Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Coach Inc. Competitive Intelligence Report
Stefani Baughman
Rachel Bentzner
Katie McCafferty
Alicja Mincewicz
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 1
Table of Contents
Coach Key Findings and S...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 2
Coach Key Findings and Strategic Implicati...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 3
Priority B: Medium Impact
Wearable technol...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 4
Key Intelligence Topics
Tasking:
The Coach...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 5
 STEEP Analysis
 Patent Analysis
 Finan...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 6
Coach Inc. Business Intelligence
Executive...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 7
press releases include both financial and ...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 8
Value Chain Analysis:
Primary Activities:
...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 9
Marketing & Sales:
Coach utilizes over
1,0...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 10
Human Resource Management: Coach has a hu...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 11
Michael Kors - Key Competitor Profile Poi...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 12
office spaces. The company uses Innotrac ...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 13
Michael Kors’ Porter’s 4 Corners Analysis...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 14
Future Goals:
Michael Kors is mainly focu...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 15
years, it will become an $8 billion USD m...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 16
company also assumes its handbag product ...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 17
Michael Kors Company Overview
History and...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 18
1981
Creation of Michael Kors
label
1983
...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 19
2005
"Island Michael Kors" fragrance
was ...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 20
Source:
http://www.freeinfosociet
y.com/a...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 21
Source:
http://www.businessoffas
hion.com...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 22
Lee S. Sporn - Senior Vice President of B...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 23
Products and Services
Executive Summary:
...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 24
 Men’s ready-to-wear – The men’s ready-t...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 25
Portfolio Model: Michael Kors’ most profi...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 26
wholesale sales growth. Within accessorie...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 27
Operations and Capacity
Executive Summary...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 28
 A distribution facility located in Seca...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 29
women’s clothing, and fragrance products ...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 30
Marketing Activities and Trends
Executive...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 31
Simon Nessman is joined by model Karmen P...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 32
The official MK logo.
http://tinyurl.com/...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 33
Company Strategies
Executive Summary:
Mic...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 34
Increase social media and public relation...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 35
Michael Kors Stock Holding Over Past Thre...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 36
12 Month Forecast For Michael Kors Stocks...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 37
Kors’ newly opened store. http://tinyurl....
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 38
regular cargo pants into tailored pants c...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 39
STEEP Analysis Summary
Social:
 The curr...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 40
Social
The current generation of young pe...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 41
People are heavily dependent on connectin...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 42
Technology
The popularity of wearable tec...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 43
door for hackers to get onto a Wi-Fi conn...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 44
Economy
It is likely the global economy i...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 45
Unemployment remains gradually dropping a...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 46
The U.S. dollar is continuing to strength...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 47
While consumers have not been spending mu...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 48
Ecological
Pollution in the industrialize...
C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 49
It is likely that green certified and LEE...
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
240CoachFinalProduct
Upcoming SlideShare
Loading in …5
×

240CoachFinalProduct

2,241 views

Published on

  • www.HelpWriting.net helped me too. I always order there
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • To get professional research papers you must go for experts like ⇒ www.HelpWriting.net ⇐
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • I think you need a perfect and 100% unique academic essays papers have a look once this site i hope you will get valuable papers, ⇒ www.WritePaper.info ⇐
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Thankyou so much! Certainly the best customer service I've had in a while. Happy with the way you guys worked with me. 》》》 https://bit.ly/3h0ICqP
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • You guys are great! We ended up buying a Grand Cherokee Limited like we wanted and saved over $6800...unbelievable!!! ★★★ https://url.cn/FAmVoVtK
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Be the first to like this

240CoachFinalProduct

  1. 1. Coach Inc. Competitive Intelligence Report Stefani Baughman Rachel Bentzner Katie McCafferty Alicja Mincewicz
  2. 2. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 1 Table of Contents Coach Key Findings and Strategic Implications ....................................................................................2 Key Intelligence Topics ......................................................................................................................4 Coach Inc. Business Intelligence..........................................................................................................6 Michael Kors - Key Competitor Profile Points....................................................................................11 Michael Kors’ Porter’s 4 Corners Analysis: ...................................................................................13 Michael Kors Company Overview .................................................................................................17 History and Background................................................................................................................17 Management Profile......................................................................................................................19 Products and Services ...................................................................................................................23 Operations and Capacity ...............................................................................................................27 Marketing Activities and Trends....................................................................................................30 Company Strategies ......................................................................................................................33 General Financial Performance......................................................................................................35 Current Events..............................................................................................................................37 STEEP Analysis Summary................................................................................................................39 Social ..........................................................................................................................................40 Technology ..................................................................................................................................42 Economy......................................................................................................................................44 Ecological....................................................................................................................................48 Political-Legal..............................................................................................................................51 Coach Inc.Patent Analysis: Key Findings ..........................................................................................53 Competitor Patents .......................................................................................................................54 New Technology Patents...............................................................................................................58 Michael Kors Financial Ratio Analysis ..............................................................................................62 Coach Inc. SWOT Analysis...............................................................................................................70 Contact Information..........................................................................................................................74 Endnotes and Sources .......................................................................................................................75 Cover Page Photo Sources: http://tinyurl.com/lzt3dh9 http://tinyurl.com/lvj8mmj http://tinyurl.com/k6m326j http://tinyurl.com/mfc6qr2
  3. 3. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 2 Coach Key Findings and Strategic Implications Key Finding Sources Implications for Coach Priority A: Highest Impact There is high growth potential in the Asian markets for luxury goods. SWOT Porter’s 4 Corners Currently, Coach operates in the US and Japan. While luxury brands are already expanding into this market, especially competitor Michael Kors, Coach still has the opportunity to enter and claimmarket share if they act quickly. Coach would also want to establish relationships with Asian retailers to gain more of a market share and make their products more of an experience. Michael Kors is at a very strong financial position. Financial Analysis Competitive Profile: General Financial Performance Michael Kors has very strong financial ratios. More specifically, they are rapidly increasing capital. To stay ahead of competitors, Coach must watch for new product introduction and expansion into new markets by Michael Kors. People today demand for constant connection through technology. Competitor Profile: Strategies STEEP Porter’s 4 Corners With the ever increasing use and demand for technology, Coach should integrate technology within its fashion products whenever possible. A strategy focusing not only on accessories for technology but products with technology in them, such as fashionable tech watches, can help become a market leader in the fashion industry. The following list is broken into 2 categories based on priority: A = High Impact to Company and Strategy Development B = Medium Impact to Company with a Potential Effect on Strategy
  4. 4. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 3 Priority B: Medium Impact Wearable technology is becoming a new market with high growth potential. Competitor Profile: Current Events STEEP MK allocates high amounts of resources towards research and development for new products. Additionally, MK has stated previously that they want to develop wearable technology. Therefore, Coach should either look into doing the same or integrating a new form of technology into their product lines. In the luxury goods industry, brand loyalty is key to claiming market share. Coach Business Intelligence SWOT To maintain brand loyalty, luxury brand need to produce consistently high-quality products and provide excellent customer service. Coach can gain a higher market share by providing both high-quality products and excellent customer service. Additionally, rewarding longtime customers with small gifts, such as coupons, will increase their loyalty. Companies are pursuing more sustainable business practices to appease governmental and social trends STEEP SWOT Business Intelligence “Green” is becoming the new trend for all types of businesses. Businesses want to appear more sustainable and environmentally friendly for both government regulations and consumer concerns. Coach can utilize green manufacturing processes through only using environmentally friendly companies. Through these sustainable initiatives, Coach can advertise their efforts to attract more customers and detract from their competitors.
