Calvin Klein Inc.: Business Strategy Analysis Report for USA Market

This report provides a comprehensive analysis of Calvin Klein Inc.'s business strategy, focusing on its operations in the United States. The analysis begins with an introduction to Calvin Klein, its history, and its position in the global fashion industry, highlighting its product range and financial performance. The report then delves into a macro and micro-environmental analysis using the DEPSTGP framework, examining demographic trends, economic factors, political influences, social trends, technological advancements, global considerations, and the impact of public opinion on the brand. A competitor analysis is conducted, comparing Calvin Klein with key rivals like Armani Exchange, Hugo Boss, and Zara, assessing their pricing strategies, distribution networks, marketing approaches, product offerings, and strengths and weaknesses. The value chain and resource-based view are examined to evaluate Calvin Klein's core competencies and competitive advantages, including product design, supply chain management, and financial resources. The current strategic position of the firm is then discussed, followed by recommendations for improvement, considering the challenges and opportunities in the fashion industry. The report concludes with a summary of the key findings and insights.

Running head: MANAGEMENT
Management
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction:...............................................................................................................................2
Macro and Micro Environmental Analysis:...............................................................................2
DEPSTGP..............................................................................................................................2
Competitor Analysis:.........................................................................................................5
Value Chain and Resource Based View Analysis......................................................................7
Current strategic position of the firm:........................................................................................9
Recommendation:....................................................................................................................10
Conclusion:..............................................................................................................................10
References:...............................................................................................................................12
Appendix:.................................................................................................................................13

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Introduction:
Calvin Klein Inc. is a premier organization in the global fashion industry and has
significant reputation for the manufacturing of the luxury and fashion products. The
mentioned organization has reached greater heights in the industry through producing
optimum quality footwear, fashion accessories, luxury sport apparel, watches, leather,
fragrance along with eyewear (Calvinklein.us 2019). The mentioned organization was
established by Calvin Klein and the excellent leadership of him along with his partner Barry
K. Schwartz was significant in spreading the business across the national boundaries. In the
year 2002, the mentioned organization was sold to Phillips Van Heusen (PHV). In the fiscal
year 2013 that ended in January 2013, the mentioned organization was able to perform in an
efficient manner which resulted in $425 million in sales (Calvinklein.us 2019). The overall
retail sales of the mentioned organization reached $7.6 billion in the fiscal year 2013
(Calvinklein.us 2019).
The paper in focused in the elaboration of the business strategy of the mentioned
organization with a precise inclusion of the macro-environmental analysis. Along with that,
the paper analyses value chain of the mentioned organization in addition to the resource-
based view analysis. Along with describing the position of the mentioned organization in the
current market, the paper provides some of the important recommendations for the
improvement of the business conduction of the mentioned organization.
Macro and Micro Environmental Analysis:
DEPSTGP
Macro environment analysis of United States of America

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The selected market for the paper is United States of America. The market has
developed in a significant manner over the years and the current population of the nation is
estimated to be 327,167,434 in the year 2018 (Census.gov 2019). With a median household
income of $61,372 in the year 2017 which increased by 1.8 percent from the previous year,
the organization is able to find the feasibility in conducting their business in the mentioned
nation and with a precise look at the age structure, the organization has the potential to
improve their business and target the youth generation for improved business conduction
(Tradingeconomics.com 2019). In addition to this, the decline in the inflation rate of the
organization is seen to be a major factor that influences the selected organization for
conducting their business operations in an attempt to generate larger amount of revenue.
Apart from this, the additional $100 billion in tariffs in case of importing products from
China is seen to be an influential factor for the chosen organization in manufacturing the
products in US (Cnbc.com 2019).
The $1.5 trillion tax reform that was initiated by US president Donald Trump in the
year 2017, the factors like the import tariff and export tariff along with the Intellectual
Property Rights creates a significant business environment for the chosen organization
(Cbp.gov 2019). The selected organization has a potent market as it is seen that 55% of the
people belonging to the age group of 35-70 years have considerable amount of preferences
towards the apparel that is prepared in United States (Calvinklein.us 2019). Apart from this,
the products of the organization that are aligning to the sustainable fashion are seen to be of
great significance for the chosen organization in conducting their business in a profitable
manner.
The impact of the technology in the business operations of the selected organization
as Artificial intelligence enables the application to use the Artificial intelligence image
recognition which is significant in making fashion easier for the people. Apart from this, the

