VF Corporation's Acquisition of Supreme: A Strategic Report

This report provides a strategic analysis of VF Corporation's acquisition of Supreme. It begins with an external analysis using PESTLE and Porter's Five Forces to assess the industry environment, identifying political, economic, social, technological, environmental, and legal factors, as well as the competitive forces at play. The report then delves into an internal analysis of VF Corporation, evaluating its tangible and intangible resources and core competencies through value chain analysis. Finally, it evaluates the strategic implications of the acquisition using a TOWS matrix, culminating in a conclusion regarding the overall strategic approach. Desklib offers a variety of study tools and solved assignments for students.

Applied Corporate Strategy
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
External analysis..............................................................................................................................3
Internal analysis of VF corporation.............................................................................................6
Strategy Evaluation....................................................................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
This report is mainly focused on the VF corporation acquire supreme brand in $2 billion and
enhance their business global world. VF corporation has been sealed its deals to acquire
supreme, privately owned street wear. Usually, this company was focused on the transaction
process but supreme has become owned subsidiary of V.F. the brand is mostly sells various kind
of products such as apparel. Accessories, footwear through online platform. With acquisition,
company is likely to implement speed up strategy because its aim to achieve business model and
completely change customer minded and retail centric business within hyper digital manner.
VF Corporation is based on the American world-wide apparel, foot-wear company and also
established in 1899 and its headquartered in Denver. The company has 13 brand and organised
into different manner. in 1899, John Barbey and group of investors are established the company
as glove and mitten manufacturing enterprise.
In this report, it will be analysed the pestle and porter’s five forces model to identify external
performance of organisation. Moreover, it will describe about the internal analysis and find all
essential resources through value chain analysis. at last, it will be evaluating the strategic
approach through TOWs.
External analysis
Pestle analysis
Political factor- in this factor, The Apparel Accessories industry can be examined the
significant impact of political instability in long term business enhancement. Usually, this
company was operated in context of apparel clothing, which has more than large number of
countries. But at certain point (Agnihotri and Bhattacharya, 2021). It will be increased the
political system risk which is creating a political environment within organization at the time of
merger & acquisition. The industry is closely analysed before acquisition of supreme brand. It
including risk of political instability in apparel clothing, increase demand of regulation. These
are different elements which is directly affecting on the The Apparel Accessories industry in
marketplace.
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Economic Factor - in this factor, it is mainly focused on the inflation rate, saving rate and
interest rate. These are directly affecting on the The Apparel Accessories brand when it acquire
Supreme brand. This is why because of increasing the foreign exchange rate. It is difficult to
determine aggregate demand & investment in an economy. In most of cases, The industry
should be consider competition norms which is directly impact on the competitive advantage. If
in case, enterprise will try to acquire Supreme brand and also paying high growth rate. Therefore,
large number of consumers are spending time and showing an interest.
Social Factor- this type of factor is influencing the The Apparel Accessories industry
because society culture and way of doing things impact on the culture of enterprise. Many people
can beliefs and attitude of large population which plays a great role in marketplace. The Apparel
Accessories industry has already understand the need of consumers in given market and manage
their textile business in global world (Bennur and Malhotra, 2020). Company is always focused
on the specific demand of consumers and always change their clothing trends according to
interest of client. That’s why, it will inspire or motivate more consumers where they can
purchase items.
Technological Factor- Nowadays, it has been rapidly increasingly demand of advanced
technology. After acquisition of Supreme brand by VF corporation . It will be implementing
automation technology in their business. In this way, it will easily handle business operation and
function in proper manner. Moreover, it is also increasing the speed of task execution. Therefore,
large number of potential consumers are attracted towards product as well as service. In this way,
it has concluded that technology factor impact on The Apparel Accessories industry in growth
and development. In some situation, The Apparel Accessories industry can do analysis of
industry but it also understand the current speed at which technology disrupts.
Environment Factor- In this factor, The Apparel Accessories industry have been
considered the different norms, standards which can impact on the profitability of organization.
Even with nation, it often that increase demand of environment law and liability. VF corporation
acquire Supreme brand and also implemented as environmental legislation. This will help to
reduce pollution rate in global world. The Apparel Accessories industry will always try to
protect or secure environment through effective environmental policies, standards.
Legal factor- this factor is related to legal framework and institution which are not robust
or enough to protect or secure intellectual property rights of organization. The Apparel
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Accessories industry should carefully evaluated legal policies before acquiring Supreme brand.
Because it help to maintain a strong brand position in marketplace. Basically, The Apparel
Accessories industry has used the Anti-trust law in textile- apparel clothing brand. This will help
to protect the entire business operations and functions.
Porter’s five forces
It is based on the holistic strategy framework that help to support business in strategic
decision making process (He and et.al., 2021). It is not just analyzing the present competition
level but it also focused on the corporation to build a sustainable competitive advantage in
marketplace.
Threat of New Entrant- Threat of new entrant in The industry which brings more
innovative, a new way of doing different things and putting more pressure on The Apparel
Accessories industry at the time of Supreme brand acquisition. When it can be implemented low
pricing strategy, reducing cost and providing new value proposition in context of customers.
