Strategic Management Of Effective Communication Campaigns Essay.

Discuss about the facts for Strategic Management of Managing Effective Communication Campaigns.

Padini Holdings Berhad is a Malaysian-domiciled investment holding company, engaged in the operation and contributed in Malaysia’s apparel industry, manufacturing, and trading (Padini Holdings Bhd 2016). Padini has setup its operation in fashion-apparel industry, manufacturing and trading in Malaysia. Previous the company engaged in the manufacture and wholesale women fashion wear. Later the company subsequently added their rage of offerings and includes children and men’s lines. Being competitive and prominent apparel contributor in the Malaysia’s fashion world, the company is always busy in their product offerings maintaining unique freshness for generating maximum customer responses. Now Padmini is looking for to extend their business offering by including sportswear to their customers.

This strategic idea involves the formulation and implementation of these major initiatives which shall be taken by the company’s top management based on consideration of resources. The researcher will assess the internal, external business environments in which Padini currently belongs. To benchmark with Voir Holding, another renowned contributor of the apparel industry, the researcher will evaluate the situation analysis and future market position as well.

Mission:

Blending the highest standards in design, manufacturing, quality, customer services, branding and innovation, Padini Holding is cherished to profile affordable goods and services within the brand niches (Padini Holdings Bhd 2016).

Vision:

The vision of the company is to be the best fashion retailer in Malaysia. Maintaining unique product delivery at the affordable price is all the aspiration of the company.

Objectives:

To address the above mentioned vision and mission statement of the company, Padini Group needs to follow a set of objectives for the successful establishment of their extended service deliveries.

To provide the most essential retail products at the affordable prices

To deliver fresh quality food items at all stores and through online across Malaysia

To ensure a seamless operation and increase profitability by 10% within 2 years

To provide the best selling experience and ultimate fashion and food retail destination across Malaysia

Based on the strategic review, Padini Group will assess the environmental analysis. Strategic analysis consists with macro analysis, Industry analysis and internal capabilities. In this section, the researcher starts the analysis by the use of PESTEL framework.

Political Factors:

To encourage Malaysians to shop locally, the government of Malaysia promotes this retail industry by adopting the aggressive approach of “value for money shopping destination” (San Lim et al. 2016). The robust growth of apparel and retail industry in Malaysia is largely for the cause of the participation of the government of Malaysia in terms of helping industry by allowing foreign direct investment and a huge tariff relaxation in terms of making large foreign exchange earnings. Dealing with foreign clients and foreign resources are quite easy and safe because the efforts of Malaysian government to make the foreign transactions crime-free are already appreciated by many market participants and business owners. The lower interference of the government in the business development encourages companies to involve in more strategic expansions.

Vision

Economic factors:

Though the encouraging foreign competition stimulates the local economy of Malaysia, Padini Holdings would still hold the leading position in apparel industry. In 2015, the retailing in Malaysia saw a healthy growth in terms of number of goods sold out in the market comparable with that seen the previous year. The Malaysian economy expanded by 4.2 percent year-on-year in the first quarter of 2016. This percentage is slightly above the market expectations of a 4.1 percent expansion.  Many economists say that it is the weakest growth since the first quarter of 2013 as the faster increase in public and private consumption (Lee, Hassan and Mohamed Udin 2016).  Several economists still believe that there is a huge scope for domestic companies to expand their market because the growing GDP indicates the demand of consumable goods and services along with the high purchasing power of average Malaysian people. In the diversified and developing economy of Malaysia, the largest sector of the economy is services, accounting for around 54 percent of GDP. Thus all favorable facts give the scope to Padini Group to expand their products delivery in the market.