  5. 5. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 4 Key Intelligence Topics Tasking: The Coach team is responsible for the planning, collection, analyzing, and dissemination of key competitive analysis regarding the luxury brand industry. Using open source research and intelligence methodologies, the team will analyze Key Intelligence Topics and subsequently answer Key Intelligence Questions related to Michael Kors to gain a competitive edge within the high fashion industry. The team will address the internal structure of Michael Kors, the trends within the industry, macro-environmental concerns, and the competitor activities and strategies of Michael Kors to create an actionable product for executive decision-makers within Coach. Key Intelligence Topics:  Identify the top advertising strategies for Michael Kors in the United States in the past five years.  Identify the perception of the Michael Kors brand in the high-end fashion industry to consumers in the United States in the past five years.  Identify the macroeconomic concerns for the high-end fashion industry in the United States in the past five years, with regards to the recovering economy from the 2008 financial crisis. Key Intelligence Questions:  What media outlets does Michael Kors use for advertising and promotional tools over the last 5 years?  How much has Michael Kors used social media for advertising and promotions over the last 5 years?  What do the consumers in the high-end fashion industry say in product reviews about the Michael Kors brand?  What are the sales trends of the Michael Kors brand in the last five years?  What are the sales trends for the high-end fashion industry in the past five years?  How has the United States economy affected high-end fashion sales in the United States over the past five years? Methodology: The team utilized the following methods of analysis for the production of this report:  Open Source Research  Key Intelligence Topics  Business Intelligence and Value Chain Analysis  Competitive Profiling
  6. 6. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 5  STEEP Analysis  Patent Analysis  Financial Ratios Analysis  Strategy Models Challenges: The team will face a number of challenges in the production of this report, including:  Limited Time – The team has 14 weeks to complete an in-depth competitive analysis project.  Limited Personnel – The team is limited to four analysts to create the product.  Inexperienced Personnel – The analysts have roughly 1-2 years of experience.  Academic/Extracurricular Setting – All team members have other academic and extracurricular commitments alongside creating the product.  Limited Information – The team relies on limited open source information.  Monetary – The team is limited by a lack of funding for the product. Resources: The team will utilize the following resources to complete the competitive analysis:  Time – The team had 14 weeks to complete the competitive analysis for Michael Kors.  Personnel – There are four team members assigned to complete the product.  Online Resources – The team used online news, financial, and governmental resources along with SEC Filings.  Technology – The team used computers and software provided by Mercyhurst University.  Exclusive Databases – The team used information from exclusive databases provided by Mercyhurst University including LexisNexis and EBSCO. Administrative:  Final project will be delivered on the Week of May 11, 2015.  Final project will be delivered in the form of a written report and an oral presentation. Contact Information: Stefani Baughman – sbaugh79@lakers.mercyhurst.edu Rachel Bentzner – rbetzn49@lakers.mercyhurst.edu (724) 554-4203 Katie McCafferty – kmccaf10@lakers.mercyhurst.edu (440) 799-3999 Alicja Mincewicz – amince98@lakers.mercyhurst.edu (412) 759-1274
  7. 7. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 6 Coach Inc. Business Intelligence Executive Summary: Coach is a leading brand and a highly competitive company that will likely remain a key player in the luxury brand industry. Coach’s strengths include increasing revenue, being a leading brand in North America with a long market presence, and their brand promotion. On the other hand, Coach is challenged by their decreasing North American sales and their factory stores outperforming their regular stores which can potentially cause brand dilution. Their also challenged by leasing their retail space meaning regardless of how poorly or well a store is doing, the lease must be upheld for the determined period of time. Their primary activities include utilizing world-wide distribution centers, outsourcing product manufacturing, and using global innovative marketing strategies. Their secondary activities include operating internationally and in North America, running a human resource committee to oversee HR matters, being a market leader in e-commerce, and keep strict regulations in producing products and services. Coach focuses on maintaining their leading brand status and their high quality products while expanding their manufacturing and customer bases internationally. Key Strengths:  Increase in Revenue: In the past five years, Coach’s revenue has been gradually growing except for a small drop in the year 2014.1 In that period of time, it increased by over USD 1.5 billion. Increase in revenue also depicts the expansion of the brand internationally throughout the last 5 years and its popularity and accessibility of the brand as Coach not only has its own stores but they are also present in department stores such as Macy’s or Nordstorm. The brand has also its website through which customers can purchase products.  Leading Brand: Coach is the leading brand in North America for accessories and gifts. The brand loyalty is strongly influenced by two main factors: the quality of products and the long presence in the market as the company was established over 70 years ago2. This long presence on the market has given the company the experience of identifying3 newest trends which influences its ranking. Coach stays on top the changing fashion and adjusts its collection accordingly to the demand.  Promotion: Coach is a well-advertised brand. It displays its products to potential customers through magazines and billboards. Each month the company publishes a few
  8. 8. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 7 press releases include both financial and corporate releases. 4 Coach is also active on social media. The brand has its accounts on YouTube, Facebook, Instagram and LinkedIn.5 Through regular posts, comments, and videos they are able to reach a greater amount of customers as well as allow the people to be aware of the company’s actions. Key Weaknesses and Potential Challenges:  Decreasing North American sales Coach’s sales in North America have been falling at the same time that the company is expanding locations and raising prices. Coach’s North American sales fell 24% to $493 million in the third quarter that ended March 28, 2015 which marked the seventh straight quarter of decline. Coach’s “quarterly sales fell short of estimates due to continued weak demand for its products in North America, its biggest market.”6 Coach opened more factory and full-line stores in North America in 2014. For 2013, the company indicated that its average prices rose 7% because it added more exotic materials and new designs, and Coach expects prices to continue to increase. Analysts have questioned Coach’s plan to continue expanding where sales are dropping and have voiced concerns that by raising prices, Coach could be undercut by other luxury accessory brands.7  Factory stores outperform regular stores and brand dilution: Wells Fargo Securities estimates that Coach factory stores account for two-thirds of the company’s retail business in the United States which presents an increase from a decade ago of 40 per cent. In response to performance, Coach continues to expand factory stores, but doing has the potential “to dilute a brand's appeal and make selling items at full price harder.”8 Coach heavily relies on the image and value of its brand, so any dilution will negatively impact the company’s performance.  Leasing retail space: Coach does not own its retail store locations, but rather leases corporate-owned stores with long-term and non-cancelable leases. These lease agreements must be upheld regardless of store performance which means that Coach may not be able to close underperforming stores. Additionally, Coach may have to close stores that are performing well if Coach is not able to renew expired leases on suitable terms or even at all. Coach’s fulfilment of “obligations to continue making lease payments in respect of leases for closed retail spaces” could potentially detrimental to Coach’s business, financial condition, and operations.9
  9. 9. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 8 Value Chain Analysis: Primary Activities: Logistics: Coach utilizes world-wide distribution centers in the US, Hong Kong, China, South Korea, Vietnam, the Philippines, and India. Coach utilizes 3rd party distribution centers in China, Hong Kong, Japan, Korea, Malaysia, the Netherlands, Singapore, and Taiwan to facilitate growth in Asia/Pacific. 10 In Jacksonville, Florida, the distribution center is an 850,000 sq. ft. distribution and customer service facility. The facility uses a bar code scanning warehouse management system and employees use handheld radio frequency scanners to read product bar codes. This process provides more accurate processing, shipping, tracking, and inventory management. Products are shipped to Coach retail stores, wholesale customers, and directly to consumers via express delivery. Operations: Coach products are processed by external manufacturers. Its products are manufactured in 20 countries including: the US, Vietnam, China, the Philippines, India, Thailand, Italy, Hong Kong, and the United States.11 While the manufacturing process is outsourced, Coach tries to keep some control over design and production. Coach tries to maintain healthy relationships with its manufactures to maintain product control and uses a global- sourcing model to maintain control over raw material sources and quality. The relationship between the brand and the suppliers ensures there are no obstacles in the production process. Additionally, Coach periodically tests products for quality control and operates sourcing offices in key countries with management present in those offices.12 Throughout the past year, the company increased the presence of senior managers in the manufacturing utilities sector in order to improve the quality. Random on-sight visits are also conducted at the utilities sector to ensure the high quality at any given time.13 •Logistics •Operations •Marketing& Sales •Service Primary Activities •Infrastructure •HR Management •TechnologyDevelopment(R&D) •Procurement Secondary Activities ProfitMargin
  10. 10. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 9 Marketing & Sales: Coach utilizes over 1,000 wholesale locations in the US and Canada. Top wholesale customers include: Macy’s (including Bloomingdale's), Dillard's, Nordstrom, Saks Fifth Avenue, Lord & Taylor, The Bay, Bon Ton, Belk, and Von Maur. 14 Coach utilizes creative marketing, visual merchandising, and public relations to maintain the Coach New York image. Coach uses both consumer research and the growing database of 24 million households in North America and 10 million in Asia. The company sends 1.2 billion emails and millions of catalogues worldwide as well.15 The following graph depicts Coach’s revenue by products the company sells. Coach is going through a transformation plan to refresh its brand image. To go along with the rebranding, Coach is holding back on preferred customer sales such as Coach days and returning to semi-annual sales. Coach wants the fewer sales to increase the brand. However, these new strategies mean fewer people purchasing throughout the year and instead waiting for the large sales.16 Secondary Activities: Infrastructure: Coach operates through a North American segment and an international segment. The North American segment uses retail stores and metropolitan shopping areas in the US and Canada. The company’s flag-ship stores are located in major cities including: New York City, Chicago, Beverly Hills, San Francisco, Toronto and Vancouver. Outlet stores also sell Coach products, but these products are typically outlet exclusives, discontinued, or irregular inventory. These outlet locations are located at least 30 miles from major markets. Wholesale is also a great percentage of sales and distribution for Coach. Internationally, Coach utilizes department store concession shop-in-shop locations, free-standing stores, retail and outlet stores, and e-commerce websites. The international flag-ship stores are located in major cities such as: Tokyo, Shanghai, Hong Kong and London. Coach uses international wholesalers as well to expand the brand’s accessibility and reach internationally.17 Source: http://marketrealist.com/2015/01/coachs-supply-chain-manufacturing- model/