Thereat of new entrant is moderate. The industry can handle the complex situation during threat
of new entrants. It will try to launch a new product & service but it is not enough to attract more
consumers. The industry will build a capacities and spending money on Research &
development. That’s why, it can easily define standards regularly.
Bargaining power of supplier- The Apparel Accessories industry is basically focused on
the different suppliers who can provide better facilities. But at certain level, Suppliers in
dominate position so that it will reduce the margins The Apparel Accessories industry and earn
in marketplace. The powerful suppliers have a great negotiation approach to extract high price
from enterprise. In this way, it has analysed that bargaining power of supplier is higher. On the
other hand, The industry will be doing some experiment with product design through different
materials. So that if prices go up as new materials. In this way, it will be shifting towards
another. The Apparel Accessories industry can represent as dedicated behavior towards
suppliers.
Bargaining power of Buyers- Nowadays, buyers are very much demanding. If they want
to purchase an item but it is mainly focused on the best offers with minimum price or cost. The
Apparel Accessories industry has already acquire Supreme brand so that they can feel lot of
pressure and increase profitability rate (Laptev, 2021). Powerful buyers are attracting towards
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The Apparel Accessories industry because company will give a better option, discount, offers.
In this way, it has identified that bargaining power of buyer is moderate.
Thereat of Substitute- when a particular product and service meets a similar kind of
consumers need in different manner. At that time, The Apparel Accessories industry may suffers
in regarding profitability. The company has acquired Supreme brand so that it would be
increased threat of substitute. It has become higher, if The industry provide offers that is
uniquely manner. But The industry can tackle a critical situation to identify specific need of
client and then give a best offers.
Rivalry among existing competitors- if it may arise rivalry among existing client in
marketplace. in this way, The Apparel Accessories industry can understand intense performance
and then it will drive lower prices and decrease its overall business profitability in marketplace.
The industry has already operates in different competitive market. But at the time of acquisition
of Supreme brand (Malin, 2021). It may increase competition level and directly effect on the
business profitability as well as productivity. Threat of competition level among consumers is
higher. But The industry can easily tackle problem by developing a sustainable based
differentiation approach. This can help to divide the scale of business and establish a strong
collaboration to increase market size. Afterwards, acquisition with supreme brand it will be
expand their business across global world.
Internal analysis of VF corporation
VF Corporation is well-known apparel and Accessories Company that wants to acquire
privately owned street wear brand that also sells accessories, footwear and apparel through
online platform. It is important for this company to identify its own strengths as well as
weakness through evaluating tangible and intangible resources. Some tangible resources that can
help this company out in improving its image include:
Resources
Tangible
Physical: This brand has around 1000 stores all around the world and is one of the brands
that has innovative fund. This company is very diverse and provides numbers of products such
as: sportswear, Jeanswear, outdoor wear, image wear and others. These ranges of products give
this company a good customer’s base that can increase its sales and revenue.
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Human: It has around 50,000 employees who are all trained and help this brand in
accomplishing its goals. Highly skilled workforce via successful training and learning program.
It is also found that this corporation invests heavily in training and development program in
order to train them and motivate them for improving productivity and performance as well. This
company has a strong base of suppliers that helps this company out in solving problems related
to supply chain bottleneck (Kok, Komen, van Capelleveen and van der Kamp, 2020). Along with
this, it has improved relations with all stakeholders such as: distributers and dealers where
dealers’ help this brand out in promoting its products and along with this, it invests in training
where it explains sales department of VF Corporation as how it can increase customers’
satisfaction and can extract the maximum benefits out of the products. All trained employees
maintain important physical resources in the form of 28 company operated manufacturing
facilities in Canada, US and mexico.
Intangible resources
Intellectual property: It deals or operates business with suppliers, agents and contractors that
comply with applicable laws as well as regulations of jurisdiction in which it operates. It avoids
regulating with those businesses and suppliers who do not respect or value its intellectual
property rights. All VF contractors need to label its products in compliance with laws so, as per
this it can be said that this brand is ethical and follows all right and legal principles.
Reputation: This brand is well-known in the market as it has high level of customers’
satisfaction as its customer’s relationship management department is able to increase high level
of satisfaction (Bailey, Coller and Porter, 2018). On the other hand, it is found that as compared
to other companies this company is facing problems related to staff turnover as it has high
attrition rate in work force that is creating problems in taking competitive advantages. Marketing
of this company or its products left a lot to be desired and the reason behind it is poor positioning
as unique selling point is unclear.
On the basis of above discussed resources, it can clearly be said that human resources and
physical resources are main strength of this brand and reputation is weakness to the some extent.
It needs to improve its image in the market by decreasing attrition rate and improving unique
selling proposition (Rushing and et.al., 2019).
Competencies
Value chain
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It is one of the effective models that can help this company out in knowing that which activities
need to be focused and which activities or functions do not require same scrutiny level (Ravasio,
2021). The main aim of this model is to know importance of activities as per their role in service
delivery process.
