Analyze the fundamental reason of success for BX Shoes.
Managing logistics is a significant aspect of supply chain management that ensures appropriate planning, implementing and controlling to move forward effectively. The functions of logistics management are conducted in order to meet the demand of the potential customers. Successful logistics management ensures the overall success of the business thereby, gaining competitive advantage for the organizations and ability to sustain in the market.
In this assignment, the fundamental reason of success for BX Shoes is analyzed in comparison to other successful and unsuccessful organizations. This assignment also highlights the probable techniques of competitive advantage that resulted in the success of BX Shoes along with mentioning the ways of using the techniques by other organizations for ensuring success. Moreover, the concept of sustainability and its relevance in terms of BX Shoes are also discussed.
According to the given case study, BX Shoes is a subsidiary of one of leading brands in India. The company operates in partnership with an Italian company and mainly emphasizes on exporting materials. As the organization emphasized on cash-intensive business operations, BX Shoes is a good fit for outsourcing materials. The shoe company has incurred loss initially that was rectified by changing the business operations style. The loss of failure initially was identified due to outsourcing materials to multiple outsourcers. The revenues of the organization fell dropped 20% in the third year compared to the revenues of the organization in the second year, that increased by 50%. This was a trial period for the organization as the organization was establishing the business rather than making headway. Upon identifying the reason of the failure of the business, in the year 1999-2000, a partnership between the BX and the Italian partner was established. Henceforth, growth was noticed for the organization.
As commented by Sun and Lee (2013), joint venture or partnership is defined as the cooperation of two or more companies in which each of the partners agrees to share the profit, loss and control in a particular enterprise. The partnership between the Italian partner and the BX hoes worked like a joint venture that a not restricted only to the design stage for the companies. For example, if improper material is produced, both the parties will simultaneously handle the issues and try to overcome it. There are examples of successful joint ventures for various business organizations throughout the world.
The Chinese Chery Automobiles entered into a joint venture with the British luxury car manufacturers and the company was named Chery Jaguar Land Rover Automotive Company. A plant was established in Changshu in Shanghai. The chief of the newly formed joint ventured company said that both the companies would work in close collaboration and emphasize on their capabilities to produce advanced and relevant car models for the Chinese customers. The joint venture allows the host company to have a better understanding of the host country due to the collaboration of the home company. In this case, the Chery Automobile was able to provide an in-depth knowledge about the expectations and demands of the Chinese customers to the British company. As a result, both the companies were able to decide and develop business and operational strategies for conducting the business successfully. Similarly, the BX Shoes and the Italian partner had decided that if improper material is produced both the partners will work together to resolve the issue. The trust between the BX and the Italian partner is also a major reason for the successful venture (H, 2017).
However, there are certain joint ventures that have failed miserably due to lack of cooperation from both the partners. One such example was the failure joint venture between The Tiffany & Co and Swatch Group. Both the organizations established a joint venture in 2007 to manufacture watches under the Tiffany brand. However, in 2011, a dispute arose when the Swatch cancelled the cooperation. According to the report, Tiffany was delaying the procedure of the joint venture that eventually resulted in the failure (BBC News, 2017). In respect to the gen case study, the reason of failure between The Tiffany & Co and the Swatch is the lack of cooperation. Such a characteristic between the BX and the Italian partners was not noticed and practised that ensured a successful joint venture.
An organization has limited economic existence without any competitive advantage. Therefore, the most important goal for an organization is to create competitive advantage in order to sustain in the competitive business market. As mentioned by Campbell, Coff and Kryscynski (2012), having a competitive advantage signifies greater customer value offered by the organization. This can be in terms of lower prices of the products or ensuring greater service and benefits justifying the higher prices. According to the given case study, BX Shoes and the Italian partner need to have a competitive advantage for conducting the business successfully. There are significant ways of maintaining a competitive advantage for the business organizations.