  11. 11. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 10 Human Resource Management: Coach has a human resource committee comprised of directors who are not members of management. This Committee determines, approves, and reports to the Board of Directors on all HR matters. The Committee also assists the Board in the annual performance evaluations of the executive officers and the Committee as well.18 Coach values providing knowledge, training, and development to all employees. All new employees receive a peer mentor to help the transition into Coach. Some departments within the company also developed mentoring programs to help employees with professional development. In addition to on the job training, employees can utilize formal classes and online based programs for more development. Coach’s HR offers both self-development and management development courses. The self-development courses facilitate individual development, focusing on knowledge, skills, and abilities to be successful at Coach. The curriculum strengthens many areas including: verbal, non-verbal, and written communication, skills to strengthen productivity, organization, stress management, and high achievement levels, and knowledge about Coach’s culture, core processes, and brand through the Discover Coach curriculum. For management development, Coach offers courses for managers to develop critical skills to develop and manage others. Skills developed in this curriculum include: leadership potential, management of other employees, and successful promotion of the team. 19 Technology/Research and Development: Coach was one of the first luxury brands in the US to go online. Being a market leader in e-commerce allowed Coach to become one of the top online luxury brands. Coach facilitates e-commerce websites for the US, Canada, Japan, and China and informational websites for 25 countries. The company also utilizes an invitation-only online outlet sales website.20 Coach exposes all materials submitted to its CRDC to an XRF scanner which checks for any restricted substances in the materials. The CRDC scans all material to ensure the suppliers are complying with the terms in the Restricted Substances and Certificate of Compliance form between Coach and the suppliers.21 Procurement: Coach values several components for producing products and services. Coach’s ethical standards are high, and they value doing business with companies with similar ethical standards. Coach is committed to fully comply with all laws and regulations. The company will not knowingly break these laws and regulations or use suppliers who knowingly break these rules. Coach values working with companies who consider the environment when producing.22 Coach agreed to buy Stuart Weitzman, an upscale shoe brand, to expand its reach. The purchase is through Sycamore Partners who acquired Stuart Weitzman in 2014 after taking Jones Group Inc. Coach will pay $530 million in cash and an additional $44 million in contingency payments depending on revenue targets over the next three years.23
  12. 12. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 11 Michael Kors - Key Competitor Profile Points History and Background: Karl Anderson, known as Michael Kors, launched the Michael Kors (MK) luxury brand in 1981. While MK initially struggled financially, the brand recovered and has been expanding, both in geography and product lines, since the 1990s. MK is especially known for its fashion and accessories. The company began with women’s wear, but has since developed lines of men’s wear, watches, purses, fragrances, and sunglasses, among others. Starting in 2006, MK has continued to expand into international markets, including in Europe and Asia. Management Profile: MK’s top management officials represent a variety of backgrounds and previous experience. Each member of the MK management team held previous employment with at least one other company in the fashion industry. This team, with the exception of Ms. Cathy Robinson, the Senior Vice President for Global Operations, has acquired more than ten years of experience working together. This experience facilitates easier communication and trust between MK’s top management. While Ms. Robinson was hired in 2014, she brings 24 years of operations, logistics, and supply chain experience to the company. CEO, John Idol, is optimistic regarding Ms. Robinson’s extensive experience and expressed hope that her years of supply chain experience both for brick and mortar stores and online distribution will aid MK in their efforts to improve the company’s distribution network. Products and Services: MK continues to diversify its portfolio to include a variety of products and services relevant to the luxury goods industry. MK products now include men’s and women’s apparel, as well as accessories while the company also renders services in the designing, marketing, and distribution of products. Retail and wholesale comprise roughly equal segments and the vast majority of MK’s revenue, and licensing accounts for the remaining 4%. MK’s accessories are their most profitable and growing sector followed by handbags, then shoes, and finally men’s wear as the least profitable with the smallest growth potential. Marketing Activities and Trends: Michael Kors primarily uses social media and print advertisements in high-end and widely distributed magazines to promote the brand. Its social media campaigns reach various types of platforms including: Twitter, Facebook, Instagram, and most recently, Snap Chat. Print advertisements showcase the MK signature “jet set” look, fashionable, wealthy, and exciting people on the move but always in style. Less utilized activities include charitable work and separation of the brands. All of these marketing activities are combined on the Michael Kors website where consumers can find a variety of MK activities, products, and services. Operations and Capacity: MK’s business is primarily centered on its retail and wholesale operations in locations throughout North America, Europe, and Japan. MK’s largest distribution centers and corporate offices are located in the US and Canada, and MK leases both its retail and
  13. 13. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 12 office spaces. The company uses Innotrac for its customer fulfillment services, a corporation that works with global brands, including Target, Zara, and Porsche. The company is expanding its operations internationally, mainly into Chinese and Southeast Asian markets. Additionally, MK is investing greater capital in fixed assets, which indicates the company’s intent to continue expanding its operations and capacity. Strategies: Michael Kors focuses on three key strategies for company growth; increase the brand awareness, design innovative products and ideas, and use connective advertising strategies. MK increases brand awareness through social media and public relations. MK offers customers products they want for the changing trends both in fashion and in technology as MK wants their products to differentiate from competitors through innovation. MK uses connective advertising with its social media platforms. The company wants to be where the consumer is, and MK uses every form of social media possible to achieve that goal. They also often hold contests on social media to increase followers and consumers. General Financial Performance: Michael Kors wants to continue growth in the next 12 months. Since 2012, Mk stock has been on a general upward trend with the highest point on February 25, 2014 at $101.04 USD. Michael Kors is using capital for new locations across the globe and new product lines. MK opened a new flagship store in New York City spanning 22,000 square feet and three floors. Additionally, MK is opening two new stores, one in Tucson, Arizona and one in Moscow, Russia.24 MK is also investing in several new product lines, men’s fashion and wearable technology. Current Events: Michael Kors is continuing to expand in new markets through new locations and broadening the target market through new product lines. MK opened a new store in New York City in December 2014, and will open two new stores in Tucson, Arizona and Moscow, Russia. Michael Kors is going into new product lines, men’s fashion and wearable technology. However, MK faces some issues that could slow down growth. Analysts suggest MK is becoming too broad, and investors are taking note of these suggestions. Also, MK suffered several thefts in February in New Jersey from TJ Maxx and Marshals stores. Recent reports also released information about MK coats containing real fur when they advertised the coats as fake fur and workers in Chinese shoemaking companies going on strike.
  14. 14. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 13 Michael Kors’ Porter’s 4 Corners Analysis: Competitor Response: Michael Kors is likely to continue producing a diversified product line of products. The current product line includes women’s, clothing, accessories, and footwear, men’s clothing, and services.25 However, MK is looking to new trends for fashion such as wearable technology and men’s high-end fashion as seen by formal statements about plans to conduct research and development on wearable technology and the large men’s section new MK store in New York City.26 It is highly likely Michael Kors will continue to use social media as a major advertising method. Michael Kors was one of the first fashion brands to utilize social media, and the company expanded onto every platform. MK recently joined snap chat, a picture and video based social media platform, to reach more users and fans.27 It is likely Michael Kors will continue to expand the brand through opening more stores globally such as Japan28, London29, Russia, and China. MK opened its new flagship store in New York City in December 2014, and the company is opening new stores in Tucson, Arizona and Moscow, Russia in March 2015.30 Future Goals - Diversify new products and expand to new markets to increase market share - Globally expand up to 700 retail stores - Further develop top e-commerce strategy Current Strategy - International expansion in Europe and Asia - Menswear more available to customers - Expand presence on social media Assumptions - Product diversification will be profitable - Store Expansion will promote growth - Handbags, their cash cow, will remain profitable Capabilities - Strength:Presence on Chinese market - Strength:Amount of operating margin - Strength:Strong Brand Recognition - Weakness:Poor Customer Service - Weakness:Loss in sales from weak store traffic - Weakness: Brand Dilution Competitor Response - Continue to diversify product line - Continue to market heavily through social media -Expand reach through opening more stores worldwide including Russia, London, Japan, and China
  15. 15. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 14 Future Goals: Michael Kors is mainly focused on increasing their market share by diversifying their products. MK is expanding various products like accessories, footwear, women’s wear, and menswear in order to gain a larger portion of the market share by differentiating from competitors through their diverse and unique products. 31 32 33 MK’s ultimate goal is to expand their store base to 700 stores globally, including 400 in North America, 200 in Europe, and 100 in Japan34. MK believes The Far East also holds potential to support an additional 200 retail store locations.35 36 Finally, MK’s long-term goal also includes developing a global best-in-class e-commerce strategy with omni-channel capabilities37. This began with the launch of their enhanced company-owned U.S. e-commerce website in September 2014 and is expanding with the upcoming launch in Canada this year followed by Europe and Japan next year.38 Current Strategy: Michael Kors is strongly focusing on international expansion mainly in Europe and Asia. Since its establishment, the company opened its stores in Japan, China, Korea, Southeast Asia, Australia, Russia, Italy, Ireland and many other countries.39 According to Belfast Telegraph, the brand is aiming at opening more locations in China and Ireland.40 Michael Kors wants to expand its menswear availability at new locations as well41. Recently the company opened its biggest store with a full collection of fashion for men in SoHo, New York City.42 43 The brand has also become present on social media. Michael Kors has its accounts on Instagram, Facebook, Pinterest and even Snapchat. This allows the brand to become more available and accessible to the public.44 45 46 Capabilities: Michael Kors’s capabilities are composed of its strengths and weaknesses. One of the brand’s strengths is its presence on the Chinese market as China’s consumers are the biggest spenders on luxury goods worldwide.47 MK’s strengths also include the company having an operating margin of 30% which is one of the best margins in the industry. 48 Additionally, MK’s strong brand awareness keeps the company growing and expanding without lessening its consumer demand. One of the main weaknesses of Michael Kors is their poor and unreliable customer service. This aspect can make customers less attracted to the brand and therefore lose these customers. It also influences brand’s image. Another weak point of the company is recent loss in sales. This leads to higher markdowns and may in the future result in lower operating margin.49 Strengths:  Presence on Chinese market: One of the most important target consumer groups is the Chinese, especially considering they are the biggest consumers in luxury goods market.50 If China’s handbag and accessory market can grow at 15% over the next 4