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usage of the virtual/augmented reality has the potential to enable the customers to try the
outfits on avatar and see the looks of it. The Greenpeace Dirty Laundry report has significant
impact on the reputation of the selected organization which it needs to improve for the
effective management of their business conduction (Greenpeace.org 2019). The importance
of the reputation is seen to be significant for the modern day business organizations and
under such situation, the cases like the Abusive Child Labor in China has notable impact on
the brand image of the mentioned organization (Calvinklein.us 2019).
Porter’s five forces
The selected organization is able to acquire a significant amount of capital investment
that is much needed for the organizations operating in the mentioned industry in improving
their business and along with that, the absence of the creative designers is seen to be
significant menace for the competitor organizations. At the same time, the concern of the new
organizations regarding the establishment of the big factories that are required for mass
production is seen to be a major challenge for the new organizations in opening their
businesses (Maloney 2015). The above mentioned factors provide a low to moderate threat of
new entry to the selected organization.
The threat of the substitutes for the selected organization is seen to be significantly
high. Many of the organizations operating in the mentioned business industry is seen to
concentrate on the application of low pricing for selling their products and along with that,
the differences in the quality of the products manufactured by the organizations operating in
the same industry is seen to be notably negligible which increases the competition in the
industry. As a result, the customers of the industry is seen to hold a significant amount of
bargaining power. With the application of the low pricing from the part of the organizations
which are operating in the industry while improving the quality of the products for producing

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a pleasant experience to the customers, has provided notable amount of options to the
customers to choose from ((Lu 2014).
On the other hand, the saturation in the cotton market along with the usage of the raw
materials such as synthetic fabrics are influential in the reduction of the bargaining power of
the suppliers from high to moderate. Apart from this, the improved and increased usage of the
recycled materials such as the recycled cotton and fabric, is a significant factor as well. With
a similar sort of products offering to the customers of the mentioned industry, it is observed
that there are considerable number of organizations that are creating an intensely competitive
environment. Hence the rivalry amongst the existing firms is seen to rise to high from
medium.
Competitor Analysis:
Calvin
Klein(citation)
Armani
Exchange
(citation)
Zara
(citation)
Hugo Boss
(citation)
Price Price Penetration Ultra-premium
pricing policy
Low Pricing
Strategy
Premium Pricing
Policy
Place 12,000 outlets in
US along with the
business
conduction across
the globe through
the distribution
chain
(Calvinklein.us
2019)
60 Giorgio
Armani
boutiques, 11
Collezioni, 122
Emporio Armani,
94 A/X Armani
exchanges, 13
Armani Junior, 1
Giorgio Armani
88 countries.
More than
6500 outlets.
(Zara.com
2019)
122 outlets, 531
shops and 388
stores
(Hugoboss.com
2019)

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Accessories and
16 Armani casa
spread over 37
different countries
(Armaniexchange.
com 2019)
Promo Print media
promotions and
commercial
advertisements
(Calvinklein.us
2019)
Magazines and
print media
promotions by
Hollywood artists
(Armaniexchange.
com 2019)
Word of
mouth
advertising
(Zara.com
2019)
print media via
catalogue,
customer
interaction videos
posters and fashion
magazines
(Hugoboss.com
2019)
Product Home
furnishings,
lifestyle
accessories,
perfumery,
leather, jewellery,
watches, home
furnishings and
ready-to-wear
(Calvinklein.us
2019)
Clothing
Accessories
(Armaniexchange.
com 2019)
Clothing
Products
(Zara.com
2019)
Clothing
Accessories
Footwear
(Hugoboss.com
2019)

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Strength Presence in
multiple domains
of fashion,
Operational
efficiency, Global
Presence and
Skilled
workmanship
(Calvinklein.us
2019)
Innovating
marketing and
customer
preferences for
Hand Stitched
Clothing
(Armaniexchange.
com 2019)
Unique
designs,
Strong
presence and
Superb supply
chain
(Zara.com
2019)
Wide Distribution
network and Brand
Loyalty
(Hugoboss.com
2019)
Weakness Synergy, Image
management and
Ethics
(Calvinklein.us
2019)
PETA
Controversy and
Higher Price
(Armaniexchange.
com 2019)
Generalised
collection and
Lack of
advertising
(Zara.com
2019)
High Pricing and
High Costs of
advertising
(Hugoboss.com
2019)
Hence it is pretty evident that the chosen organization is observed to create a
significant balance in the generation of profit through the application of the pricing
penetration in comparison to the low, premium or ultra-premium pricing policy of the
competitors. With the competitive advantages in the aspects such as presence in multiple
domains of fashion, operational efficiency, global presence and skilled workmanship, the
selected organization has the potential to sustain for a longer period of time as the market
leader (Akhtar and Abdullah 2014). However, the licensing concerns, the recent reputational
damage that the selected organization faced with the abusive child labour along with the case