The business organizations need to consider the preferences, expectations and demands as their topmost priority (Wagner III and Hollenbeck 2014). This is because a business is only successful when it has the ability to keep up and fulfil with the changing trends and demands of their target customers. The business organizations need to set their objective that the customers are always right. For example, if the target customers of the organization are middle earning people, then the pricing of the product needs to be accordingly. The business organization will fail to attract their potential customers and sell the products if they implement premium-pricing strategy. Therefore, based on the income of the target customers, the organizations need to implement their pricing strategy. Additionally, the organizations also need to stay attuned with the demands of the customers along with emerging technologies and government regulations.
Another way of maintaining competitive advantage is having something unique in their product manufactured and sold by the company. There are different companies conducting business in the same business sector. As a result, the customers have a wide range of options for buying a particular product. For example, if the customer is not satisfied with the price of a product of a company, he might opt for another company selling the similar product. This will result in loss of potential customers for the companies. Therefore, the organizations need to have innovative and unique properties for attracting the customers. For example, one such innovative product was launched by Apple was iPod. In the era of mp3 players, Apple launched iPod that changed the expectation and experience of the customers worldwide. The company was not only able to attract premium customers but also customers from all income background. Apple successfully launched various models and capacity of iPod for all types of the customer by varying the price of the product.
Another significant way of gaining competitive is by engaging the customers on a timely basis (Kirchmer 2012). The organizations need to engage the target customers by implementing new offers and benefits to the customers at a regular interval. The customers will be easily bored and feel saturated if they fail to receive attracting offers and benefits from the organization on a regular basis. Therefore, engaging the customers is a huge competitive advantage for the organizations.
After the joint venture of BX Shoes with the Italian partner, the collaborative organization gained a competitive advantage that helped them survive in the market. The Italian partner and the BX Shoes gained a competitive advantage by outsourcing the products according to the needs. Having enough and sufficient capital for running a business is one of the most significant parts. The fact that the Italian partner for the BX was financially strong was a strong competitive advantage for the organization. BxX selected the outsourced for them based on the organizations financially stability and strength. According to Meihami and Meihami (2014), the financial stability of the organization provides support and confidence for running the business. This was a major competitive advantage for BX Shoes. This point of gaining competitive advantage can be used other organization in order to run the business successfully. Uncertainty in business is commonly encountered by the organizations. This is due to change in the present market, the global economy and the demand of the customers. Therefore, having adequate and sufficient capital helps the business organizations to withstand any circumstances. For example, the financial stability of the Italian partner provides a competitive advantage for the BX Shoes, as the organization is able to cope up with the demands of the business in a new country very easily.
The business conducted by the BX and the Italian partner is highly cashed intensive. BX Shoes were the best fit for the outsourcer’s requirement. In the business of import and export, there lie inherent issues such as procurement of the leather and the quality of the product that is judged at the end. Therefore, in order to reduce the uncertainties of the business a supplier partnership approach for the business was preferred by the organization. This provided a competitive advantage for the organizations, as both the partners were able to resolve the issues encountered during operations such as designing and procurement. Such a competitive advantage can be used other companies, as this strategy helps in enlightening the process of reducing business uncertainties.
BX was looking for a new business venture while the Italian partner was trying to extend its manufacturing operations to India. As the requirement of both the companies met, they signed a memorandum specifying broadly the roles and responsibilities of both the parties. BX was looking for someone who knew the business and the Italian partner was looking for an established Indian company. Supplier based joint venture was successful and provided a competitive advantage for the companies, both had adequate knowledge in their fields. BX Company enlightened the Italian partner about the expectations and demands of the Indian customers based on which marketing, pricing and operational strategies were developed. On the other hand, the Italian partner guided BX about the shoe industry. This competitive advantage used by BX can be used by other organization in order to develop a deeper understanding of the host country and techniques of conducting the business successfully.