  16. 16. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 15 years, it will become an $8 billion USD market. Currently, the U.S. is a $10 billion USD market.51  Amount of operating margin: MK has a 30% operating margin which is one of the best in its industry. MK’s average sales per square foot is the fourth-highest in the luxury goods industry which is a key measurement in sales and potential growth. On top of this, MK’s sales per square foot are increasing.52  Strong brand recognition: MK believes their global expansion brand awareness drives customer demand and company growth. MK’s growing presence has directly hampered competition and helped the company to grow and expand as a global luxury lifestyle brand. There is currently no indication that the brand is oversaturating its market, but MK must balance its necessary popularity while avoiding making its products too accessible and decreasing demand.53 Weaknesses:  Poor customer service: MK has quite a few complaints on various websites reporting poor customer service. MK has a low ranking on various customer service review websites with reports of rude, unhelpful, and unknowledgeable employees as well as various organizational and technical issues regarding shipping and product availability.54 55  Loss in sales: MK’s stock hit a 19-month low with analysts cutting estimated earnings and share price targets considering their weak mall traffic and fallout from a collapsed roof at an Ohio distribution center. Sales seem to be leveling out, though still on the low side, but U.S. growth is being slowed and promotions were heavier with over 50% price markdowns.56  Brand dilution: MK’s reliance on outlet stores to boost sales could dilute the brand’s value. Finding MK products in bargain/discount stores like TJ Maxx also weakens the brand as its availability makes it more accessible to lower income people. Anyone paying full price for products may become skeptical and look for less easily attainable brands.57 Assumptions: Michael Kors functions under the assumption that their expansion and diversification will be profitable and continuing to grow. MK is diversifying various product sectors which has been proving profitable in some sectors, like accessories and handbags, more than others, like men’s apparel. While their accessories are flourishing as star products, their men’s apparel is their weakest product line, yet MK is continuing to push and expand its market.58 Additionally, opening new stores is a key strategy for MK that comes with mixed results. While their overseas markets are growing and are very important to maintain growth, this international expansion comes at a price as its expenses lower their profit margin.59 60 61 Growth also appears to be slowing62, but this is not unusual as a company gains size over time like MK.63 Finally, the
  17. 17. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 16 company also assumes its handbag product line will remain relatively constant and profitable. Many luxury goods brans rely heavily on their accessories and handbag market since they tend to have lower prices, are easy to produce, and carry a large profit margin. By successfully bringing the handbags to the masses, MK risks diluting the brand and saturating their handbag market.64 65
  18. 18. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 17 Michael Kors Company Overview History and Background Executive Summary: Michael Kors (MK) is a luxury brand known for its fashion and accessories. The brand has been in existence for over 30 years now. The company started with only women’s wear, but now also has men’s wear, watches, purses, sunglasses, and many other products. Within past 10 years, Michael Kors expanded internationally and has its 550 stores and over 1500 in-store boutiques in worldwide. Discussion: Michael Kors is a luxury fashion brand established by Karl Anderson, known as Michael Kors, in 1981. He started his brand with a woman’s collection that was sold in Bergdorf Goodman and Saks Fifth Avenue.66 His early collections were based on comfort, luxury and simplicity. For the first decade the brand was not as popular as it is right now. In 1993, Michael Kors had to file for Chapter 11 bankruptcy protection as its debts reached 1.4 million USD. The brand recovered shortly and launched a new cheaper line. Only two years later Michael Kors received his first award for excellence. Since then, the brand was given multiple awards for their menswear, women’s wear and fragrance. In 1997, MK launched its first menswear capsule line. It took five years up until the brand created a complete menswear collection.67 Only a year later Michael Kors already received an award for menswear. The brand has not stopped evolving after its creation of men’s apparel. In 2004 the brand launched two completely new lines: the Michael Kors and Michael Michael Kors collection as well as got into the perfume, eyewear, and watch business. The Michael Michael Kors line is a more day to day wear fashion and is more affordable to working people. In 2005 the company created its first fragrance and in 2009 it launched its second perfume. Currently, in 2015, the brand offers six different scents for both men and women.68 Michael Kors partnered with two other brands such as Luxottica and Fossil to expand its products line. Partnership with Fossil resulted with creation of its watch line, and partnership with Luxottica resulted with an eyewear line. Michael Kors does not want to limit itself to United States. MK began international expansion in 2006. Later on the company opened other stores in Japan and China and is planning on opening a store in Belfast, Northern Ireland.69 Right now, Michael Kors has its stores in Northern America, Europe and Asia. International purchases are available on each of the continents and in almost every country.70
  19. 19. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 18 1981 Creation of Michael Kors label 1983 First award for Michael Kors brand: First Amercian Original Award 2000 First women's perfume "Michael Kors" was created 1997 Releasement of a capsule menswear line 1993 Reorganization under Chapter 11 bankruptcy 1996 Vouge magazine named Michael Kors part of "New Establishment" 1995 Michael Kors was awarded Elle/Cadillac Fashion Award for Excellence 1999 Michael Kors receives CFDA Womenswear Designer of the Year award 2001 Michael Kors adds accessories to its collection Michael Kors also launches "michael michael kors logo print signature tote" A Timeline of
  20. 20. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 19 2005 "Island Michael Kors" fragrance was created 2010 Michael Kors expands to Japan Awarded The Geoffrey Beene Lifetime Achevement Award from the CFDA and the Fragrance Foudation's Fifi Hall of Fame Award for Lifetime Achievement 2009 Another perfime "Very Hollywood Michael Kors" is released Michelle Obama wear Michael Kors in her first Presidential Portrait 2006 Michael Kors starts opening accessories speciality stores internationally 2004 Michael Kors launched new lines: MICHAEL Michael Kors and KORS Michael Kors The company partners with Fossil to launch Michael Kors Watch 2002 Creation of Men’s Collection 2003 Michael Kors receives CFDA Menswear designer of the Year award • Michael Kors receives CFDA Menswear designer of the Year award 2014 Michael Kors' partnership with Luxottica to produce eyewear 2011 Creation of their jewelry line
  21. 21. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 20 Source: http://www.freeinfosociet y.com/article.php?id=357 Management Profile ExecutiveSummary: Michael Kors’ (MK) top management team possesses a variety of backgrounds and previous experience. Each member of the MK management team previously worked for at least one other company in the fashion industry, adding a vast amount of knowledge and industry tradecraft to the company. Excluding Ms. Robinson, this team has over ten years of experience together. Throughout these ten years, the MK management developed the capabilities to communicate with each other and certain levels of trust among each other. Ms. Robinson, being an outlier and new to the fashion world, is likely to cause some potential problems after taking a job from another long-time executive, Britton Russell. However, it is likely she will quickly integrate into the MK community while providing new ideas for the company. John Idol, CEO of the company, hopes her years of supply chain experience both for brick and mortar stores and online distribution will help the company improve the company’s distribution network.71 Discussion: Michael David Kors – Honorary Chairman, Chief Creative Officer  Total Compensation: $13,603,300 o Salary: $2,500,000 o Cash Bonus: $5,000,000 o Stock Bonus: $3,889,958 o Option Award (Buy stock at a certain price): $2,093,684 o Other Compensation: $109,61372  Total Stock Options: 471,816  Total Stock Options Value: $30,767,203  Age: 54  Year Joined Company: 1981  Education:Fashion Institute of Technology - State University of New York73 Past: Michael Kors (birth name: Karl Anderson Jr.) studied fashion at the Fashion Institute of Technology in Manhattan, NY. He previously worked for Celine, the French luxury brand, from 1998 to 2004 as the creative director. He has held his positions within Michael Kors since the brand’s inception in 1981.74 Additionally, Michael Kors has served as a judge on Project since 2004.75
  22. 22. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 21 Source: http://www.businessoffas hion.com/john-d-idol Source: http://tinyurl.com/lgwfx7r John D. Idol – Chief Executive Officer, Chairman of the Board  Total Compensation: $13,549,220 o Salary: $2,500,000 o Cash Bonus: $5,000,000 o Stock Bonus: $3,889,958 o Option Award (Buy stock at a certain price): $2,093,684 o Other Compensation: $65,57876  Total Stock Options: 1,419,242  Total Stock Options Value: $115,067,728  Age: 55  Year Joined Company: 200377  Education: Mount Saint Mary’s College - B.A. in History and Political Science78 Past: JohnIdol hasover30 yearsof experience inthe fashionindustry. Mr. Idol began his career in 1980 at J.P.Stevens.Hisextensive listof past experience includes: the Chief Executive Officer of Kasper ASL Ltd. fromJuly2001 to July2003, the Chief Executive Officer of Donna Karan International Inc. from July 1997 to July2001, the Group PresidentandChief OperatingOfficerof productlicensing,home collection and men's collection at Ralph Lauren from 1994 to 1997, the President of the Ralph Lauren home collection from 1990 to 1994, and the Vice President at Ralph Lauren from 1984 to 1990. Since 2003, he has served as Chief Executive Officer, and since 2011, he has served as Chairman of the Board for Michael Kors.79 JosephB. Parsons - Executive Vice President,ChiefFinancial Officer, Chief Operating Officer and Treasurer  Total Compensation: $2,839,084 o Salary: $583,333 o Cash Bonus: $450,000 o Stock Bonus: $1,169,988 o Option Award (Buy stock at a certain price): $628,113 o Other Compensation: $7,65080  Total Stock Options: 549,095  Total Stock Options Value: $45,719,425  Age: 61  Year Joined Company: 200481  Education: Unavailable Past: JosephParsonsstartedhisexecutive career at Crystal Brands as AssistantControllerfrom1989 to 1993. AfterCrystal Brands,he served as Executive Vice President and Chief Financial Officerof DonnaKaran International Inc.from1993 to 2001. He thenwentto KasperASL, Ltd. as the Executive Vice President and Chief Financial Officer from 2002 to 2003. He then joined Michael Kors in 2004 as the Chief Financial Officer, Chief Operating Officer, Executive Vice President, Treasurer of Michael Kors Holdings Ltd.82
