Comprehensive Strategic Report on TOTTO: Ansoff & BCG Matrix

This report provides a comprehensive analysis of TOTTO's internal and external environment using various strategic tools. It includes a SWOT analysis identifying the company's strengths, weaknesses, opportunities, and threats, and a VIRO analysis assessing its competitive advantages. The value chain analysis highlights key activities that add value to TOTTO, while Porter's Five Forces model examines the competitive forces in its industry. The BCG matrix categorizes TOTTO's products, identifying clothing, backpacks, and accessories as star products. Finally, the Ansoff matrix explores potential growth strategies, including market penetration, market development, product development, and diversification. The report concludes with an implementation plan and recommendations for TOTTO to sustain its competitive advantage and achieve continued growth. Desklib offers a wide range of solved assignments and past papers for students.

CORPORATE STRATEGY
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EXECUTIVE SUMMARY
The report has been summarized the overall internal and external environment of TOTTO
organization with the use of value chain analysis, Ansoff matrix. With the help of BCG matrix,
the report has summarized that the clothing, backpacks and accessories are star product that
generate more cash to TOTTO.
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Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
Diagnostic findings......................................................................................................................4
Swot analysis of Totto company: ................................................................................................4
VIRO analysation.........................................................................................................................5
Value Chain Analysis of TOTTO................................................................................................6
External environment ..................................................................................................................7
TOTTO’S Competitive environment..........................................................................................8
Portals five force model .............................................................................................................8
Change and Sustaining Competitive Advantage..........................................................................9
TOTTO Market share and growth analysis – BCG Matrix.......................................................10
ANSOFF MATRIX...................................................................................................................12
diversification............................................................................................................................13
Implementation plan .................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
Appendix........................................................................................................................................16
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INTRODUCTION
The present report will discuss the Totto company which are apparel and fashion
company that provide clothing, backpacks, accessories and fashion. It is dealing in fashion
multinational that offer variety and technology and aim to satisfy the need of clients in a
comfortable and versatility way with the better quality standards. This report will describe about
the in which way Totto globalized as well as which pattern seen in Totto expansion beyond the
Colombia (Elizabeth and Arroyo, 2020). In further aspects, also analyse the income statement,
cash flow and operating cost of Totto company.
Diagnostic findings
The Totto company is facing various issues and challenges in the emerging world as the
competition is high. The main issue the company is facing is changes in the fashion trend day by
day as well as preference and demand of the customers. Along with that it is challenging for the
company to determine the potential patrons for the growth of the company. For the company it
is challenging for the organization to meet the demand, taste and preferences of the every
consumer as everyone is having different mindset.
Swot analysis of Totto company:
Strength: This fashion multinational company offer a wide range of innovative product with the
quality like apparel, bags and clothes, etc. it provides quality as well as fashion at the same time
which attract the customer loyalty. The company presence at the global level and across the
world (Teoli and Sanvictores, 2019). Totto deal partnership with the Asian company to supply
technologies. Moreover, the company expand their production in the silver as well as ensure the
raw materials integrated with the suppliers. The company generate loyalty among youth and
sporty people in informal taste.
Weaknesses: Maintain low quality can result in the low price of fashion brands. Entering new
market and targeting new customers is the biggest challenges for the company. The dealing with
the third party supplier is the cost-efficient which can create a number of problems in their
production work, quality standards. The backpack product poorly displayed and back at the store.
Opportunities: Totto company is access in the Colombia market and also expand it footprint
(Abdel-Basset and Mohamed, 2018). In the fashion multinational industry, company can have
improved the lifestyle of the living standards as well as promote their products and services.
Company can increase the advertisements which helps in the growth of online shopping trends
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that's why company should invest on the e-commerce platforms which helps in remained
profitable and increase the fashion brand, moreover, spend on the quality and fashion products
which helps in built better image and reputation of company.
Threats: The biggest challenge of fashion multinational company is changing trends which also
lead a weakness of the company and this can decline the performance of the company. The
competition with the high demand in fashion industry are increased day by day. The free trade
agreement are also a threat of the company which lead in the slow growth. For the company sales
in Colombia might be bearable for the products. The company dealing with china that provide
black, grey and pink colour in fabric cloth which are high costly for the Totto.
