Strategic Plan For Growth And Expansion Of VF Corp. – Analysis And Recommendations

External Environment of VF Corp and Its Competition

The report focuses on the business activities and operations of VF Corporation. VF group is the apparel and footwear company which deals in various footwear and apparel products in the market. In today’s era, the firm is maximizing the net income and operating income in the global market. Further, the paper also explains that how VF group uses SWOT analysis, pestle analysis, and porter five forces model to stand out against the competitors in the competitive market. In addition, some recommendations have been given to improve and change the current business level strategy. Along with this, the report describes the resources and core competencies of VF group which help to gain competitive advantages in the international market.

Task 

External environment of VF group and competition 

The external environment refers to the macro environment which affects the business activities and operations of VF group adversely. The company needs to control the external environment in order to beat the competitors in the competitive market. It also affects the firm’s ability to make and develop successful and effective customer relationships. The external environment also influences the performance and productivity of the organization. The macro environment affects the apparel and footwear business in the international market.

The firm should focus on the external environment in order to analyze and evaluate the plans, policies, and strategies of the competitors in the world. The external environment includes several factors such as political, economic, socio-cultural, technological, legal and environmental factors (Fernfortuniversity, 2017). Pestle analysis is conducted to analyze and evaluate the macro environmental factors which have been discussed below.

Political factors: These factors play an integral role in order to determine the long-term profitability and success of the VF group. VF group operates and manages apparel and textile products in the international market. The political factors include the risk of military invasion, corruption, intellectual property protection, rules, regulations, tariffs, legislation, taxation policy, tax rates, and industrial safety regulations. These factors influence the growth and success of the company. The firm should focus on the political factors in order to overcome the competitors across the world (Gilpin, 2016).

Economic factors: The economic factors include saving rates, interest rates, inflation rate, foreign exchange rate, economic cycle, labor cost, economic growth rate, unemployment rate, and recession. All these factors affect the long-term vision and mission of the firm. These factors are essential to attain the long-term objectives and goals of the company. It also provides various competitive advantages in the competitive environment. Therefore, VF group should analyze and identify these factors in order to increase and maximize the revenue and profit within the organization (Sobotka, Skirbekk and Philipov, 2011).  

Social factors: The social factors include attitudes, social conventions, culture, customs, values, beliefs, religious and values of the people which have an impact on the trading activities and operation of VF group. The company needs to focus on these factors in order to determine and evaluate the needs, requirements, and desires of the company. None of the organization can run its business activities and operations without evaluating the social factors.

Pestle Analysis for External Environment Evaluation

Technological factors: These factors disrupt the several industries across the world. The company should analyze and evaluate the technological elements in order to hit the competitors in the world. Recent and innovative technological factors must be developed by VF Corporation in order to gain long-term benefits within the organization. Rate of technological diffusion also affects the progress and growth of the company (Salvendy, 2012).

Environmental factors: Different countries have different environmental laws and standards which influence the business activities and operations negatively. The environmental factors include air pollution, climate change, weather, laws regulating environment pollution, and ecological products. Thus, the firm needs to focus and evaluate the environmental factors to increase and enhance the profit and targets within the organization.

Legal factors: These factors protect the intellectual property rights of VF Corporation. The firm must carefully evaluate and identify these factors to gain competitive advantages in the international market. The legal factors include discrimination law, employment law, antitrust law, health and safety law, copyrights, patents and data protection law. Now it is assumed that external environment influences the business activities and operations of the apparel industry in the international market. The company needs to measure and identify these factors to make an effective and dynamic image in the global market (Larsson, 2013).

Competition

There is high competition exist in apparel and footwear industry. The competitors also influence the financial position and image of the company in the market. VF group competitors include Columbia sportswear and GAP which influence the goodwill of the firm negatively. The firm needs to analyze and identify the strategies, plans, and policies of the competitors in order to overcome the rivalries in the competitive market. Along with this, the organization should also focus on the marketing strategies and policies in order to build and develop an effective image across the world (Tseng and Piller, 2011).

Resources and competencies of VF group 

The core competencies include passionate, integrity, accountability, self-respect, morality, and dignity. The company maintains dynamic core competencies in order to build and develop an effective position in the international market. Further, VF group uses various resources such as tangible resources, intangible resources, social capital, reputation and strategic value of resources (Subic, Shabani, Hedayati and Crossin, 2012). The company uses porter five forces model in order to gain the competitive advantages in the footwear and apparel industry. This model is considered the effective framework to overcome the competitors across the world. It is the holistic strategy framework to analyze and evaluate the present competition. The porter five forces model has been discussed below (Rothaermel, 2015).