  23. 23. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 22 Lee S. Sporn - Senior Vice President of Business Affairs, General Counsel and Secretary  Total Compensation: $1,989,890 o Salary: $483,333 o Cash Bonus: $500,000 o Stock Bonus: $649,972 o Option Award (Buy stock at a certain price): $348,935 o Other Compensation: $7,65083  Total Stock Options: 283,218  Total Stock Options Value: $21,115,796  Age: 55  Year Joined Company: 200384  Education: Undergrad - Oberlin College o Graduate School - Brooklyn College85 Past: Lee Sporn started his career in the fashion industry for Polo Ralph Lauren Corp. He was the Vice President of Intellectual Property and Associate General Counsel at that company from 1990 to 2001. He moved to Kasper ASL, Ltd. as the SeniorVice President,General Counsel and Secretary from 2001 to 2003. He took his current positionatMichael KorsLtd. as the SeniorVice President - Business Affairs, General Counsel, Secretary in 2003.86 Cathy Marie Robinson - Senior Vice President, Global Operations  Total Compensation: Unavailable  Total Stock Options: Unavailable  Age: 4687  Year Joined Company: 2014  Education: Azusa Pacific University – Leadership & Organizational Studies (2009-2011)  University of Alabama – Communication (1985-1989)88 Past: Cathy Robinson brings 24 years of operations, logistics, and supply chain experience to Michael Kors. Robinson started her careerin the US Army as a LogisticsOfficer and various logistics and operationspositionsatWal-MartStores,Inc.She movedon to Smart & Final Stores LLC as Senior Vice President, Supply Chain from 2006 to 2010. From 2010 to 2012, she served as the Senior Vice President of Supply, Logistics and Customer Experience atThe Great Atlantic&PacificTea Company(A&S).In2012, she joinedToysRUsasthe Senior Vice President, Chief Logistics Officer. She was responsible for all aspects of global supply chain operations at ToysRUs and its subsidiaries. In 2014, she took the Senior Vice President - Global Operations position for Michael Kors. 89 Source: https://cardozo.yu.edu/dire ctory/lee-sporn Source: http://tinyurl.com/k7jol9z
  24. 24. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 23 Products and Services Executive Summary: Michael Kors (MK) offers a variety of products and services relevant to the luxury goods industry. MK products include men’s and women’s apparel and accessories while providing services in the designing, marketing, and distribution of products. Additionally, the company divides its total revenue by its retail (49%), wholesale (47%), and licensing (4%) sectors. MK’s accessories make up the largest portion of the market share and potential market growth followed by handbags which show less potential market growth. Footwear holds high potential to grow, but has a low market share while men’s wear comes out on bottom having a low market share and low growth potential. Discussion: Brands: Michael Kors is a rapidly growing global luxury brand that offers two primary brand collections: the Michael Kors luxury collection and the Michael Michael Kors accessible luxury collection. The Michael Kors luxury collection established the brand and is carried in many of their retail and department stores. The Michael Michael Kors accessible luxury collection focuses more on accessories, footwear, and apparel while addressing the demand opportunity for accessible luxury goods.90 91 Products: Michael Kors offers a variety of clothing, shoes, accessories, fragrances, and beauty products for women and men, though the men’s selection is much more limited.  Handbags – The most well-known MK item is the handbag. MK sells a variety of totes, shoulder bags, cross body bags, satchels, clutches, wallets, and wristlets in both Michael Kors collections.92 The collections are designed to be affordable options for woman with prices from $54 to $10,000.93  Watches – MK’s watches are purposed as an alternative to extreme high-end watches that cost thousands of dollars and are another popular item. Prices range from $156 to $550. The watches include silver, gold, rose gold, turquoise and horn, as well as glitz and leather.  Jewelry – The jewelry collection includes bracelets, rings, earrings, and necklaces ranging from $32 to $425 per piece.94  Accessories and eyewear – MK’s accessories include tech accessories, cold weather items, sunglasses, and belts, all ranging from $10 to $1,187.95  Footwear – The footwear collect includes sandals, pumps, wedges, flats, boots, and sneakers. The collection is meant to cover all the footwear needs of the target women with prices ranging from $29 to $8,000.96  Women’s ready-to-wear – The women’s ready-to-wear products include dresses, tops, pants, shirts, shorts, outerwear, and swimwear. The collection is designed for women to easily create outfits and looks with any combination of MK’s pieces with prices ranging from $60 to $9,995.97
  25. 25. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 24  Men’s ready-to-wear – The men’s ready-to-wear products include tops, pants, shorts, outerwear, and swimwear designed to easily create looks and interchangeable outfits. Prices range from $20 to $1,200.98  Fragrance and cosmetic products – The fragrance and beauty collection consists of perfumes, colognes, and cosmetics. The price point is $18 to $108.99 Services: Michael Kors is involved in the design and distribution of sportswear, accessories, footwear, and apparel. MK is involved in the design, marketing, distribution, and retailing of branded women’s apparel and accessories and men’s apparel with the Michael Kors trade name and related trademarks and logos.100 101 MK utilizes a global distribution network focusing on retail stores, department stores, specialty stores, and select licensing partners.102 The company operates through 3 sectors:  Retail – MK sells its products and licensed products with the company’s name directly to the consumer through retail stores, which include collection, lifestyle, outlet stores, and concession stores throughout the U.S., Canada, Europe, and Japan.103  Wholesale – MK sells the company’s products directly to department stores, specialty retail stores, and travel shopping locations to accommodate consumers who prefer to shop at department stores.104  Licensing – MK licenses its trademarks on various products including watches, eyewear, jewelry, fragrances, and cosmetics. The company generates revenue through product and geographic licensing arrangements while allowing third parties to use the brand name and trademarks along with the manufacturing and sale of the various products.105 Chart of Revenue from Distribution Segments http://tinyurl.com/l4fnymx
  26. 26. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 25 Portfolio Model: Michael Kors’ most profitable industry was their accessories sector, with watches and jewelry being the top performers within the sector. The next profitable sector was MK’s handbags in second, followed by footwear in third, and finally men’s apparel as the least profitable sector. BCG Matrix This matrix depicts Michael Kors’ stars, cash cows, question marks, and dogs in terms of products and industry sectors. Stars Accessories – Michael Kors’ accessories sector, which includes watches, jewelry, eyewear, and other accessories, is the most profitable sector and the fastest expanding market in the company. Accessories represent over 62% of revenue and is a leading contributor to MK’s strong global growth over the past 5 years. 106 107 108 Watches led 31% of its sales growth along with other accessories including footwear, making up $618.3 million in the U.S. and Canada. The accessories market is expanding at a rate of 10%, according to Coach109. The combination of handbag, watch, footwear, fragrance, and jewelry sales make up 85% of MK’s revenue with management highlighting accessories as a key driver for retail and
  27. 27. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 26 wholesale sales growth. Within accessories, watches and jewelry were separated as the top performers within MK’s accessories sector. Management sees tremendous growth in its jewelry business in particular and sees and opportunity to generate between $1-3 billion in sales from it in the future. The company currently operates 120 watch and jewelry shop-in- shops, and believes that bringing their total count to 500 will allow the company to generate a targeted 5% of its annual revenues from fashion jewelry sales.110 Cash Cows Handbags – Michael Kors’ handbags are the second most profitable of the company’s sectors. In 2011, Americans spent $8.5 billion on bags, according to Accessories magazine.111 Handbag sales aid in driving sales higher while also expanding their market, along with accessories, at a rate of 10%, according to Coach. 112 MK’s biggest concern is an over-saturation of their handbags in the market.113 Question Marks Shoes – Michael Kors’ footwear sector is the third most profitable sector and aid in driving sales higher. Footwear contributed to North America’s 31% sales growth, alongside watches and accessories, making a combined $618.3 million in the U.S. and Canada. 114 Footwear shows potential for growing, but currently does not hold as high of the relative market share.115 Dogs Men’s Apparel – Michael Kors’ men’s apparel sector is its least profitable sector. MK currently generates a very small portion of its sales from men’s products, but they have implemented a long-term target of achieving $1 billion from the sector. MK announced that it plans to focus on the continued development of this sector while emphasizing its men’s watch business since watch sales have been a leading revenue contributor.116
  28. 28. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 27 Operations and Capacity Executive Summary: The vast majority of Michael Kors’ business is centered on retail and wholesale operations in locations throughout North America, Europe, and Japan. Michael Kors uses Innotrac for its customer fulfillment services, a corporation that works with a number of global brands. The company is continuing to expand its international locations, primarily into Chinese and Southeast Asian markets. Additionally, the capital that Michael Kors is investing in fixed assets, which indicates the potential to expand its operations and capacity, has seen recent increases. Discussion: Michael Kors operates in three areas, including retail, wholesale, and licensing, and the company’s “global distribution network” focuses on retail stores that are company-run, department stores, specialty stores, and licensing partners. As of March 29, 2014, Michael Kors’s retail operations accounted for 48.1% of the company’s total revenue and included:  288 retail stores in North America;  117 retail stores in Europe and Japan. The company’s wholesale operations accounted for 47.6% of its revenue and included sales through the following:  2,496 department and specialty stores in North America;  1,232 international department and specialty stores. Licensing to third parties accounts for Michael Kors’s remaining revenue.117 The company’s largest distribution and corporate facilities include:  A distribution facility in Whittier, California with an area of 1,170,714 ft2;  Corporate offices in New York City, New York with an area of 157,785 ft2;  Canadian corporate office and distribution center located in Montreal, Quebec with an area of 191,563 ft2;  Corporate offices in East Rutherford, New Jersey with an area of 43,336 ft2; Michael Kors leases space in this building to house its corporate office in New York (Commercial Observer). http://tinyurl.com/ncgxlkq
  29. 29. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 28  A distribution facility located in Secaucus, New Jersey with an area of 22,760 sq. ft. 118 Combined, both the New York and New Jersey corporate offices have over 400 employees.119 Additionally, the company stores inventory at warehouses in the United States, Holland, Canada, Japan and Hong Kong.120 Michael Kors’s quarterly net “property, plant, and equipment,” the fixed assets belonging to the company, increased from Jun. 2014 ($404 Mil) to Sep. 2014 ($454 Mil) and increased from Sep. 2014 ($454 Mil) to Dec. 2014 ($532 Mil).121 Michael Kors uses Innotrac Corporation as its direct-to-consumer fulfillment provider. Innotrac was founded in 1984 and is based near Atlanta, Georgia. It identifies itself as a “commerce provider integrating digital technology, fulfillment, contact center, and business intelligence solutions to support global brands.” Innotrac emphasizes its use of order processing and warehouse management technology, and it currently operates ten fulfillment centers and one call center across each of the time zones in the continental United States. Additionally, Innotrac Europe GmbH maintains a “network of fulfillment centers, call centers, and returns processing facilities with operations in the UK, Germany, France, Denmark, Sweden, Poland, Austria, Italy, Switzerland, Ireland, Spain and the Netherlands.” Innotrac began fulfillment services for Michael Kors’s accessories, footwear, watches, jewelry, men’s and Michael Kors’s 2014 opening of a new store in Shanghai (CNTraveler). http://tinyurl.com/ncgxlkq Pictured are the facilities of Innotrac, Michael Kors’s customer fulfillment service provider (Innotrac). http://tinyurl.com/ncgxlkq