VIRO analysation
in general, it highlight the effectiveness of the company by considering four elements which
includes valuable, rarity, limitability and organisation.
Value: the company is increasing the physical presences in the domestic as well as international
marketplace. Along with that the value of the company is increased by the online services of the
company. The company is highly valuable as it allow the distribution of the resources. The
company is delivering high brand value in the domestic as well as international marketplace. Due
to which the company is attracting large numbers of customers. The organisation is having high
network that make the company more valuable in the market and able to satisfy the large
numbers of the customers.
Rare: the competitive advantages of the TOTTO company is rare as many other competitive
brand using same strategy and delivering similar product and services in the marketplace. On the
other hand it is also valuable for the company. The employees of the organisation are highly
skilled and well-educated which improve the performance of company. Apart from that TOTTO
is having the patent which is not easily available due to which the competitor didn’t interfere in
the production of Totto. Along with that it required higher capital to invest at one time in order
to distribute large numbers of products and services.
Imitable: some competitive advantages of the company is imitable which is identified by the
organisation with the assistance of VIRO analysis. For instance the financial resources of the
organisation are costly to imitate. In context to that the competitor and the new company will to
obtain same profit from the marketplace. Along with that the fashionable product of the company
not required much experience. In order to that the company deliver temporary competitive
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advantages in brand value. Apart from the company required capital to invest on the employees
for improving their skills and knowledge for the success of the company. For the unique
distribution of product the company need to invest amount.
Organisation: the company need to improve the network and expend the business all over the
world for the success of the company. The company has the potential to invest huge amount in
the domestic as well as international marketplace. Furthermore the organisation has the
opportunity to improve the brand value of company as it is valuable and deliver competitive
advantages in the marketplace.
Value Chain Analysis of TOTTO
The various activities that add value to TOTTO fashion company are as follows:
Primary Activities:
The various primary activities which has delivered value to TOTTO fashion company is
inbound logistics, operations, outbound logistics, marketing sales, service etc. (see appendix).
The company mostly purchase raw material locally, but they started sourcing fabric from China
such as all coulour nylon because of unavailability in Columbia market and high cost locally
(Chapman and et.al., 2021). The huge investment in R&D and technological innovation is an
operational activities that has lead to value creation of TOTTO organization. The extensive
customer care etc. is also part of TOTTO primary activities that deliver value such as brand
reputation, high profit etc to organization (see appendix 1).
Supporting Activities:
Firm Infrastructure: TOTTO has around 700 stores in more than 60 countries which
include 150 stores in Russia by the end of 2021.
Human Resource Management: The total number of employee work with TOTTO in
Latin America is 7000 and all over the world is 150000.
Technology: TOTTO is basically committed towards technological innovation where
they use cloud based architecture, agile engineering method to deliver value quickly. The
technology of company includes Mailchimp Mandrill (Email delivery), MS office 365, Zendesk
for support and feedback, Amazon AWS for hosting etc.
Procurement: The company such as TOTTO have a sustainable and progressive relation
with supplier such as China (Fernandez-Stark and Gereffi, 2019).
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External environment
Political factor: in the modern era the companies are allow trading freely in international
marketplace which is the positive aspect for the organisation. Due to the political issues the
company is having certain restriction that include traffic and taxes which lies on the company. It
is one of the strongest reason for increasing the sales and revenue of the company. The stability
of political parties affect the company as if the government increase the taxes it increase the
prices of the productivity and affect the profitability. In context to that interaction with the
government is very important.
Economic factor: Increase in inflation rate affect the demand of companies product and
services. Along with the continuous changes in the exchange prices of currency decreases and
increase the sales of the company also affect the profitability of the company. Due to the
financial crises the company is not able to offer discount to the customers in order to satisfy
them. Furthermore the stable economic of nation allow the company to increase the market
shares of the company in domestic as well as international marketplace. Apart from that the
fiscal and monetary policies of the nation is properly manage by the authority which allow
managing with the low inflation rate.
Social factor: The changing trends of the market increase the sales of the company as the
company follow the marketing trends. It is one of strongest reason the company is able to deliver
competitive advantages in the marketplace. The potential customer of the organisation is
influenced by the different culture, society and perception of the people. The continuous changes
in taste and preferences of the customer increase the challenges for the organisation. Furthermore
it is increasing the love for the leather bags which is produced and offer by the TOTTO
company.