Social factors:

Malaysia attracts several numbers of clients with its large, literate, young and hugely urban population equates to a healthy labor market. Being the developing economic condition, Malaysia is considered as an upper middle income country. As per economists opinion the country is one of the most developed among the developing countries. This information indicates that the average Malaysian people has the ability to purchase their necessities in daily basis. On the other hand, consumer’s lifestyle has been changing with times for the better in this nation due to the emerging growth in the education system of the country (David and David 2016). Several high profile retailers such as Padini Holding, Voir Holding, Zara, Levis, Guess along with global media have changed the consumer buying behavior, resulting in the Malaysians as being more westernized. Moreover it is indeed a positive fact that average Malaysians’ life revolves around trendy shopping malls. Therefore, it would be favorable if Padini Holding updates their ranges of offering by incorporating sportswear with the latest trends.

Technology factors:

There is a huge trend in shopping online due to growing ecommerce functionalities in the Malaysian’s business world (Slack 2015). Internet accessibility has changed the shopping perceptions because young people preferred to shop through online and this is the reason behind the huge popularity of the online retail sites in Malaysia. Alternatively, it can be said that retailers can now get a scope to sell their products both online and offline. This unfolds opportunities to earn more profit because it gives the extra exposure and the operational costs are also reduced by the selling their products through the internet facilities.

Objectives

Environmental factors:

Retailing industry has long accounted for a substantial economic growth in Malaysia. The environmental aspects of retailing have been must studies as one of the significant initiatives of CSR (Ward and Peppard 2016.). This has been investigated that majority of Malaysian people trust in eco-label and eco-brand products as this factor changed the consumer buying perceptions (Rosenbaum-Elliott et al. 2015). In addition, Percy and Rosenbaum-Elliott (2016) found that several high profile lifestyle companies have been  acknowledged this fact and adopted green culture while manufacturing and selling products into the market. Though there is a significant relationship between consumer behavior and attitudes towards green practices, Padini Holding Company has given their efforts by using recycling items during the process of garment manufacturing. Furthermore, the company believes in green packaging and green product distribution process. Initiatives of not selling Fur have been taken in all their outlets is a strong indication that Padini Holding has considered environmental factors seriously.

Legal factors:

There is a least number of legal rules and regulations imposed by the government of Malaysia. Also the regulatory environment of the nation is stable and provides complete set of rules, institutions, regulations and attitudes to all the local businesses.

Before entering into the market, it is indeed important tom assess the industry or market position and demand for the future (Mellahi and Frynas 2015). By the using canvas of Porter’s five forces, the researcher can identify industry position. Assessing different industry threats like rival entry, availability of substitutes, and power of buyer, suppliers and extended rivalry of competitors is the main forces of Porter.

Intensity of rivalry among existing competitors: High

In the modern times, many companies are willing to extend their size in terms of volume of sales, workforces, technology development which certainly compete with each rival company for the same resources such as brand reputation, customer’s loyalty, market shares and other factors (Morden 2016). Presence of existing competitors including Voir Holding Company, Giodano Holdings Bhd, Esprit, Zara, Bonia Corporation, the chosen company will surely face intense rivalry or a threat among existing competitors. However, this is the perfect time for Padini to extend their lifestyle range and capture the market. But the concerning part is that the “cost of switching” will be low because consumers have the option to compare prices before taking the final buying decision. Additionally, consumers can also compare the styles of the clothing season. Therefore, product uniqueness shall be maintained in the market.

Macro environmental analysis

Threat of Substitutes: Medium

Though clothing is the basic requirement, the “retailing and manufacturing industry” for apparels have no visible substitute (Austin and Pinkleton 2015). However, there are budding “substitutes” in reaching to target consumers. There is a threat of “non-retailing stores” such as “direct mail, online shopping, telephone sales, door-to-door sales” which are gaining popularity in the Asian countries.

The power of Buyers: High

The bargaining power of buyers in the market of Malaysia is moderate and the company can influence trend and fashion (Vignali 2015). However, lunching price of the product may be fixed at low because the switching cost is low and consumers can change their choices whenever they find unsatisfactory results from the company due to presence of alternative options in the market. Holding the market position, thus, would be the cause of concern for Padini Holding Company. This is always an issue whether the product of Padini is fashionable or it provides the better value to the consumers that its adversary. Therefore, the company must experience a high sensitivity to the consumer’s ever changing trends to satisfy their needs.