  30. 30. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 29 women’s clothing, and fragrance products in fall 2014.122 Among Innotrac Corporation’s other varied clients include Target, Microsoft, Zara, Charming Charlie, Ferrari, and Porsche.123 Michael Kors opened a flagship store in Shanghai in early 2014, and as of May 2014, there were plans for the company’s fragrance and beauty collections to expand into additional markets in Europe, as well as the Middle East, Latin America and Asia.124 Michael Kors is moving forward with plans to expand operations into China and Southeast Asia.125 The company continues to expand retail locations internationally, and a flagship Michael Kors store is scheduled to open in Moscow in March 2015.126
  31. 31. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 30 Marketing Activities and Trends Executive Summary: Michael Kors uses the latest and most popular communication tools to advertise its products. Social media is the main venue for the advertising campaigns, but the company still produces many print advertisements. With both social media and print, the advertisements show high society living and what people should feel like and achieve through the MK brand. Celebrity endorsements are also pivotal in campaigns and showcased on the MK website. Wholesalers also have an integral role is advertising and distributing Michael Kors products. Philanthropy is another major aspect for MK advertising, with employees from all over the world participating in charitable work. Michael Kors integrates all of its campaigns by showing them in all the various social media platforms and on the Michael Kors website. Discussion: Social Media: Michael Kors uses every possible form of social media to advertise its brand. It tries to integrate all the different platforms into one campaign. MK makes its campaigns accessible on all forms of social media and makes a strong point to offer exclusives for social media followers. MK also utilizes Instagram and Pinterest more than other companies due to their visual nature. MK then integrates all of its advertising campaigns into the Destination Kors page. 127 Recently, MK joined snap chat to add to its social media marketing. Michael Kors chose to utilize snap chat to go where the consumers are. MK wants to showcase the brand and have consumers showcase themselves loving the brand.128 Website: The Michael Kors website features each season’s collections for the past 3 years, the Jet Set collection, and the Runway shows. The company uses both celebrity endorsements and look books to showcase the brand in popular culture. The Jet Set collection focuses on traveling the world while look chic and in style. The runway shows showcase the next season’s styles (Fall 2015), while the season collections show the past styles and the current season’s styles (Spring 2015).129 Print and Online Advertisement: Michael Kors advertisements in both print and online have a common theme. They show a certain demographic, but attract a larger demographic Michael Kors’ Official Twitter Page. http://tinyurl.com/ncgxlkq
  32. 32. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 31 Simon Nessman is joined by model Karmen Pedaru for this Michael Kors advertisement. http://tinyurl.com/njysjsw that wants to look like the people in those advertisements. The ads focus on men and women who are always travelling and always travelling in style. They travel in luxurious ways, private jets, yachts, and helicopters, and never stop. These ads try to depict a lifestyle that most people cannot have but they want. They can feel like they are in high society while not paying extremely high prices.130 Celebrity Endorsements: Michael Kors is a very well know fashion designer himself. He is a major part of the marketing for the brand with his different appearances and able current judges’ seat on Project Runway. He is able to use his fame and personal relationships with celebrities to gain their endorsements of the MK brand. Several endorsees include Angelina Jolie, Cameron Diaz, Uma Thurman, and Jennifer Lopez.131 Department Stores: Michael Kors utilizes many wholesale department stores to distribute and advertise the brand. Stores include Bergdorf Goodman, Saks Fifth Avenue, Neiman Marcus, Macy's and Bloomingdales, and many more.132 These distributors advertise the brand in their stores and have separated sections within the store to showcase the brand. For example, Macys is celebrating the MK brand with “The World of Michael Kors.” This event showcases the MK brand by giving shoppers giveaways, insider style tips, and more promotions.133 Charitable Work and Local Involvement: Michael Kors utilizes two different philanthropic campaigns, the Watch Hunger Stop campaign and the Gods Love We Deliver campaign. The Watch Hunger Stop campaign is working towards delivering 10 million meals to children in need in the world. They launched a limited edition watch that donated a portion of the proceeds to the United Nation’s World Food Programme (WFP). 134 God’s Love We Deliver is a New York organization where MK employees, including Mr. Kors, volunteer. The organization provides meals to people living with severe illnesses. Mr. Kors has been involved with this organization for over 20 years, and he brings employees from all over the world to participate in “Michael Kors Month.”135
  33. 33. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 32 The official MK logo. http://tinyurl.com/qbdd87w Separating the Brands: The Michael Kors brand and the Michael Michael Kors brand are very separate from each other. Both have different target markets and pricing strategies. The brands have different advertising campaigns and strategies to appeal to different levels of income. Michael Kors makes an effort to keep these separate to allow both lower-income groups to enjoy luxury items and higher-income groups to remain prestigious and unique.136
  34. 34. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 33 Company Strategies Executive Summary: Michael Kors implements many strategies in order to achieve revenue, market, and product goals. While MK utilizes many strategies, their focus on three strategies allows for the company to maintain growth in their various sectors. The three most important strategies for MK are: to increase their brand awareness, to generate innovative products and ideas, and increase their connective advertising strategies. These strategies work to increase revenues and their customer/audience base, promote growth and expansion, and stay on top of industry trends. Discussion: The below chart depicts MK’s goals, strategies, and actions from 2013. Many of these points are still relevant today or have simply been expanded upon to form MK’s current strategies. Michael Kors’ 2013 goals, strategies, and their planned actions for these objectives. http://tinyurl.com/nd96ura
  35. 35. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 34 Increase social media and public relations work to increase Michael Kors’ brand awareness. MK believes their expanding global brand awareness is driving their continued growth as a global luxury brand and strong demand for their products. Michael Kors continually works to build their brand awareness throughout the world. MK commissioned a study in mid-2014 to further understand how their brand awareness grew between 2013 and 2014. In the U.S., awareness increase from 82% in 2013 to 89% in 2014. In Europe, awareness grew from 39% to 49% and Japan’s brand awareness was at 32% in 2014. This growth in brand awareness, both in the U.S. and internationally, is mainly due to MK’s several new advertising initiatives throughout that fiscal year. These initiatives included social media and other web-based mediums that are continually expanded upon.137 138 Encourage innovative ideas and diversify products to differentiate Michael Kors from the competition. Michael Kors continually works to adapt to the needs of their customers by providing contemporary and modern products like iPhone clutches. MK must also keep up with changing industry trends which they confront through their innovative products. The inclusion of new lines for men and children show MK’s willingness to confront new challenges with innovative thinking. New lines and products are meant to support their increasing revenue objective, but innovation and differentiation from the competition is essential.139 The company also continues on focusing on innovative product diversification to expand market share. While MK originally had its handbags as its centerpiece product, its decision to diversify its products is paying off as the accessories market is overtaking handbags.140 141 Utilize connective and engaging advertising strategies to expand their consumer basis and increase their social media followers. MK acknowledges the significance of digital marketing and engaging with its audiences.142 While some luxury brands focus on one or two social media outlets, MK stays active on all the top outlets and works to engage its audience. While Twitter and Facebook are the top outlets for advertising campaigns, Instagram and Pinterest are gaining popularity among luxury brands due to their visual nature and strong female following. In an attempt to target Instagram Fan Growth, MK launched a campaign called #MKTimeless where customers were challenged to take a photo of their favorite watch and post to Instagram. The two week contest gave them a 50% increase in their Instagram fan base. MK also released their first mobile-friendly social campaign through a Facebook app where the company positioned worked to use social media advertisement as an opportunity for increased engagement instead of just selling their products.143 MK’s Mother’s Day Facebook Advertisement. http://tinyurl.com/nkxchgu
  36. 36. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 35 Michael Kors Stock Holding Over Past Three Years According to NASDAQ. Source: http://www.nasdaq.com/symbol/kors/interactive-chart General Financial Performance Executive Summary: Michael Kors’ is likely to grow in the next 12 months. In the past three years, the stock worth followed two consequent patterns: growth with a shift into decline in the first quarter of 2014. Currently, Michael Kors is as its lowest point in comparison to the past year, caused by issues at the distribution center and weakening mall traffic. However, analysts predict that the company will grow within the next year with a median price at $85.00 USD, possibly as high as $130 USD. Discussion: In the past few years, the Michael Kors’ stake holdings went through two major patterns with small variations within them. First pattern was growth in the stake values. This order lasted up until first quarter of the year 2014. Subsequently, stocks started to consequently decrease in their value. This pattern has held up until right now. The stock reached its highest point in the first quarter of 2014 when, on the 25th of February, it reached $101.04 USD.144 It was the highest price for a stock within past three years. This major boost was caused by Michael Kors bringing e-commerce in-house.145 This decision influenced on-line sales by increasing them by 73% in North America. Since then, there was a gradual decrease in the stock worth throughout the rest of the year. As of March 26th, 2015, stocks are worth $66.69 USD, which was one of the lowest rates in past months. According
  37. 37. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 36 12 Month Forecast For Michael Kors Stocks. Source: http://money.cnn.com/quote/forecast/forecast.html?symb=KORS to InvestorPlace.com, the recent decrease in the stock value was caused by issues at the distribution center and weakening mall traffic.146 According to CNN Money analysts, the forecast for the next 12 months has a median of $85.00 USD per stock, with its highest at $130 USD.147 The median represents an increase of 27.51% from March 26th stock value. Even though the stock has been declining, the revenue has been steadily increasing in the past years.148 Michael Kors closed 2014 with a revenue $3.31B USD. The amount almost tripled since 2012 with the revenue equaling $1.3B USD. The year 2012 was also when Michael Kors expanded internationally and opened its stores in China.149 A year later, the company launched its beauty line that includes cosmetics and body products.150 Additionally, during 2014, MK stopped the outsourcing of its e-commerce business to Neiman-Marcus and decided to bring it in house.151 Another factor that impacted the rise was the growth of tourism in the Far East as the performance at airports increased.