Technological factor: in the modern era to is one of the biggest trend in domestic as well as
international marketplace which is attracting large numbers of the customer toward the brand. It
allow the company to deliver services through the online sources as the large numbers of people
depend on the technology. In context to that the TOTTO company is focusing in go digitalisation
for increasing the sales of the company. It help the company in increasing the awareness and
attract the customers toward the brand rapidly. Due to the technological factor the company is
providing flexibility of selecting right product to the customers in effective as well as efficient
manner.
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Legal factor: the Totto organization is the new market so the company did not have any legal
restriction but the industry have restriction on tax restriction and export restriction. Along with
this the organization need to follow the employees law while operating the business. Every
country have different legal obstacles due to which the company facing downfall in the
international marketplace.
Environmental factors: the fashion industry is affecting the environment badly. The fashion
industry is using the chemical in producing the clothing product which affect the nature as the
extraction merged in air, water and soil. Apart from that the transporting services of the company
is creating air pollution. As per the record the industry is generating around 62% of pollution all
over the world. The company is utilizing the skins of animals which put the life of the animals in
danger which also affect the sales of the company.
TOTTO’S Competitive environment
The TOTTO company is having the advantage of remaining competitive in the marketplace.
With the wide range of product and services the organisation has potential to remain competitive
in the marketplace. Along with that it will be easier for the company to operate the business with
the few restrictions. Due to that the company is having extensive opportunity to enter in the new
market in order to increase the productivity and profitability of the company in effective as well
as efficient manner. As the organisation is the fastest growing company it is benefited to remain
competitive in the marketplace. The organisation is having low manufacturing cost that decrease
the price of commodity and satisfy numbers of customers in effective manner. Furthermore it
deliver the support in generating higher revenue from the marketplace. With the assistance of
higher profit the company s having good hold on the market share for increasing the brand value
in the domestic as well as international marketplace.
Portals five force model
The treat of new entrants: the numbers of competitors are already available in the domestic as
well as international marketplace. for entering the new market the company has various risk but
easy for the TOTTO to enter the market as the company is having strong brand values.
Competitive rivalry: the comparative rivalry is low for the TOTTO organisation. the company
is offering the adequate cost of product because of which the potential customer will not shift on
the other brand.
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Bargaining power of supplier : the bargaining power of the supplier is higher due to which the
company has the potentials to increase the prices of the commodity. Apart from that the company
has the potential to obtain better position in the marketplace.
Bargaining power of buyer: the power of the buyer is medium it means the company is having
less possibility that the customer will shift to the other brand which is competitive for the
company.
Threat of substitute: there are chances of shifting toward the substitute good and services of the
organisation as many other brand sale same product and services in the domestic as well as
international marketplace.
Change and Sustaining Competitive Advantage
Sustainable success helps the company to enhance their brand image and reputation in the
national as well as international market. In order to achieve the sustainable success, the company
need to improve their creativity, innovation, delivery and invention. One of the threat of the
company is such that the fabric material such as nylon is available in three colour only in
Columbia. Also, it is costly for the company to use that material from local market. Thus,
TOTTO has started sourcing the same from the China market at low cost in order to gain the
sustainable competitive advantage in the competitive market.
However, on the other hand, the fashion industry is huge and one of the pickiest market
in the world is China and America. The huge competition in the fashion industry is because of
the top competitor such as Nike, Shanghai Tang, Louis Vuitton etc. with high brand value and
market share (see appendix 2). This is one of the biggest threat for the company to sustain the
fashion industry with the top brand. TOTTO company have to understand the same with and to
deal with this issue they should start their online delivery and shopping channel (Chiu and Lin,
2019).
Another competitive change for TOTTO is that they have expand its business to around
60 countries with more than 700 stores. The large customer base and high customer loyalty as
well as retention rate of TOTTO is their biggest strength. The impact of which the company able
to deal with the changes and able to sustain its business in highly competitive market. The
availability of same fashion products which was provided by top brand in the low cost at TOTTO
store is another factor that help the company to gain sustainable competitive advantage.
