Example Of Organizational Strategy Analysis: Ralph Lauren Critical Thinking

The enterprises of the modern world survive in a double-edged corporate atmosphere, which while being conducive to their development, demands development at a breakneck speed. Moreover, survival in the current market dynamics demands aggressive growth not only with respect to external demands but also with that to the internal health of an organization. This paper studies a popular organization in the retail sector, that is, Ralph Lauren. The company’s products include, fashion clothing and accessories, jewelry, fragrances, shoes, home goods and appliances and it has made its presence felt across continents (Ralph Lauren). The company has also provided its custom-made products for the film industry and for the 2012 London Olympics (Forbes, 2012). This paper analyses Ralph Lauren Corporation since its success rate makes it an interesting company for business analysis. The aim of this study is to analyze the various strategies of the organization that have encouraged survival and growth in the present economy. For the purpose of this paper, the Ralph Lauren products considered are fashion clothing and accessories, fragrances, and shoes.

The Organizational Environment

Ralph Lauren Corporation, LLC. is a prominent American lifestyle and fashion brand with an international reach and is associated with luxury, comfort, quality as well as its unique designs. Its total value for fashion clothing and accessories, fragrances, and shoes as of 2010 was estimated to be 3.117 billion USD and it is ranked 42nd in the Forbes list of top companies in the United States (Polo Ralph Lauren Corporation, 2010). For the first fiscal quarter of 2013, the 1.6 billion USD, and this is a four percent increase over the same quarter last year (Forbes, 2012). The company was formed by its titular founder in the year 1976, whose value is currently estimated to be 6.5 billion USD (Forbes, 2012).

Industry Assessment and Competition

While Ralph Lauren is a leader in this industry, in terms of pricing and designs, its competitors are Coach Tifinay & and Co. Almost 36 percent of Ralph Lauren sales revenues for fashion clothing and accessories, fragrances, and shoes come from its international sales, of which 22 percent is from Europe and 14 percent is from Asia (Cheng, 2012; Wahba, 2012). However, its sales for these products in the Euro Zone have slipped in the recent past and this has become matter of concern and its shares have recently gone down by 2.5 percent (Wahba, 2012). The company’s most close competitor, Coach, which is ranked 51 in the Forbes list of top American company, has also experienced a downfall in its share values recently (Wahba, 2012). Similarly Tifinay & and Co. also experienced a fall by 2.1 percent (Wahba, 2012). Nevertheless, Coach states a healthy growth in its North American sectors and in China, and this has increased its share value by 7 percent (Wahba, 2012). No such increase has been experienced by Ralph Lauren. Although Macy’s, which retails Ralph Lauren’s products does seem to be excessively concerned, but this is probably because Macy’s only attends to customers in the United States (Cheng, 2012). In addition Macy’s states that other global brands it carters to, such as Nike, which is a competitor to Ralph Lauren in its fashion sports shoes, have also reported a drop in their sales (Cheng, 2012). It is possible that Ralph Lauren’s dependence in the European market is the cause of its problems, because the Euro Zone is going through crisis. However, Ralph Lauren also has a presence in the North American markets and in the Chinese market, so the lag in its sales compared to Coach’s indicates of a marketing lag (Ralph Lauren). This is a significant factor as both Coach and Ralph Lauren are known for their American roots through their brand names. Ralph Lauren executive have blamed market volatility for the recent downs, and state that it has also reported a 10 percent growth in the North American markets, but the slowdown in Japanese, Korean, and European markets have affected its sales revenues and growth (Cheng, 2012). It has also been noted that Ralph Lauren’s discount outlets seem to be functioning much better than its full priced outlets, and thus, this is an indication that customers are being conscious about monetary value of products (Cheng, 2012).
Another competitor, Fossil, Inc, which is much smaller in size compared to Ralph Lauren has shown a tremendous surge in its share with a 32 percent growth, becoming the best performing company on the Standard and Poor 500 list (Cheng “Fossil proves skeptics wrong,” 2012). This was in spite of the fact that the company was aware of the slowdown of markets in Europe and Asia and had issued a warning to that end recently (Cheng “Fossil proves skeptics wrong,” 2012). However, only recently, in May 2012, the company’s shares had dropped by 38 percent because of low sales in Germany and Korea as well as in Italy and Spain (Cheng “Fossil proves skeptics wrong,” 2012). While this could be a growth projected because of the previous downfall of the company shares, the increased sales in all its European and Asian markets in face of the competition’s significantly decreased sales shows that some astute marketing tactics have been at work (Cheng “Fossil proves skeptics wrong,” 2012). In fact, Fossil’s sales from Europe account for almost one third of its earnings and its sales in Asia accounts for almost 15 to 20 percent of its earnings (Cheng “Fossil proves skeptics wrong,” 2012). Thus, its business interests in Europe and more than that of Ralph Lauren. Similar growths have been reported by organizations such as Calvin Kline, Guess, a competitor to Ralph Lauren in its Rugby sector, and Tommy Hilfiger (Cheng “Fossil proves skeptics wrong,” 2012). The fact that Calvin Kline is a competitor to Ralph Lauren in its Men’s Purple and Black Label, Ralph Lauren Collection and Women’s Black Label, Blue Label (Men’s and Women’s), and Home Decor, Bath, and Bedding sections is a clear indication of Ralph Lauren’s falling market shares. It is notable here that these brands along with their place in the industry as luxury products also have iconic products in their list. For instance, Calvin Kline is known for its jeans and Fossil is known for its watches. Thus, according to these companies, “This time last year, European economy was in a free fall. Customers completely pulled back on shopping, but now the shock of it was gone. People are getting that international isn’t dead yet and it still has potential for upside” (Cheng “Fossil proves skeptics wrong,” 2012).