  38. 38. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 37 Kors’ newly opened store. http://tinyurl.com/psfclnq Current Events ExecutiveSummary: Michael Kors is continuing to expand into new markets, both in location and customer type. The company has recently opened stores domestically and internationally. Michael Kors is also undertaking effort to expand into men’s ware and respond to changing consumer trends by innovating in wearable technology. However, Michael Kors is also vulnerable to several issues because it depends heavily on brand image, including striking workers at its manufacturer and concerns regarding product material and quality. Additionally, Michael Kors is vulnerable to changing consumer confidence and crime, such as theft. Discussion: New Locations  In mid-December, Michael Kors had recently opened its largest store at a new retail space located in SoHo at 520 Broadway. The space is 22,000 square feet across three floors. This store is the first to offer Michael Kors’s full menswear line, and in-store presentation of men’s shoes is another first.152 The main floor is devoted to accessories and fragrance, the second houses women’s fashion and shoes, with the largest selection of MICHAEL Michael Kors worldwide; and the downstairs level contains the men’s collection.153  Tucson, Arizona’s first Michael Kors store is expected to open on March 26, 2015 at La Encantada, 2905 E. Skyline Drive. The Michael Kors Lifestyle store is set to carry accessories, watches, jewelry, footwear, eyewear, fragrances and apparel and will be located in the 2,600-square-foot on the upper level across from a Tiffany & Co.154  One exception to retail location closures among Russia’s fashion industry will be a flagship Michael Kors store in Moscow which is supposed to be within walking- distance from the Kremlin. This new store is set to open in March.155 New Product Lines  Seeking to design clothing that blends dressy with casual and sporty, many high-end designers, including Michael Kors, are placing new emphasis on men’s wear. Michael Kors’s fall 2015 men’s collection reflects this shift. Kors, for example, redesigned
  39. 39. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 38 regular cargo pants into tailored pants called “flannel cargo trousers.” According to Kors, the target customer for his this product line is “a successful, dynamic man on the move who wants clothes that can work for the weekend but also during the week . . . [who is] blurring the lines, in fashion and in life.”156  The Michael Kors label indicated on February 4, 2015, that it was planning to enter the wearable technology market. The company has hinted at its interest in technology-centered products, “including selling lipstick tubes and compact mirrors that double as portable phone chargers.” Michael Kors created designs in 2014, with the signature MK logo print, for Duracell Powermat, a wireless phone-charging device. Additionally, Michael Kors has a relationship with Fossil, the firm that makes Kors watches, and the company entered “into partnerships with Intel and Google to develop wearable technology for the fashion industry.157 Potential Issues  Michael Kors performance has investors paying close attention. Reuters noted that “some analysts said the company’s clutches and watches could be losing their niche appeal” because of the company’s rapid expansion. In the affordable luxury industry, Michael Kors has grown larger than Coach Inc., but its growth appears to be slowing. Michael Kors’s stock markets shares “were down 3.3 percent at $68.99 by midday on February 5, 2015.”158  As of February 26, 2015, Michael Kors merchandise was targeted in a series of New Jersey thefts. A group of thieves perpetrated the thefts, and they have allegedly stolen several thousand dollars’ worth of merchandise during several visits, which primarily consisted of Michael Kors coats and handbags from TJ Maxx and Marshalls stores in the Linden, NJ area.159  A Rossen Reports investigation revealed that some of the nation’s largest retailers, including Neiman Marcus, Nordstrom Rack, Belk, Jacadi and Gilt Groupe, are selling products with real fur while advertising faux fur. The investigation found traces of fur from rabbits, coyotes and raccoon dogs, and Michael Kors goods were among those tested. A Michael Kors coat, purchased from a Belk in the south, was ‘advertised online as having a ‘tailored faux fur collar.” However the coat’s tag indicated it was real animal fur, and the investigation revealed that the coat contained coyote fur.160  On March 8, 2015, approximately 5,000 factory workers went on strike at Michael Kors’s Chinese shoemaker in Dongguan in southeast China. The company also manufactures shoes for Prada. The striking factory workers demanded housing assistance. Additionally, a spokeswoman for Stella International indicated that only “a few hundred” workers had gone on strike, not 5,000. Last year, the number of Chinese worker strikes more than doubled to 1,378 from 656 in 2013.161
  40. 40. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 39 STEEP Analysis Summary Social:  The current generation of young people are extremely visually focused and driven.  People want to be connected by social media which heavily influences the public on a daily basis.  People are heavily dependent on connecting and utilizing mobile devices for social and day-to-day purposes. Technology:  The popularity of wearable technology is growing rapidly.  The internet has become an inseparable part of people’s lives.  Cloud storage is becoming the place to store information and files. Economy:  It is likely the global economy is facing slow growth and shifting of the world’s economy rankings.  Unemployment is remaining gradually dropping and consumer spending is expected to take off throughout the year.  The U.S. dollar is continuing to strengthen. Ecological:  Pollution in the industrialized world is becoming more of a concern for both businesses and governments.  It is likely that green certified and LEED certified buildings will become more common for industries in the next few decades.  Many companies are slowly moving from a paper filing system to a digital filing system. Political-Legal:  In response to growing concern over cybercrime and cyber warfare, attempts to regulate cyberspace are likely to increase.  As transportation infrastructure in the US deteriorates, government entities and agencies will likely allocate more funding toward these sectors.  Party ideology will likely exert great influence over the shape of new tax policies, as well as reform.
  41. 41. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 40 Social The current generation of young people are extremely visually focused and driven:  A large trend in today’s world is the visual culture that is being created by the current younger generations.162 These people learn through images and think visually. Around 65% of all people are visual learners,163 meaning they associate information with the images they see. They prefer using pictures, colors and maps.164  This visual generation also requires more visual technology in their shopping experience.165 Many of them take pictures of products they want to purchase and around 45% of these people would like to be able to take a photograph of the item and then be directly linked to the product on the company’s website. Another 32% would like to be able to upload the image online and then be shown very similar items.  Image is highly important to the visual generation and with image comes branding. It takes only 0.1 second for humans to form a lasting impression of a person they see.166 What is more, around 45% of employers check social media of their potential employees and form their opinion based on what they see without even talking to the person. People want to be connected by social media which heavily influences the public on a daily basis:  Over two billion people in the world have social media accounts.167 Additionally, over 60% of all Americans have accounts with people even as young as 12 years old being a part of this group.168  Social media also influences the purchasing of goods. From a pool of Facebook users, 47% said that the portal have influenced their purchasing behavior.169 Social media users are directly targeted by ads that are adjusted to what they browse on the Internet and what websites they go to. Social advertising is present not only on Facebook but also on Snapchat, Instagram, Twitter and various other social media mediums.170  While it used to be that YouTube was the main source of posting and watching videos, now Facebook will take over that function. At the end of last year, the amount of video’s views on Facebook exceeded the amount on YouTube.171 Social Network Users in United States. Source: http://tinyurl.com/os2jojq
  42. 42. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 41 People are heavily dependent on connecting and utilizing mobile devices for social and day- to-day purposes:  Around 90% of all Americans own a mobile phone and 64% of American adults own a smartphone.172 Many of them use their devices to browse the Internet and 7% are smartphone dependent. Another 29% of mobile owners say that they cannot live without their phones.  People use their mobile phones heavily to go on social media. In 2013, around 48% of Facebook users and 60% of Twitter users were mobile.173 In addition to this, Facebook reported that 49% of its revenue comes from mobile apps.  Many online stores offer apps for mobile phones so people can purchase items without using their computers. In 2012, $25 billion was spent on online purchases with the use of mobile phones and tablets. According to data from 2014, 50.3% of online purchases were placed with the use of phones.174 Implications: Social media has a great impact on the luxury good industry. Many people follow or “like” pages of their favorite models or brands. This is also where they like to read updates about new collections, new store locations, and what is generally going on in the industry. Coach Inc. has to stay on top of being a part of this community and also be able to connect through it with customers. Considering social media, especially Facebook, influences purchasing behavior, it is a good place to advertise products and reach a great amount of current and potential customers. Coach Inc. has its accounts on Facebook, Instagram, Twitter and LinkedIn. However, there is no mobile phone app for the brand. As current generations have been purchasing more with the use of their phones, it puts Coach Inc. a little behind the other brands. On the other side, the brand has a very accessible mobile version of their website.