Threats of new entrants: Threats of new entrants affect the apparel and footwear business of the company. The firm faces various challenges and risks while managing and operating the trading activities and operations. Threats of new entrants are significant challenges for the firm because it affects image and success of the company. The company needs to introduce new products and services in order to stand out against the competitors across the world. Competitors influence the plans and policies of the VF Corporation. The company should appoint a research and development team to focus on the activities and operations of the rivalries (Ormanidhi and Stringa, 2008).

Political Factors in the External Environment

Bargaining power of suppliers: The VF group buys their raw material from enormous suppliers in the global market. Suppliers maintain a dominant position in the international market because they provide raw material to the company to increase the revenue and profit. Therefore, the firm needs to focus on the various suppliers in order to gain competitive benefits in the international market. An effective supply chain management should be developed by the company to tackle the suppliers. Further, the firm should develop dedicated suppliers whose business depends on the company (Haucap et al, 2013).

Bargaining power of buyers: The success and growth of the VF Corporation depend on the buyers. They want to buy the right and suitable products from the company at minimum prices. The bargaining power of suppliers reduces the profit and revenue of the firm. Innovative products must be developed by the company to control over the buyers in the global market. The new and innovative products will help to reduce the defection of existing products of VF group. It will also help to differentiate its products from the competitor’s products and services (Berdine, 2008).

Threats of substitutes: When a new and innovative product and service meets a similar needs and requirements of the customers in different ways then the company has to face various challenges and risks in the market. Threats of substitutes also affect the long-term goals and objectives of the company. VF group focus on the needs, desires, wants and expectations of the customers to overcome on the substitutes in the international market. Further, the organization should increase the switching cost for the customers. It will also help to enhance and maximize the profitability and revenue of the organization (Porter, 2008).

Rivalry from the existing competitors: There is immense competition exist in the global market which affects the prices of the apparel and footwear products. It also reduces the profit and revenue of the firm. VF group must analyze and identify the plans, strategies, and policies of the existing competitors in the market. It will help to gain the competitive benefits in the international market. The company should build and develop a sustainable differentiation to overcome the rivalries across the world. Further, VF group should maintain communication and cooperation with competitors in order to increase and develop the market size in the world. Now it is assumed that porter five forces model is an effective framework in order to stand out against the rivalries in the marker. Further, it also helps to build and develop a dynamic image in the competitive market (Edwards, 2008).

The options available were VF Corp. to make acquisitions as a means of achieving its growth and expansions strategies  

VF Corporation was founded in 1899 with its headquartered is located in Greensboro, North Carolina, U.S. VF group more than 30 brands are organized into five product categories such as sportswear, Jeanswear, Outdoor and action sports, image wear and contemporary brands. There are various options available in order to achieve its growth and expansion strategies which have been discussed below (Infoenterpreneurs, 2017).

Economic Factors in the External Environment

Increasing market share: It is a good and dynamic option to attract new customers in the market. It also provides support to achieve the long-term success and growth of the firm. This option will also help to beat the existing competitors across the world. By using this strategy, the firm has been able to know and understand the existing customers and competitors in the market. Further, the company can set the appropriate prices by using this strategy within the organization. It is the effective tool to attract and retain the existing and as well as new customers.

Diversification: Diversification is another option to explore and flourish the trading activities and operations globally. Through diversification, the company can develop and build new products and services in the global market. It will also help to eliminate and reduce the risks and challenges of the market. Now it is assumed that VF group should focus on the diversification strategy in order to expand and flourish its business operations and activities in the world (Kenny, 2009).

Partnership, joint venture, mergers, and acquisitions: It is one of the significant options in order to determine the success and growth of the firm in the competitive market. VF group can expand and explore the business by joining forces with another business. It also helps to reduce and eliminate issues and barriers related to the employees. Apart from this, partnership and joint venture also provide significant advantages including sharing experience, equipment, skills, people and customer bases to the corporation. All these options are used by the VF group in order to expand and explore the business in the international market. It also provides assistance to determine the success and growth of the organization. These options are essential to gain the competitive benefits in the world (Pablo and Javidan, 2009).

There is various argument put forward in favor of VF corporation making acquisitions. The company builds and enhances various options in to determine the growth and progress of the firm. The economist argues that diversification and market share strategies help to maximize the profitability of the company. Along with this, various researchers argue that diversification strategy helps to maintain a healthy and positive culture and environment within the organization. In addition, many people argue that these strategies also help to promote and enhance the products and services in the international market. The ecological economists argue that merger and acquisitions provide an option to the firm to enhance and explore the trading activities and operations globally. It also helps to measure and identify the strategies, processes, policies, and plans of the competitors across the world.

