Madiha Zaib (4849) & Sajid Ali (4759)

Case Study of Liz Claiborne

What actions by others in the industry might be of greatest concern to Chazen? Ans: Liz Claiborne is in retail garments business sector. This sector is an ever changing sector. Customers preferences changes due to many factors including social, economic, ethnic, educational factors and many more. Even everything held constant, time is a great factor. Wit h time, fashion changes. What is hot cake today can be obsolete tomorrow. Modern fashion of a decade ago is considered as heck today. Customers preference thus is the most important factors. Thus the company who will be a b l e t o be s t s u it t he c u s t o m e r s w i l l b e s u c c e s s f u l . T h e r e a r e v a r io u s m e nt a l it i e s o f customers like price conscious, qualit y conscious, fashion conscious, looking different etc. In addition during the 1990 era, the war of IRAQ slummed USA economy forcing many to cut their live standard. In addit ion people were shift ing towards more casual fashion and work place was accepting these casual dresses in the era. Thus more and more people were searching a fashion which fit their new demand. However Liz was unable to supply t hese new products to it s custo mers as it was designing simple, straight forward dresses for working women. Thus the main concern of Chazen was to analysis the environment of the econo my and fashion trend and fit the strategies accordingly. Historically USA is full of fashio n designers products that works for the best fit and t h e r e a r e s o m e c o s t l e a d e r s t r a t e g i c f i r m s l i k e w a l - m a r t . T hu s L i z C l a i bo r n e ha s t o analyze the factor which will be profitable for Liz Claiborne as the environment does not seem too favorable. Besides, Liz Claiborne mainly pursues focus strategy that is to design simple, straight forward fashion designed for women. It has a niche market of working women. However the roll was changing and people were searching something that will fit both home and office. Thus any cost cutting by compet itors will switch the cost conscious customer who is now earning less. In addition failing to maintain present trend might be prime reason to switch customer from Liz to fashion house. 3.2.2 Comment on the internal consistency of what is done strategically at Liz Claiborne. Do goals, strategies, administration and strategic control seem to be in harmony? Ans: To comment on whether the goals, strategies and administrat ion are in harmony or not, we need to sort out the goals, strategies and internal control system. Goal T o b r i n g w o m e n i n t o u c h w i t h themselves, no t t he i r d r e a m s a n d d e s i g n s i m p l e , straight forward fashion thats designed for women who have more important things to think about than what to wear. No gimmicks. No surprises Strategy

In the co mpany's 1997 annual report, Chairman Paul Carron noted that the company was focused intent ly "on leveraging and extending our core competencies, emplo ying ne w t e c h no lo g i e s a n d d e vo t i ng c e a s e l e s s e n e r g y t o m a k e u s t h e w o r ld ' s p r e e m i n e nt designer and marketer of fashion apparel and accessories."This was done pract ically by installing retail feedback software named SURF. They do c o l l e c t a l l t h e s a l e s a n d d i s t r i b u t io n i n fo r m a t io n f r o m t h e i r i nt e r n a l S U R F s y s t e m software. They monitor the pattern of choice from sales data and can gather valuable s a l e s a d j u s t m e nt fo r d i f f e r e nt d i s t r i b u t io n s ys t e m . I n a d d it io n t h e y c o l l e c t p e r s o na l int erview of customers to get their feedback because they belief that technology can supplement but cannot replace the human. Thus they collect their customers thinking by personal interview. They care and listen to customers for increasing customers loyalty. In addit ion, they bring the fashion that customers want. From all the above they make short term and long term demand forecast and make the fashion accordingly Administration and strategic control A sophisticated computer system, known as System Updated Retail Feedback (SURF), keeps the company in touch with what is selling and what is not, around the country, around the clock. A $10 million system of IBM computers is used to ' crunch information and produce bound volumes at the end of each week. Liz Claiborne keeps in close contact with retailers, both to make sure they are handling m e r c h a nd i s e p r o p e r l y a n d t o f i e l d q u e s t io n s a n d c o n c e r n s . T h e c o mp a n y m a i nt a i n s c o n s i s t e n c y i n t h e pr e se nt at io n o f it s mer c ha nd is e t hr o ug h a gr o up o f a bo ut 2 1 consultants who are responsible for visiting department stores to ensure that clothes and displays are arranged uniformly according to "Liz map" diagrams. From all t he above, it s clear the goal, strategies and control are in harmony. Internal management, goals and strategies have no conflict and set towards same outcome.8

3.2.3 What collective strategy opportunities might exist for Chazen to consider? Ans: The market is ever changing for textile products due to change of economy, demography, e d u c a t io n, g lo ba l i z a t io n a n d m a n y. W e i d e nt i f i e d m a n y o f t h e p r o s p e c t w h i c h w a s c h a ng i n g d u r i n g t h e e nd o f 2 o t h c e nt u r y n a m e l y 1 9 9 0 a n d a ft e r w a r d s . D u e t o t ho s e changes, the strategy needed to be changed accordingly. Change of economy. During t he 1990 USA engaged war wit h IRAQ and this had adverse effect on econo my. Government spent heavily on the war creating pressure on tax payers as well as national development budget. The war also created hostile relationship with many courtiers and as a result exports of USA product declined. All this issue created a new problem and that misfiring of employees by many large corporations. Lots of people lost job and demand for upscale product declined. Many focused on budget products and this created new market segmentat ion and that is budget customers. This segment was born from t he exist ing market and a result existing market size declined for braded products. Change of Taste

Madiha Zaib (4849) & Sajid Ali (4759)

During 1990 customers preference started to change towards casual dress. Lots of people wanted to have something which will be ok with home and office both. Liz had serious problem with the theme as its market analysis, infrastructure was based on only market segmentat ion. Thus Liz needed a more dynamic system than before. Liz needed a good strategy which will cope up with the changed market expectation. Historically Liz was fo llowing focused strategy where it focused on specific market segment. Its marketing proposition was considered as niche marketing. However Due to change of the economy and taste of customers, Liz needed a new strategy. New Collective strategy According to change of economy and tastes of customers Liz had two new opportunities a s w e l l a s o ne t hr e a t . O p p o r t u n it i e s w e r e n e w m a r k e t s e g m e nt a t io n. T h e g r o w t h o f budget customer meant, Liz had to go for cost leader strategy. In addit io n they needed product line diversification. Product line diversification Increa s ing ly peo p le wer e mo ving t o wards ca su a l dr ess. Ma n y fa milie s ha d w o r k i n g husband and wife who had less time to shop on separate location. They wanted one stop solution. So Liz could diversify its product for men and children. Cost leadership strategy Imports become less costly and already Wal mart was discounting its product using less costly imported products. Thus Liz needed to fight with the strategy by cutting cost. This two combined strategy would cut cost of Liz and also create synergy. By adding products it could expect expanded market size with reduced distribution cost. . Conclusion The industry involving high fashion and designer clothes is as tough and competitive. It s a n e n v i r o n m e nt o f c o nt i n u o u s a n d u n p r e d i c t a b l e c h a ng e . W h i l e r e c o g n i z i n g t h e tradit ion of Liz Claiborne, Chairman Jerome the changing industry dynamics must be c o n s i d e r e d . T h e f a s h io n i n d u s t r y i s n 't a bo u t c lo t he s a nd d e s i g n s a t a l l : i t i s a bo u t informat ion. It is about people's need to establish t hem in a social pecking order and associate with a part icular social group. Fashionable clothes are communicat ion devices; they make a statement about the wearer, identifying them with a group and their position within a group