  43. 43. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 42 Technology The popularity of wearable technology is growing rapidly:  Wearable technology has become very popular with fitness. This includes wristbands or smartphone apps, which help keep track of the daily physical activity.175 Such devices make people more aware of what is happening to their body while they are working.  Wearable technology will likely also heavily influence health care since new wearable devices will be able to measure vital signs that will provide basic information to doctors.176 In cases such as cardiac disease or resting from a torn ligament, the wearables will show the recovery and relapse possibilities.  Furthermore, consumers show interest in even some specific niches of wearable technology. An example of this being the researchers from the Human-Computer Interaction Group at the University of Rochester recently developing a device that will give feedback to someone who is publicly speaking.177 The device records the speaker and analyses the way they talk based on the speaker’s volume and speaking rate and then gives feedback to the wearer. The internet has become an inseparable part of people’s lives:  The internet has been expanding more and more beyond typical devices such as computers, tablets and mobile phones.178 People can now expect to see it in cars, television sets, and even field equipment. These are all every day home and business devices that can be accessed by almost everyone.  Internet of Everything has a great impact on businesses. It is changing how they operate as it will impact not only technology but also the strategy of the business. 179 This will also require new jobs because these businesses will require more skilled IT professionals.  This phenomenon will impact security matters. Many every day devices operated with the use of internet can create an open Business Insider Estimate on Number of Devices with Access to Internet over next 4 years. Source: http://www.businessinsider.com/internet-of-everything-2015-bi-2014- 12?op=1
  44. 44. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 43 door for hackers to get onto a Wi-Fi connection and then gain access to sensitive information like financial records and data.180 Having the home devices with internet capabilities brings a huge threat to anyone’s personal security information. Cloud storage is becoming the place to store information and files:  Cloud storage is now an integral part of people’s lives with different services such as Dropbox, Google Drive, ICloud, Box and OneDrive providing storage “on the cloud.”181 Cloud storage can be accessed from personal computers, tablets and even smartphones.  Business from the United States spent $13 billion on cloud storage in 2014. By the end of 2015, this amount will reach $180 billion.182 Businesses utilize cloud storage because it gives better insight and visibility to employees. It also eases the collaboration and allows for a quick development of new products and services.  Cloud storage allows people to access information from anywhere. In order to be able to access files or documents, it is not necessary to bring personal devices anymore as cloud storage allows digital files and documents be stored and accessed from anywhere with an internet or data signal rather than on a hard drive.183 Strategic Implications: Coach Inc. can use the internet to its advantage and produce fashionable, everyday wearable devices. This would allow the brand to reach new groups of customers who want to be up to date with technology, but also be fashionable at the same time. Wearable luxury technology would combine being practical and stylish. Furthermore, cloud storage could be used to share information among manufacturers around the world to improve the communication and increase the efficiency of the company. Manufacturing sites of coach are spread through four different continents with different times zones which can make the flow of information difficult, but cloud storage can easily combat this.
  45. 45. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 44 Economy It is likely the global economy is facing slow growth and shifting of the world’s economy rankings:  On April 9th, 2015, the head of the International Monetary Fund (IMF), Christine Lagarde, warned that the global economy’s current state of low interest rates risks the outlook of a long period of weak global growth. Global growth is roughly functioning at the average of the last three decades, but several of the world’s largest economies are likely to be shielded from some of the backlash. IMF economists “expect stronger growth in the U.S. and U.K. and improving prospects for the Eurozone.”184 With the U.S. dollar making strong currency movements against the euro and yen, European and Japanese central banks are flooding their economies with cheap cash but the IMF advices these easy-money policies continue to combat the low growth prediction.185 186  Currently, the U.S. remains a strong leader of the largest economy in the world, followed by China, Japan, and various European countries. With the shifting global economy and possible growth slowdown, future GDP predictions will shift some of these standings. Bloomberg estimates that, 15 years from now, the U.S. will remain the global economic leader, but by a significantly smaller margin. China’s GDP is expected to grow over two times its current size followed by India. Though India is currently has a much lower GDP and ranking, its largest and youngest workforce in the world is likely to boost India into the top 3 countries. Japan was ranked as the fourth largest economy by 2030, down from its current 3rd place position. The rest of the rankings include several European nations scattered among various other counties.187 Predictions for the world’s largest economies in 2030 and their current, 2015, GDPs. http://tinyurl.com/oprpuvc
  46. 46. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 45 Unemployment remains gradually dropping and consumer spending is expected to take off throughout the year:  The current unemployment rate in the U.S. is being held at a steady 5.5% and this March of 2015 reported hourly wages raising 0.3% in the private sector. After the past several months saw an average of 200,000 new jobs being created monthly, this March concluded with only 126,000 new jobs. Wall Street blames the slowdown on relaxed business investments, the harsh winter, and plunging oil prices which weakened economic growth. Nonetheless, the economy is expected to regain some momentum throughout the year as the American energy industry is adjusting to the low oil prices and unemployment has not risen.188  The U.S. economy and its GDP is heavily dependent on consumer spending and economists estimate 2015 will see strong consumption growth. This is due to Americans saving money from the dropping oil prices and outstand consumer credit has grown for the past 42 months. While the harsh winter put a damper on consumer spending, the warming weather should reverse its economic effects. The other issue is the low wages that hurts consumer spending. Wages have remained steadily low due to changes to the unemployment-insurance system and the behavior of firms. Again, the U.S. economy is expected to pick up as the past month’s performance is seen as a “blip” overall.189  Economists believe the dip in consumer spending is simply due to more people saving their money. This would act as a coiled spring as these savings will soon be put back into the financial system with people buying new houses, technology, factories, etc. Consumers are expected to start spending their savings on various goods and services as the year progresses.190 Chart from the Department of Labor Statistics depicting the unemployment rate over the past 5 years. http://tinyurl.com/mw82ldc
  47. 47. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 46 The U.S. dollar is continuing to strengthen:  The U.S. dollar has grown significantly over the past year. Since May, while the Euro has weakened, the dollar has risen 24% and is estimated to further 2015 economic growth to exceptional heights. Largely international countries are in the position to benefit from looking for new products and customers in emerging global markets. With a strong U.S. backing, companies can “strengthen their core business in the United States while simultaneously entering new geographic markets, acquiring new technology and customers, and obtaining economics of scale overseas.”191 The strong dollar will also increase mergers and acquisitions, consumer confidence, and encourage favorable credit markets.192  With the dollar’s continued rise against the Euro, the U.S. economy is expected to pick up the pace after its winter slowdown.193 While data points to slowing U.S. growth, market participants view the current economic state with a positive outlook. A strong U.S. dollar signals a solid economic foundation and fundamentals. The dollar should not rise too quickly though or it could hurt stocks as companies would not have enough time to react, but it currently is rising at a gradual pace.194 Strategic Implications: The economic implications for Coach and the luxury goods industry are extremely important to consider in order to stay on top. If the global economy slows down, luxury good spending will likely decrease around the world, but within individual countries, results may differ. Since the U.S. is still predicted to remain in the number one slot, it would be beneficial for Coach to focus their attentions on the U.S. and look into focusing on other countries that are not just currently strong, but rising, like India. While Coach currently has many international locations in Europe, Asia, and the Middle East, they are not located in India while some of their competitors are, including Michael Kors. If Coach is trying to expand into countries that show less potential growth, then they will likely be missing out on business opportunities and consumers interested in the luxury goods market. Chart showing he dollar index surging since mid-2014 through 2015. http://tinyurl.com/kpk78m8
  48. 48. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 47 While consumers have not been spending much within the last month, this is expected to change which means Coach can expect some of that spending being geared towards their products. With unemployment steadily dropping in the long-run and remaining stable in the short-term, sales and profits are also likely to increase. One of the biggest complaints from employees is the wages not increasing so Coach may want to consider the benefits of having happy, hard-working employees who are paid a proper wage, though labor costs should still be kept low. A strategy to increase sales, keep labor costs low, and minimize costs would allow Coach to use the economy to their advantage. The strengthening dollar also encourages a good outlook for the economy and consumer spending. As Coach is an international business, they could benefit from looking for new products and customers in any emerging global economies like India. A strong dollar makes imported goods cheaper and exported one more expensive. Any corporations selling goods will be negatively impacted by the strengthening dollar as they lose export and pricing power.
  49. 49. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 48 Ecological Pollution in the industrialized world is becoming more of a concern for both businesses and governments:  With an estimated 1.2 million people in China who prematurely died due to increased pollution from industries, companies all over the world are looking to change business practices. Leaders from around the world are focusing on regulating high-polluting industries, promoting clean energy within all industries, and researching new sources for renewable energies.195 Industries use approximately 4 million pounds of materials to provide American families with all the products they need for one year. These items are packaging, advertising, shipping containers, and they cause a lot of unnecessary waste in America. Additionally, scientists estimate that companies around the world waste up to 2 million barrels of oil per day due unnecessary lighting.  While Americans tend to think of only physical pollution, other forms of pollution can have many adverse effects on the environment as well. Noise pollution has a direct link to decreased health including stress-related illnesses, high blood pressure, speech interference, and hearing loss. Light pollution effects the natural habitats and lifecycles of wildlife and can also be a catalyst to smog buildup. 196 The EPA is drafting a new rule that will reduce power plant carbon emissions to 30% by 2030. This new rule could cost many job losses and harm the US economy, but the US Chamber of Commerce is debating this statement with the EPA.197 Graphic showing the 2010 air pollution levels and projected 2050 air pollution levels based on current trends. The light blue circles represent 2010 data, the dark blue circles represent projected 2050 levels, and the dotted red circles represent the World Health Organization’s recommended maximum levels. Source: http://widgets.weforum.org/outlook15/06.html
  50. 50. C o a c h C o m p e t i t i v e I n t e l l i g e n c e A s s e s s m e n t | 49 It is likely that green certified and LEED certified buildings will become more common for industries in the next few decades:  Green buildings are becoming mainstream in the industrial world. On average, green buildings cut greenhouse gas emissions by 50%, reduce solid waste management related emissions by 48%, and lower transportation related emissions by 5%.198 Additionally, sustainable buildings improve workers’ morale and property values. Investors want sustainable buildings to achieve a higher return on investments, and green buildings cut down costs through energy efficiency, decreasing water usage, and achieving longer lifespans and less maintenance.199  Firms are shifting their focus toward green buildings and processes, and 51% of businesses plan to have 60% of their work at green levels by 2015. Ultimately, consumers and the market determine the decision to build green buildings and establish green manufacturing processes200 Many companies are slowly moving from a paper filing system to a digital filing system.  Industries are moving towards an all-digital record keeping system. This paperless systems helps to decrease backlogs and delays for businesses.201 Businesses are also moving towards paperless systems to streamline business workings and reduce waste.202 Almost 80% of companies are taking steps to reduce paper usage. Cost savings mainly drive these conversions to paperless systems. While the movement is slow and difficult, paperless systems will become more realistic in several decades with a more digital based work force.203 Biodesign Building a Tempe Campus. http://tinyurl.com/q3mpzfy

×