SWOT analysis of VF group 

The SWOT analysis of VF group has been discussed below (Helms and Nixon, 2010).

 It is recommended that VF group should improve the current business level strategy in order to overcome the competitors in the world. The business level strategies are used by VF group in order to gain various competitors benefits in the competitive market. The business level strategies include cost leadership, differentiation, focus strategy (Kim and Mauborgne, 2014). VF group should focus on the cost leadership strategy to reduce the cost of the products and services in the market. It will help to maximize the revenue and profit of the firm. Along with this, the firm must focus on the differentiation and focus strategies to accomplish the mission and vision of the firm (Teece, 2010).

Social Factors in the External Environment

The dynamic and effective differentiation strategy will help to differentiate its products from the competitors across the world. In this way, the company should change the current business level strategy in order to protect the interest and rights of the customers. It will also provide satisfaction and morale to the customers. Along with this, innovative and new policies and strategies must be changed and modified by VF group in order to retain and attract the more customers in the international market. In this way, the firm can reach the target audience in the world. It also helps to analyse and identify the needs, requirements, preferences, needs, tastes, and choices of the customers. The business level strategy provides value to the customers and gains competitive benefits by exploiting core competencies in the specific market (De Wit and Meyer, 2010).

Conclusion 

On the above discussion, it has been evaluated that VF group is expanding and flourishing its trading activities and operations globally by using effective and dynamic marketing and business level strategies. The pestle and SWOT analysis are done by the company in order to identify and measure the strengths and weaknesses of the competitors across the world. Apart from this, the firm uses various methods, policies, and strategies to determine the growth and success of the organization. It will also help to hit the competitors in the global market. The core competencies of VF group have been shown in the report. In addition, the company also uses corporate level strategies to run the business activities successfully.

References 

Berdine, M.P., 2008. Measuring Productivity through Competitive Advantage.

De Wit, B. and Meyer, R., 2010. Strategy: Process, content, context. Cengage Learning EMEA.

Edwards, E.R., 2008. Licensing as a Component of Competitive Strategy: A Comparative Analysis and Case Study.

Fernfortuniversity.com., 2017. VF Corporation PESTEL & Environment Analysis, reviewed on 4 Dec 2017, https://fernfortuniversity.com/term-papers/pestel/nyse4/881-v-f–corporation.php

Gilpin, R., 2016. The political economy of international relations. Princeton University Press.

Haucap, J., Heimeshoff, U., Klein, G.J., Rickert, D. and Wey, C., 2013. Bargaining power in manufacturer-retailer relationships (No. 107). DICE Discussion Paper.

Helms, M.M. and Nixon, J., 2010. Exploring SWOT analysis–where are we now? A review of academic research from the last decade. Journal of strategy and management, 3(3), pp.215-251.

Infoenterpreneurs.org., 2017. Assess your options for growth., reviewed on 4Dec 2017, < https://www.infoentrepreneurs.org/en/guides/assess-your-options-for-growth/>

Kenny, G., 2009. Diversification Strategy: How to grow a business by diversifying successfully. Kogan Page Publishers.

Kim, W.C. and Mauborgne, R.A., 2014. Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press.

Larsson, S., 2013. On legal complexity: between law in books and planning in practice. Social and Legal Norms: Towards a Socio-legal Understanding of Normativity.

Ormanidhi, O. and Stringa, O., 2008. Porter’s model of generic competitive strategies. Business Economics, 43(3), pp.55-64.

Pablo, A.L. and Javidan, M. eds., 2009. Mergers and acquisitions: Creating integrative knowledge. John Wiley & Sons.

Porter, M.E., 2008. On competition. Harvard Business Press.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Salvendy, G., 2012. Handbook of human factors and ergonomics. John Wiley & Sons.

Sobotka, T., Skirbekk, V. and Philipov, D., 2011. Economic recession and fertility in the developed world. Population and development review, 37(2), pp.267-306.

Subic, A., Shabani, B., Hedayati, M. and Crossin, E., 2012. Capability framework for sustainable manufacturing of sports apparel and footwear. Sustainability, 4(9), pp.2127-2145.

Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning, 43(2), pp.172-194.

Tseng, M.M. and Piller, F. eds., 2011. The customer centric enterprise: advances in mass customization and personalization. Springer Science & Business Media.

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