Business sustainability is defined as the ability of the business organizations to manage the triple bottom line of the respective business (Bansal and DesJardine 2014). The concept highlights the process used by the business organizations in order to manage their environment, financial and social obligations, opportunities and risks. These aforementioned factors are often referred to as the planet, people and the profit of the business organization. Reports suggest that companies throughout the world need to undertake a more sustainable approach of doing business. A business needs to be sustainable in order to contribute to the betterment of the environment, their customers and making a profit for their business.
BX and its Italian collaborate needs to do business by maintaining sustainability, as this will provide competition for them in the end. Maintaining sustainability for the business will enable the BX and the Italian partner to manage the financial resources well. The Italian partner was looking for a well-established Indian company and BX was looking for getting into a new business. The most important criteria for selecting the partner was the financial stability of the organization, as it was a cash-intensive business. Therefore, maintaining sustainability allowed BX Shoes to manage the financial resources appropriately. Initially, the Italian partner was working with different outsources. The business mainly emphasized on exporting completely finished products. However, later BX decided that procurement of raw materials should be conducted by them. This would help BX Shoes to compensate the cost of the raw materials largely. Therefore, maintaining sustainability for the business allowed BX and the Italian partner to ensure appropriate management and distribution of finances.
Business sustainability ensures huge profit for the business. Maintaining sustainability for BX and the Italian partner would allow them to compensate the loss they incurred in the third year. According to the given case study, revenues in the second year increased by 50% whereas the revenue fell drastically by 20% in the third year. This was a trial period conducted by the organization in order to ensure successful establishment of the business. It is then in 1999-2000, both BX Company and the Italian partner made an exclusive merger. After the exclusive merger of both the companies, growth in the business was prominent. Therefore, maintaining and ensuring sustainability for the business enabled BX Company and the Italian partner to manage their financial resources for the overall success of the business. The exclusive merger between the two companies allowed them to maintain sustainability in the business. This was because the involvement of both the companies was not only restricted to the design stage but also included sharing responsibilities, trust and involving both the companies in the decision-making process. For example, both the companies are supposed to handle issues if faults were encountered rather putting everything only on one company. Therefore, maintaining business sustainability for BX and the Italian partner will help in the overall success of the business, as this will allow the companies to maintain their financial resources appropriately.
In this assignment, it can be concluded that both BX Company and the Italian partner were appropriate for each other, as both of them were looking for business expansion. As the Italian partner ventured into a host country, India, BX Company helped the company in understanding the Indian market better. As a result, an exclusive merger between both the companies led to the success of the business. Business sustainability allowed the organizations to manage their financial resources appropriately and use it for progress in the business
Bansal, P. and DesJardine, M.R., 2014. Business sustainability: It is about time. Strategic Organization, 12(1), pp.70-78.
BBC News. (2017). Tiffany & Co ordered to pay Swatch over failed venture - BBC News. [online] Available at: https://www.bbc.com/news/business-25489721 [Accessed 14 Aug. 2017].
Campbell, B.A., Coff, R. and Kryscynski, D., 2012. Rethinking sustained competitive advantage from human capital. Academy of Management Review, 37(3), pp.376-395.
H, E. (2017). Famous Joint Venture Companies - A Knowledge Archive. [online] A Knowledge Archive. Available at: https://infomory.com/famous/famous-joint-venture-companies/ [Accessed 14 Aug. 2017].
Kirchmer, M., 2012. Business process oriented implementation of standard software: how to achieve competitive advantage efficiently and effectively. Springer Science & Business Media.
Meihami, B. and Meihami, H., 2014. Knowledge Management a way to gain a competitive advantage in firms (evidence of manufacturing companies). International Letters of Social and Humanistic Sciences, 3, pp.80-91.
Sun, S.L. and Lee, R.P., 2013, September. Enhancing innovation through international joint venture portfolios: From the emerging firm perspective. American Marketing Association.
Wagner III, J.A. and Hollenbeck, J.R., 2014. Organizational behavior: Securing competitive advantage. Routledge.
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