Supply Chain Business Operations Report: Giordano HK Case Study

This report provides a comprehensive analysis of Giordano HK's supply chain business operations. It begins with an introduction to operations management and its relevance to the fashion retail industry, focusing on Giordano's global presence and business model. The report delves into Giordano's operations strategy, performance objectives, and the critical elements that guide its decision-making, including cost, flexibility, and dependability. It examines customer satisfaction through the service gap model and explores marketing strategies. Furthermore, the report analyzes Giordano's business model, highlighting its corporate values, competitive strategies (including Porter's Generic Strategies), and the challenges it faces in the market. The report concludes with a balanced scorecard approach, providing recommendations for best practices and areas for improvement within Giordano's supply chain.

Supply Chain
Business Operations
Giordano HK
Name:
Institutional Affiliation:
Author Note:
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Contents
Introduction...........................................................................................................................................2
Part 1.....................................................................................................................................................3
Performance objectives......................................................................................................................4
Customer satisfaction........................................................................................................................6
Business model..................................................................................................................................9
Supply chain management...............................................................................................................10
Part 2...................................................................................................................................................13
Part 3...................................................................................................................................................16
Balanced Scorecard.........................................................................................................................17
Conclusion...........................................................................................................................................18
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Introduction
Operations management (OM) refers to business practices that maximize on company
resources for optimization of returns. Best practice strategies include efficiency, reduction of
wastage and value returns. Managing resources such as time, raw materials and processes is a
challenge. This case analysis considers Giordano HK as a large operation in the fashion retail
industry with multiple stores internationally. With more than 2420 stores across the company
has a manufacturing unit for its supplies. This Hong Kong oriented brand has served
customers for more than 37 years. Further insight into its business mechanisms identifies an
established global retail and distribution network1. Listed as a fashion retailer the company
goes through planned purchases, organized distributions, controlled prices and coordinated
marketing. Principles of OM guide these processes for higher returns and improved
efficiency. This report focuses on the operations strategy, company objectives, business
model, and supply chain for recommendations on best practices. Of critical importance are
principles such as cause and effect, risk management and best practice. Synchronizing
business elements for maximum output depends on the capacity of the company2.
Part 1
Giordano Operations strategy defines its business model featuring retail, wholesale and
distribution point. This is a complex system that calls for a resource based management with
multiple benefits3. Aligning these with company objectives and business activities is tricky
because of the existing market competition. As a result efficient operations drive down costs
by designing an appropriate framework, managing its operations and improving on it
1Bloomberg, ‘Giordano International Ltd; 709: stock Exchange of Hong Kong Limited’, 2019,
https://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?capId=410706
2 Inside Retail Asia, ‘Giordano cites ‘sluggish’ Hong Kong-Macau market’, August 10, 2018,
https://insideretail.asia/2018/08/10/giordano-cites-sluggish-hong-kong-macau-market/
3 Michael H, Kai X, Christina, M, ‘Resource based theory in operations management research’, Journal of
Operations Management, Vol. 41, 2016, p. 77-94
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continuously4. This creates a competitive advantage which becomes a practice. Specialised in
fashion apparel, its target customers include men, women and children. Additional products
on its list include global accessories. Business franchises from across the globe can also buy
products from Giordano on wholesale5. Its wide clientele explains its use of different brand
labels such as Giordano Junior, BSX and Giordano Ladies. This heterogeneity shows a
growing complexity in the company’s business model. Revisiting its strategies is one way to
identify existing gaps and reinforcing its strengths against weaknesses. Resource exploitation
through extension is one of the patterns that Giordano adopts6.
Performance objectives
Operations strategy performance model in Giordano’s case includes an efficient team work7.
In order to achieve its performance objectives the company scrutinizes its decision making
process. An efficient human resource management system supports its process design. An
online retail business with a global layout requires an integration of objectives. Critical
elements used to guide its decision making feature the business costs, flexible operation,
dependability, quality products, and speed in service delivery. This framework guides
Giordano’s complex supply chain which requires operational measures for effective planning
and controls8. Figure 1 below shows a summary of this with reference to the fashion
manufacturing and wholesale chain. Adopted from Porters five competitive forces these
elements give Giordano an advantage9. Dependability in this case means that customers in the
wholesale franchise can count on Giordano’s manufacturing plant to produce orders on time.
Reduction of the order size should not affect the company’s performance records in terms of
4 Miriam M W, Constantin B, Vikram B, Antony P, ‘Sustainability in multi-tier supply chains: Understanding
the double agency role of the first tier’, Journal of Operations Management, Vol. 41, January 2016, p. 42-60
5 Lanlan C, Jyoti N, Zhongqi J, ‘Business model innovation: How the international retailers rebuild their core
business logic in a new host country’, International Business Review, Vol 27, No. June 2018, p. 543-562
6 Ibid 256
7 ibid
8 Brettel M, Klein M, Friederichsen N, ‘The relevance of manufacturing flexibility in the context of industrie
4.0, Procedia Cirp, Vol 41, 2016. p. 105-110
9 Christopher M, ‘Logistics & supply chain management’, 2016, Pearson, UK
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cost of production, and quality of customer services. One of Giordano’s challenges in this is
maintaining flexibility amidst external changes. For example workers may complain of poor
human resource management caused by an imbalance between work and leisure times10. With
more than 8000 employees Giordano thrives through mutual support. In addition, the
company has an environment that encourages staff retention. Among these are monetary
benefits, and promotions which encourage employee loyalty.