Company’s Brand Building Strategy in its Market Segments

The company states that it uses advertising and marketing techniques in a unique combination to deliver its products across the globe (Growth Strategies). If the market is segments by sales outlets, the company has been effective in promoting retail sales. It continues to focus on its retail outlets as a significant annexation of its brand name (Growth Strategies). Because the company’s has tasted success with its privately owned specialty retail outlets, it has applied its business concepts to its wholesale dealings (Growth Strategies). Thus, the strategic formula it follows is presenting an assortment of merchandise with eye-catching presentation and quality consumer services (Growth Strategies). It intends to continue expanding and present its lifestyle products in newer categories in untapped markets across the world (Growth Strategies). Furthermore, it also produces certain exclusive wares that are available for a limited period of time (Growth Strategies). In order to achieve these goals, the company employs experienced and skilled marketing support personnel and seeks out leaders you can guide the company with expertise (Growth Strategies). Thus, by integrating the right kind of merchandise with the right of selling support, it achieves tremendous success (Growth Strategies). However, it seems to have not been able to do equal justice to its online retail sales, and this is an important market segment in today’s business environment, especially in the current market environment. In comparison, Fossil, Coach, and Gap have reported superior online sales in the past financial year (Growth Strategies).
Ralph Lauren clearly focuses on its international ventures and plans to expand itself with a strong infrastructure as well as with a presence in the e-commerce world (Growth Strategies). One of the most innovate stances taken by the company of late is its venture into the digital world. Not only its e-commerce ventures but also its fashion shows using technology have set it apart. For instance, in 2011, the company held a 4-D light show for inaugurating the launch of Ralph Lauren e-commerce in the United Kingdom (Fast company staff, 2011). In order to hold the show, the companies worked with complex architectural light-mapping methods and build a holographic video for eight minutes which was shown on the front of its store (Fast company staff, 2011). The illusion created by the 4-D was such that the building vanished and giant 3-D pictures of models, polo players on fields, and Ralph Lauren were shown (Fast company staff, 2011). The 4-D effect was achieved by spraying Big Pony cologne on the gathering (Fast company staff, 2011). The company also takes pride its innovative abilities in advertising and store designing, which are not outsourced (Knowledge@Wharton, 2010). However, it has been pointed out that Ralph Lauren has changed its stand in entering the European market, so that its products retain their appeal in European fashion capitals, such as Paris (Knowledge@Wharton, 2010). It seems like Ralph Lauren has begun to realize the importance of online sales as a market segment.

