more to identify the competitive
advantage and assets it is possessing to win the competition in market.