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TOTTO Market share and growth analysis – BCG Matrix
BU
Volume of Sales
This TTM
Volume of Sales
Last TTM
Leading Competitor's
Volume of Sales
Relative
Market
Share
Market
Growth
Backpacks $ 120,000.00 $ 100,000.00 $ 45,000.00 2.67 20%
Clothing $ 170,000.00 $ 140,000.00 $ 50,000.00 3.40 21%
Pets $ 50,000.00 $ 76,503.00 $ 25,000.00 2.00 -35%
Home Products $ 130,000.00 $ 75,000.00 $ 65,000.00 2.00 73%
Accessories $ 140,000.00 $ 120,000.00 $ 280,000.00 0.50 17%
PPE (domestic and industrial used) $ 10,935.00 $ 26,497.00 $ 30,487.00 0.36 -59%
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BCG growth matrix is a planning tool with the help of which TOTTO organization able
to analyse and identify its different products market share and growth opportunities. There are
four quadrants as per this matrix which are as follows:
Star: The products cover in this quadrants have high market share and growth rate. This
product generates more cash for the company as well as also consume more cash because of high
growth rate. For example, Backpacks, clothing and home products of TOTTO come under star
category.
Cash Cow: This is second quadrants of matrix which state the products have high market
share but low growth rate. For example, Pets products of TOTTO come under cash cow category
with 2.0 market share and -35% growth rate. Thus, it is advisable to TOTTO that they should
invest in this product to maintain current level of productivity and growth. However, this product
is best for TOTTO as it generates more cash as compared to cash it consumes (Hossain and
Kader, 2020).
Dogs: This are third quadrant of matrix which cover the products whose market share as
well as growth rate are low. This are those products which neither consumer nor generate more
cash to the company. For example, PPE product of TOTTO organization which should stop by
the company to produce and sale.
Question mark: This is basically the last quadrant of matrix which cover the product that
have high growth prospect and low market share. For example, accessories product of TOTTO
that have the potential to convert in star. For this, it is advisable to TOTTO that they should
invest in R&D of accessory products to understand market trend and customer demand
(Khajezadeh and et.al., 2019).
However, the limitation of BCG matrix is such that it does not consider other factor
beyond market share and growth rate for their product analysis. The impact of which TOTTO
unable to identify the products which are high profitable and loss incurring in the real world.
ANSOFF MATRIX
This is also known as product or market expansion grid that is used by TOTTO organization in
order to plan their strategies for growth. The four strategies of the Ansoff matrix are as follows
(see appendix 3):
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Market Penetration: TOTTO organization firstly introduce their products such as
Backpacks, clothing, and fashion industry in Latin America. At the initial stage, most of its
backpacks and other products are placed in back of store and poorly displayed. So, in order to
implement the market penetration growth strategy and achieve higher sales, TOTTO has adopt
social media marketing for the same (Orach, Duit and Schlüter, 2020).
Product Development: TOTTO fashion company have launched various new product
line such as PPE (domestic and industrial use), PET product, home product and accessories in
Latin America in order to enhance their product portfolio in existing market.
Market Development: TOTTO company has first entered Cali city of Colombia with its
existing clothing and fashion products in the year 1987. Further, the company enter costa Rica in
1992, Ecuador in 1998 etc. as per TOTTO market entry sequence (see appendix 4).
Diversification: TOTTO company has adopted diversification growth strategy in order to
internationalize its company and brand. For this, the company has entered various foreign
countries and open stores with new and innovative products such as Home, pets, accessories etc.
as per the customer taste and preferences (Kuncoro and Suriani, 2018). By the year 2019,
TOTTO company have opened 650 stores in 30 countries in order to became global recognized
brand (see appendix 5). Not only that, it was also reported that TOOTO has achieve its goal in
excess of 700 stores in 60 countries. The fastest growth of company in seen in Russia with 150
stores.
However, this strategy does not work well all the time because of its own limitations. The
competitors of TOTTO organization such as Permoda, Tuctuc and Saville Row is not
considering while analysing growth opportunity. Without competitor analysis, it is difficult to
predict whether TOTTO will grow or vanish with product or market development (Kuncoro and
Suriani, 2018).
diversification
For the further growth of the organization the company will enter the new market with the new
product and services. In context to that the company willing to deliver trending cloths to the
people as per the culture of hosting country. For attracting the large numbers of customer toward
the productivity of the organization the company will launch exclusive jewellery, and premium
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