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of the water pollution are in need to be managed professionally by the organization to
improve their business operations.
Value Chain and Resource Based View Analysis
Value Chain
Resource – Based View VRIN
(valuable, rare,
inimitable,
non-
substitutable)
Sustainability
Competitive
Advantage
capabilities resources
Primary
activities
Product
development
Idea, design,
patents
 
Product design Customer
requirements
identifiers, Radio
Frequency
Identification
Device, strong
supply chain
  
Supporting
activities
Financial
management
Strong cash flow,
Significant
investment
 
Learning and
growth
Infrastructural
development,
training and
  

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developmental
activities.
As mentioned earlier, one of the significant strength of the organization is the presence
of it in the multiple domain. The selected organization has developed substantial ideas and
implemented them in the design of the products which helped the organization to introduce
different products for their customers and along with that, it also helped the organization to
increase the variation in the products of the selected organization. The increasing formation
of the patents from the part of the organization to acknowledge the implementation of the
new ideas in the design of the products is seen to be of great significance.
With a precise focus on the product design, the chosen organization has the required
infrastructure in place for the application of the Radio Frequency Identification Device which
enables it to track the bestseller products (Buckel and Thiesse 2014). With the increasing
competition of the market, the importance of tracking the products that are consumed more
by the customers is notably important. Under such situation, the application of the Radio
Frequency Identification Device enables the organization to share the details of the products
to the various parties associated with the process of manufacturing, selling and designing of
the products that are repetitively purchased by the customers (Madakam, Ramaswamy, R.
and Tripathi 2015). This enables the organization to produce the best quality and frequently
consumed products to the customers and that increases the level of satisfaction to the
customers of the organization.
With a precise focus on the supporting activities, the strong cash flow inside the
organization and the significant investment from the part of the higher authority are seen to

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crucial for the achievement of the infrastructural development along with the improvement of
the business operations of the selected organization.
Considering the bulk investment from the part of the management, the company is
able to meet the developmental needs of the employees which plays a crucial role in the
improvement of their skills and competencies. As a result, the company is able to produce
such products which is seen to increase the loyalty level of the customers.
Current strategic position of the firm:
The selected organization is able to position their business strategy in a significant
manner which enables it to apply the price penetration policy for the effective conduction of
their business. The decision of the organization in expanding the product chain of the
organization with the products such as the Jeans –denim wear, Watches and Jewellery, Black
Label products, Euphoria, Shoes and Socks, Bags, Belts and Wallets along with cosmetics
plays a crucial role in meeting the varying requirements of the customers of the organization
(Calvinklein.us 2019). In addition to this, more than 12000 number of outlets in US market
along with significantly strong distribution channel of the organization across the globe
enable the company to reach out to the customers with the products (Visser, G. Visser, G.,
2014 2014). Apart from this, the commercial advertisements and the print media promotional
campaigns help the organization in attracting larger number of customers for their products.
All these have notably helped the organization to achieve a noteworthy competitive
advantage to the selected organization.
Recommendation:
From the above analysis, it is pretty evident that the selected organization is facing an
intense impact of the ineffective and inappropriate corporate image. With a precise focus on
the controversial elements and the criticism that the company had to digest in the Asian

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market regarding the business ethics, the company faces the need to be managed in an
effective manner. Apart from this, the company is renowned for its out of box thinking and
the creative designs for the products. However, the creative aspect of the company is seen to
be face a major setback with the incapability of the organization in acknowledging the
existence of the prominent local designers and the creative work of them. Hence the
organization is expected to put strong emphasis on the global designer brands for the
achievement of the effective knowledge regarding the new and creative designs. Adding to
the point of criticism on the business conduction of the selected organization, it is visible that
the organization has faced notable amount of incidents where the selected organization
suffered the negatives from the improper advertisements and the ineffective incorporation of
the business ethics. Hence the incorporation of the ethics in the business conduction of the
organization is much needed. This will make sure that the employees are more liable towards
their job roles and at the same time, the company will not be forced to face any sort of
impacts of the reputation damage that the criticism creates.
Conclusion:
On a concluding note, the business strategy of the chosen organization is evaluated
and the company is seen to achieve the strengths such as presence in multiple domains of
fashion, operational efficiency, global Presence and Skilled workmanship. However, some of
the factors such as the absence of the creative designs or the licensing concerns from the part
of the organizations are expected to be met professionally to place the organization in a better
position to fight against the renowned competitor organizations.