Branding strategies feature long term plans to enhance performance through customer and
employee loyalty11. Giordano’s workers feel proud of their brand because of its performance
records in the market. The good working environment provides training opportunities for
professional development. Most of its employees are within the 20-40 year bracket whose
preference is organizations with better opportunities for growth. Internal branding through
company values coupled with an effective external branding or marketing plan influence
loyalty. Brand identity motivates customers to invest in the success of the business. Buying
more items from Giordano means an increase in sales and a positive relationship with the
brand. However, Giordano’s reported sales show a drop of HKD 161 Million in the last year.
The company has an executive team headed by its CEO Dr. Kwok Kuen Lau, a director and
Group HR. These are over 40 year olds but the management supports a cordial working
environment with most of its employees featuring young people below 40years. Its
executives and Board of Directors support staff participation in company decisions for a
caring environment. Through a hands-off management strategy the company boosts the
employee motivation and competencies.
10 Indeed, ‘Giordano’ Management Reviews, 2019, https://www.indeed.com/cmp/Giordano/reviews?
fcountry=ALL&ftopic=mgmt
11 Pearson S, ‘Building brands directly: creating business value from customer relationships,’ 2016, Springer
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Figure 1: Giordano performance elements
Customer satisfaction
OM considers the quality of goods and customer service as a best practice. The service gap
model or 5 gaps model gives five ways to offer customer satisfaction. The figure2 below
shows these areas for Giordano to identify and fill. The knowledge gap influences how the
company meets customer expectation, understating customer needs and fulfilling them.
Principles of customer satisfaction include continuous improvement on service delivery12.
Giordano invests in speedy and friendly online services in order to create strong and lasting
relationships. For example, when a customer complains about the product quality, the sales
department responds on time in order to assure the customers.
12 Beckford J, ‘Quality: a critical introduction’, 2016, Routledge, p 77
6
Costs Control costsSpeed
Perfomance
Objectives
Giordano
Fashion Retail
and
Wholesale
flexibility
Dependability
Manage
external and
internal
branding
Quality

Supply Chain
Figure 2: Illustration of the service Gap model
Loyalty brings the buyer back and spreads the news to new customers. Knowing the customer
means taking time to meet the required expectations. It also implies giving accurate
information about the company. Training the employees in the best sales skills, Giordano
manages to address its rigorous sales process. Having adequate knowledge about a product
enhances the customer and employee confidence13. Quality improvement strategies such as
digital marketing strategies encourage innovative campaigns for market competition. This is a
useful technique for acquiring new customers but it also breeds content familiarity for new
products. Figure 3 highlights an example of Giordano’s mixed marketing with pricing,
pomp and colour as critical strategies14.
13 Ibid 212-232
14 David B, Operations Management: An International Perspective, Chapter 2, ‘Operations, Strategy and
Operations Strategy’, 2018, Cengage, http://cws.cengage.co.uk/barnes/students/sample_ch/ch2.pdf
7
Customer expectation
Customer perception
Customer
Service delivery
Service policies
Understaning customer needs
External communication
Company
Knowledge gap Customer
satisfaction

Supply Chain
Figure 3 Giordano pricing mechanism combined with holiday festivity15
Celebrity endorsement in the Figure 4 below is a strategy to maintain customer loyalty in its
Chinese markets. Giordano expresses its corporate strategy in product launches highlighting
its business type, diversification and strategic objectives. The business level strategy focuses
on each franchise or store while the functional level plans enhance marketing, operational and
financial mechanisms16.
Mixed marketing strategies enhance the brands product strategy. Positioning itself as a global
brand has benefits and risks. Its repositioning strategies include focusing on the regional
markets too. Focusing on place, price and product, its promotions incorporate all target
customers17. However, when Giordano experiences slow growth as seen in its Macau market
an analysis of probable cause is necessary. Poor performance and tough competition are some
of its major challenges18. In this case the solution would be to reduce costs while improving
15Offeraty, ‘Giordano Online Sale 50% off, May 2019’, https://www.offeraty.com/stores/giordano/giordano-
online-sale-50-may-2019-25106
16 ibid, p, 25
17 Chen X, Wang X, Jiang X, ‘The impact of power structure on the retail service supply chain with an 020 mixed
channel’, Journal of the Operational Research Society, Vol, 67 No. 2, 2016, p. 294-301
18 Inside Asia, par 3
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on innovativeness or creativity. A drop in group sales implies reduced net margins hence it
affects financial performance. OM supports the optimization of sales for profitability.