Recommendations

It is interesting that in this date of technology, Ralph Lauren continues to place maximum emphasis on its retail marketing. This is indeed interesting because being a high-end lifestyle product, it presence is felt in a locality with its glamorous retail shops. Its exclusive products further add to its persona of a high profile luxury brand. Its focus on the international venture is important for it to maintain its position as a global leader in the fashion world. This is because in many markets across the world, the purchasing capacities have significantly increased. Moreover, countries like India, China, and Brazil have a large young population with a strong buying power and thus, without an international focus, the company could lose out on its current position. Notably, Ralph Lauren does not have any outlets in Brazil and India although these governments have opened their doors to foreign investment in the retail sector. While it is still working well with its innovative digital ideas and e-commerce ventures, the company must analyze its marketing strategy in Europe. While Fossil is definitely not a direct competitor for the organization, it shared many products that Ralph Lauren also produced. Thus, Ralph Lauren must study Fossil’s resent marketing ventures in the European market. It is also been noticed that Ralph Lauren’s retail outlets in Paris, etc., have moved away from the American theme in an attempt to appeal the European populace. The effectiveness of this strategy must be evaluated. While the company is known to designs its own store outlets and has a strong focus on them, it must analyze the fact that if it is losing business because of e-commerce hindrances. Furthermore, the company must take a stand on providing discounts in situations like Europe’s, where the financial crisis takes off the public interest from luxury products. Clearly, the company has a commendable brand strategy, but as of now, there seems to be a discrepancy between its understanding of the European and Asian markets and the demands of the consumers in these markets.

References

CHENG, ANDRIA. 2012. “Ralph Lauren, Macy’s tell different tales.” January 26, 2014 http://articles.marketwatch.com/2012-08-08/industries/33091919_1_ralph-lauren-retail-sales-club-monaco.
CHENG, ANDRIA. 2012. “Fossil proves skeptics wrong.” November 28, 2012 http://www.marketwatch.com/story/fossil-proves-skeptics-wrong-2012-08-07/.
Fast Company Staff. 2011. “Ralph Lauren’s $13 Billion Bet.” January 26, 2014 http://www.fastcompany.com/1769043/ralph-laurens-13-billion-bet.
FORBES. 2012. Ralph Lauren. January 26, 2014 http://www.forbes.com/profile/ralph-lauren/.
GROWTH STRATEGIES. Ralph Lauren. January 26, 2014 http://phx.corporate-ir.net/phoenix.zhtml?c=65933&p=irol-growthstrategies.
Knowledge@Wharton. Leadership and Change. January 26, 2014 http://knowledge.wharton.upenn.edu/article.cfm?articleid=2484.
PHIL WAHBA. 2012. “Coach posts big gains in China; U.S. sales pick up,” Reuters. January 26, 2014 http://www.reuters.com/article/2012/10/23/us-coach-results-idUSBRE89M0NL20121023?type=companyNews.
“POLO RALPH LAUREN CORPORATION.” 2010 Form 10-K. United States Securities and Exchange Commission January 26, 2014 http://www.sec.gov/Archives/edgar/data/1037038/000095012310055188/y81773e10vk.htm.
RALPH LAUREN. January 26, 2014 http://www.ralphlauren.com/frontdoor/index.jsp?omniturecode.
Figure 1. Ralph Lauren Corporation Chart: Revenue Quarterly Year on Year Growth
Source: http://ycharts.com/companies/RL/chart#series=type:company,id:RL,calc:revenue_growth
Figure 2: Days Sales Outstanding (DSO)
Source: http://www.fool.com.au/2012/07/investing/check-this-to-find-out-whether-ralph-lauren-is-going-to-bomb/