Entry Threat: Low

The Malaysian-base companies such as Voir Holding, Bonia, Elba have already sustained their position in the market. These companies have lowest operating costs because the selling price of the local companies are low compare to foreign companies in the market of Malaysia. Since already exists company are already achieve economies of scale, it would be difficult for new comers to come into the apparel market (De Waal 2015).  Few analysts think that it would not possible for new companies to operate in a large scale immediately; instead they can compete with the smaller companies that are not listed in KLSE. In means that Padini has the power to stimulate the consumers’ buying decisions because the company has lesser threat in term of thee new entries in the market.

Bargaining power of suppliers- Low

Padini is already engaged both in manufacturing and retailing business.  Padini’s in-house design is used for styling of the brand and outsourcing the manufacturing products into their store indicates low bargaining power of the suppliers. Thus the bargaining power of suppliers in this diversified company is slow.

The above discussion clearly indicates that the intensity of the rivalry in the industry of apparels is high because of the existence of the similar ranges of product but at the same time the treats of entry is low. To perform with stability, the decision of Padini to extend their line of product is ideal for the industry. This is the right time to introduce range of sportswear which is popular and highly demanding among young Malaysians.

Political Factors

To assess the strategic capabilities, the company needs to identify its own organizational effectiveness (Lages 2016).  Additionally it is important to assess the weaknesses of Padini with the benchmark of other existing companies.

Organizational effectiveness and value chain:

Initially Padini was engaged in the manufacture and wholesale of ladies wear.  Due to stiff competition from the rival companies, the company has concentrated to increase the list of delivering products and quality of services with the support of large workforces. With the effectiveness of the leadership, the company subsequently added children’s and men’s lines to its offerings. Thereafter Padini has changed their role from the wholesaler to single-brand store. In this context, the value lies in their product uniqueness and brand recognition in the market. Currently the company has nine levels of family in its family of brands and retail in 330 stores which are franchised outlets, freestanding stores and counters of consignment in Malaysia across the nation. Also the company made available their products at the online as well, named as Padini.com where all products are available and new products can easily be marketed without wasting any huge amount.  Now the company is listed on the “Second Board of Bursa Malaysia Securities Berhad” and gained the shareholder’s confidence and increased the brand reputation. According to the SWOT analysis of the company, the following are the strengths of Padini Group based on the year’s performance and current market position:

Strengths:

High growth rate

Reduced labor costs

Brand reputation in the domestic market

High profitability and revenue over the past years

Skilled workforces

However, weaknesses are as follows:

Competitive market and unstable profitability are the biggest concerns of the company.

Despite the above mentioned threats the company has enough organizational capabilities because of being considered as one of the preferred apparel companies in Malaysia. The effective leadership and skilled designers of the company are added creativities in terms of lunching new trends, styles and product line increases the operational effectiveness in terms of more sales during the financial year and results increased popularity (Sahu 2015). Due to in-house design, Padini’s biggest value added service is the product uniqueness or exclusivity. On the other hand, Malaysians are gradually exposed to more international and regional sports events by the government and private organizations. Due to this reason, the company currently captures the theme of sports and presents a completely new sportswear product line in their existing product portfolio. Compare to Voir Holding Company, Padini is placed in a better position in terms of market share, style, ranges of product deliveries and financial position is the stock market. Though both the companies are operating in the same industry, Padini’s product exclusivity and comparatively low price are the biggest advantages over Vior Holding Company.

Economic factors

Financial stability is the key driving force to implement any new strategic plan. Being the leaders of the appeals industry in Malaysia, the company is financially secure. With the current line of offerings, the company has increased its revenue from 866.26m to 977.90m. However, the company is concerned due to the percentage of increased cost of goods sold. Due to this fact the net income is slightly reduced in 2015.