Secondary
or
support
activities
activities
Firm infrastructure
Quality management
Margin
Human resource management
HR management
Performance and Leadership Management system
Technology development
Automation software
Focused R&D
Data analytics
Technological based customers services
Procurement
Linkage with multiple value chain activities
Cost efficiency
Primary
activities
Inbound
logistics
Retrieving
raw materials,
storing inputs
Integration
with
producers and
Operations
Improved
packaging
Low-Cost
Automation
and
maintenance
Outbound
logistics
Improved
distribution
network
Marketing
and sales
Promotional
activities
and
improved
relations
with
channel
Service
Pre-sale and
post-sale
services as
open as well as
continuous
communication
with
customers.
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suppliers for
better
transformation
of raw
materials into
finished goods
members.
Improved
relations
with sales
agents
(Ban, 2020)
On the basis of above discussed value chain, it can clearly be said that this company needs to
focus on technologies to the great extent in order to being in the competition and increasing
value.
VRIO analysis
Competence Value Rare Inimitabl
e
Organizational
support
Core
Competence
Trained and skilled employees Yes Yes Yes Yes Yes
International Business Services Yes No No Yes No
Corporate social responsibility
function
Yes Yes Yes Yes Yes
Distribution channels Yes No Yes Yes No
Propensity for innovation Yes Yes No Yes yes
On the basis of above discusses VRIO analysis, it can clearly be said that this VF
corporation has numbers of competencies that are valuable and are rare. Skilled employees, CSR
and innovation are main key of its success that can help it out in successful acquisition of
supreme for $2 Billion. Along with this, it has improved brand image in the market and
improved relations with suppliers that are also valuable (Coleman, 2021). Its problem solving
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skills, an ability to work in team, promotion of innovation and creativity are some rare
competencies that can also make it able in acquiring Supreme and increasing market share.
Along with this, it is found that its ability to adapt new thing is other rare competency.
Being a global giant, this brand has shown high adaptability to different cultures through
engaging in localization activities, and marketing communication and it increases customers
satisfaction and trust. On the other hand, competitive pricing and marketing communication and
channels that it uses are imitable or other companies can imitate easily which means it needs to
focus on its unique selling proposition for becoming the market leader (de Borja Reis and et.al.,
2020).
Strategy Evaluation
SAF stands for Situation analysis framework which is consider as analytical & planning
method. This type of framework will be used to evaluate proposed merger strategy between VF
Corporation and Supreme brand.
Suitability-
TOWs matrix is one of the best approach to identify the future strategic decision and
consider all essential resources, capabilities. so that company can easily maintain, sustain future
strategy. TOWs will be used to find the best option and identify strength & weakness of industry.
Strengths (S) Weaknesses (W)
W1 Reputation
Brand image,
demand
Opportunities (O)
Advancement of modern
technology
Support from
government
Legal policies and
procedures
Increasing growth of
economic condition.
SO Strategic options
Launch an innovative items and attracts
more consumers
Maintain a strong brand reputation and
follow all essential standards, norms.
Always maintain and control high class
items and focused on Research &
development
WO Strategic
options
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Threats (T)
High competition level
Changing the demand of
consumers
ST Strategic options WT Strategic
options
Table: 1
On the basis of analysis, it has been examined that VF corporation will focus on the market
consolidation in different countries such as UK, China. In this way, it will develop a new product
to gain more competitive advantage in marketplace (Ren, Aubert-Kato and Tripette, 2020). A
merger with Supreme brand is one of the best strategy aspect in context of business growth and
development. in this way, VF corporation is enabled to take some advantage and gain
opportunity in capitalisation. Main important aspect of business to its high demand in
competitive marketplace.
Accessibility-
In context of market capitalization of 33.33 billion, VF Corporation carries as number-3
Ranked in marketplace. This can possible when enterprise is gaining from strong enterprise
performance in contest of digital channel. The driven by its major investment and easily
increased consumer demand. Sometimes, it can shift from one platform to another. As per
consideration of strong performance, in 2021 estimated 40% of growth revenue. Digital
penetration is always expected to account for more than 25% of revenue in 2021 (Wu, Zheng and
Li, 2021). After acquisition of Supreme brand, VF Corporation will improve their financial
activities and increased rate of growth 40%. This is the best way to expand the business demand
across global world.
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Reaction-
By using Mendelow’s matrix, it will be examined the reaction of stakeholder towards
merger strategy.
VF corporation management-
The enterprise is mainly identified the different facilitator and group of stakeholders.
Because these are proposed the merger strategy to acquire Supreme brand by VF corporation.
But it is always concerned about creating new approach which brings more value to stakeholders
(Wu, Zheng and Li, 2021). On the basis of interest, demand of stakeholder it will be changed the
procedures. Since, The merger between VF corporation and Supreme brand will be creating a
new opportunities for growth and development. it is combined with margins, balance sheet and
increase annual revenue of enterprise approximately 33.33 billion. The management of VF
Corporation has become consider the best interest in order to facilitate merger.
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