Figure 4: Celebrity endorsement showing Jeon Ji Hyun in Giordano commercial
Business model
Giordano’s process of producing and supplying goods thrives on customer value19. Its
corporate values include innovation, simplicity, quality, knowledge and service20. Giordano’s
vision is to have the “best” and “biggest” apparel retail business21. This supports its mission
of making the customer to feel and look great. Specializing in men’s, ladies, and kids wear
is a challenge but market competition is also high. The company is up against global retailers
from UK and US markets. Brands such as Gap, Esprit, Fast Retailing and Bossini
International Holdings push Giordano to invest more in offering value for customer’s money.
Some of its competitors offer alternatives, for example Japans Fast Retailing uses the
LifeWear concept which has a catchy tagline for high quality, affordable and comfort
19 Stark J, ‘Product lifecycle management’, Springer, Vol 1,2015, p. 1-29
20 Giordano, Corporate, 2019, http://corp.giordano.com.hk/en/vision.aspx
21 Ibid, par 1
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material. Giordano is a high end brand with standard and custom made designs sold through
aggressive promotional strategies. Therefore creating a competitive strategy in the midst of
the high competition focuses on four strategies. Giordano has an opportunity to excel in its
industry through innovative focus on attractive costs, differentiation, and leadership22. Table
1 below highlights this under Porters Generic Competitiveness concept.
Uncertainty in the markets a major risk in the retail business and it calls for a strategy to
spread risks while looking for new opportunities23. The company has to continuously monitor
its microeconomics for effective business operations. In 2018 Giordano experienced an
increase in sales with a 9.2% increase. However, this was not the case in 2019 because its
sales dropped by 20%24. Capitalizing on e-commerce the company looks to better
performance. Its IT strategies enhance financial performance through marketing strategies
while minimizing costs for profitability25. Analytic techniques support pricing strategies for
high accuracy in the retail wholesale model. Giordano has a dual framework business
approach therefore it needs to prepare for multiple results. The retailer business may thrive
through social networks but the wholesale section greater focus on more inputs and outputs.
Cost Leadership
-low cost production
-use economies of scale
-technology and innovation
Easy access to raw materials
Differentiation
-Uniqueness in design/operations
-gain customer value
-position brand as ideal in meeting customer
needs
-best price offers
22 Cambridge University, ‘Porter’s Generic Competitive Strategies ( Ways of competing), Management
Technology Policy’, 2016, https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-
strategies/
23 David B, p. 55
24 Bloomberg, par 5
25 Martis L, Rindova V, Greenbaum B E, Unlocking the hidden value of concepts: a cognitive approach to
business model innovation, Strategic Entrepreneurship Journal, , Vol 9 No.1, 2015 p. 99-117
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Cost Focus
-Narrowing the target through cost advantage
-reduce competitive scope
-exclusive pricing
Differentiation Focus
-Narrowing the differentiation target
-Focus on special needs segments
-exploit differences
Table 1: Porters Generic competitiveness for best cost strategy
Supply chain management
Creating value for the Giordano customer is a major strategy that goes through the complete
supply chain26. First suitable operations must be in place for this cross channel system.
Efficiency in this system ensures that the brand maintains value for money while improving
efficiency. Competitive priorities in the ladies wear calls for changes in. Maximization of
value brings out competitive advantage. Figure 5 shows the intertwined supply chain in the
Giordano e-commerce for proper scheduling, timely distribution and effective demand
management.
26 Kohtamaki M, Partanen J, ‘Co-creating value from knowledge-intensive business services in manufacturing
firms: The moderating role of relationship learning in supplier-customer interactions;, Journal of Business
Research, Vol 69, 7, 2016, p. 2498-2506
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Figure 5: Illustration of Giordano’s complex supply chain
Sustainability continues to feature as Giordano’s challenge because of the comparative costs
from competitors. A comparative analysis of its approaches recommends repositioning
strategies that maximises on the brands abilities. To develop competitive priorities Giordano
HK must explore its buyer and supplier chains27. Its Hong Kong Markets may not be as
favourable as its Saudi Arabian markets or South East Asia. Having in-depth knowledge
about the market environment gives the company strength against its regional and global
competitors. Sustainable management ensures that efficiency maximizes on production,
resource management and technology. This goes beyond the profit agenda because it weighs
the internal and external customer value. IT solutions support the design, execution and
control of operations. These form the back bone for OM supply chain which converts
resources into expected outcomes. Giordano obtains the desired goods and services through
an effective implementation of company strategies. Technology selection proved effective for
its global competitor Zara, but the company has to redefine its fashion trends to match the
27 Jitpaiboon, T, ‘The study of competitive priorities and Information Technology Selection: Exploring Buyer and
Supplier Performance’, Journal of International Technology and Information Management, Vol 23, No. 3, 2014
12
Distribution Retail
Wholesale
Sales
Operations
Demand
management
Inventory
manufacturing Design
Suppliers