In this strategic plan, the company needs to invest more on assets and workforces for launching the new product line with their existing ranges of product. Due to operating surplus at the rate of 13.68 percent, the company can easily manage the extra burden of costs.

Therefore, the above analysis clearly indicates that Padini Holding has the ability of product extension in the future period. Sound capabilities in terms of operational, organizational and financial, the company suggests that the company can make this strategic plan a successful one.

To execute this plan, the company needs to address the drawbacks, threats and weaknesses strategically.

Strengths -S	Weaknesses-W
S1 Leading position in Malaysia	W1 Unstable profitability
S2 Several outlets across the nation	W2  less on line shopping exposure
S3 Effective leadership and diverse work culture	SO Strategy (S1+O1)
S4 High quality product	ST Strategy (S1+T1)
S5 Trendy and traditional products availability	WT Strategy (W1+	WO Strategy (W1+O4)
Threats-T T1 increased competitions T3 No celebrity endorsement	Opportunities-O O1 Product extension O2 Preferred local companies O3 Scope to increase profitability

SO strategy:

The company needs to use the power as market leadership to strategically expand their businesses (Johnson et al. 2013). Being hold the dominant position in the retail market, Padini has a huge power and opportunity to launch their new sportswear by appropriate media intervention.

WO strategy:

To give more efforts towards online services along with offline retail operation, the company can achieve proposed revenue in the long run (Hitt, Ireland and Hoskisson 2012). This strategy is quite feasible because most of the Malaysians are now preferred to shop online. Offering more products means meeting more customer demands. In this way, Padini can improve their profitability and stabilize the company profit.

ST Strategy:

There is a plan to introduce new sportswear by celebrity endorsement. Launching this product line by a sports personality is a good option to promote and create awareness. In this way, the company can generate maximum attention of consumers and would result higher profitability.

WT Strategy:

To fight against the increase competition in the apparel market, the company needs to maintain the product uniqueness and low price strategy (David and David 2016). By constant monitoring over consumer’s product preferences, the company can understand the trend. Collecting feedback or conducting survey process, the demands of the consumer can be reviewed and updated ranges of product accordingly is another strategy for staying in the market.

Social factors

By this following this strategy the company can achieve more profitability and ensure the sustainability in the market. The new product will be positioned is as follows:

(Source: created by author)

By the use of above proposed strategy, Padini Holding Company can strengthen their position internally and externally as well. Internally, the more effective workforce management will be implemented to deliver additional responsibilities. The more workforces may be recruited for seamless operation from the fabric and design department to product delivery. The performance of the company can be evaluated by the following ways:

Suitability:

By the strong media exposure, the organization can promote their new product line among their customers (Jakhar, S.K., 2015). The trust of the consumers is already achieved by the company for year’s long services in Malaysia. Therefore, consumer awareness can be established within a short period of time without expending much.

Accessibility:

Getting more return is the ultimate desire of shareholders. In this case, the company can definitely increase volume of sales and will generate more profit. This would result more return in the long run. However, shareholders must have patience for getting such return because new product needs some time to get popular.

Feasibility:

The improved revenue and operating profit increases the feasibility of the lunch of new product in the market. On the other hand, new product of Padini is quite competent for having effective leadership, skilled workforce and market position of the company.

Conclusion with recommendations:

By the above strategic analysis, this can be said that Padini Group can extend their product line and increase the market share in Malaysia. Diverse work culture, effective leadership, brand reputation, skilled workforce - all are favorable factor for the company. However, few recommendations are as follows:

New products line must be promoted by mentioning features such as price, design and theme. Such promotion can be done by online because it is cost effective and powerful as well.

Initially price of the products must be fixed at low so that consumer can prefer to buy this product.

Quality services must be provided by the sales professionals at all stores of Padini. They can increase awareness by promoting new products by mouth publicity.

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