Strategic management is the planning, monitoring, and analysis of all the necessary needs of an organization that helps to meet the goals as well as objectives. The chosen company for this report is Havaianas which is a Brazilian company which deals with footwear. The company operates its unit at a global level and also offers the product at such cheap rates as compared to their competitors. The report's main aim is to describe the external as well as the internal environment through PESTLE and SWOT analysis. The further report also describes the current strategy through Porter's five force model and also recommended some future strategies for the company's future performance.
1.1 History of a company
Havaianas is a slipper produce Brazilian company founded in early 60s by Alpargatas but in appear in market on 70s with high quality of product offering. The company have their own design and unique products and due to having a simplicity and low price and that is why the sandal become popular in the Brazil social classes.
1.2 Vision and Mission
The company wants to work with the employees and producing the best quality of workers and provide the positive working culture so that it will help them to reach at global level.
2.1 External and internal analysis
Havaianas deals with at global level and offer best variety of products to their customers. There are many factors that affect company internal as well as external environment. In order to determine the external analysis of the company, it uses PESTLE analysis which help to determine the exact external market situation and for knowing the external or macro environment it is quite necessary to analyse some variables such as social, cultural, demographic or political situation. Moreover this are as mentioned below:
Political Factor: the condition of Brazil is not stable from last many years due to the events which are happened in last years. Hence, a result comes through a president's impeachment and the corruption involved that further leads to raise the demand of law and policies (Bush, 2017). Due to this reason, this made difficult for the companies to keep investing as well as interfering with the customer's purchasing power. While on the other side, due to growing liberalization of foreign trade as well as frequently opening of trade barriers that also allowed to develop new economic groups.
As Havaianas supply their product at global level and this further required to extend international supply chain and also have to follow some political procedure. Even each and every country is abide from their own taxation system. Therefore, a company needs to follow all the rules as well as regulation if it deals with third level party.
Economical factor: This factor also consider the population growth as well as the demand of their customers in order to make sure that production of the company is enough to attend the needs of all market. If there is a minor fluctuation in the currency of the Brazil then it raise the increase of Chinese products and it further leads to decreases in exports. Such that if the global economy fluctuate then it directly affect the manufacturers company (Cope, 2018). Havaianas is an labour based company and it also faces some challenges related to import or export of goods and as there is low in the growth of economy it directly affect the company's overall profit because there is a less spending of their customers purchasing power.
Hence, it is quite necessary for the company to keep changes their pricing strategy as if there is sudden fluctuation in economic market. This will be helpful for the company to raise their profit margin and maximizes the sales.
Social factor: It is another factor that affect the company's overall productivity level as well as profitability. As per the Social- cultural aspect, there is a growing concept with the brand image of the company. In this society, people are judged through their appearance and therefore it is consider the main deciding factor of a choice regarding the job interview. And this factor causes worry to the people regarding footwear so that they needs to follow the fashion trends.
It has been analysed that people of Brazil are quite health conscious and as the market or current trend changes this will directly affect to customers buying power as well as their lifestyle too (Flores, 2018). On the other side, there are many programs which are conduct by Havaianas in order to let people know about new offers and products. Havaianas also support in Olympics and this also allow them to purchase marketing opportunities and catch eyes of new audience in a world.
Technological Factor: it has been analysed that new technology as well as advance technique will help to invest into new product development. Havaianas also deals with online as well as offline mode and to attract new customers towards them it is quite necessary for the company to invent new products. As the new technologies are developed and this are also associated with the production chain whose main aim is to maximizes production cost and also maximizes the quality of their final products such as new technological that also impact upon adsorption, raw material processing etc. Hence it has been analysed that as the development of technologies are involved it directly affect the company's overall performance and as a result, it helps to maximizes the profit.
Havaianas is also operates its unit in online mode and it is also quite necessary to keep using all new techniques into their market so that it will help to maximizes the profit margin.
Legal Factors: Legal factors for Havaianas is in the regard of intellectual property rights and it is also mainly because of the company is high copy in a world. Moreover, the company also affected through the suppliers that need to adapt all the norms in their constant process of alteration (Coelho, 2016). In addition to this, there is a increasing demand of their consumer protection law and it can be seen by a quoted company to exploit and then it helps to enhance the competitiveness and also makes sure the differentiation. Havaianas also have their unique design and it also defend their right against the infringement and being a brand image in market, the company needs to have protection for their product and also have a trademark protection that help to safe from other.
Environmental Factors: Havaianas also take some initiatives in order to protect their environment such as selective collection, control of waste generated and adequate transportation, also takes some action to reduce energy and water consumption, recycling of PVC waste in a production process itself. The company also support and also add the value so that it helps to raise the brand image in market. Through such activities, the company also attract new customers and retain their old ones.
In order to determine the internal market of the company, SWOT model uses which help to determine the company's strength, weaknesses, opportunities as well as threats. This are mentioned below:
Strength: Havaianas is one the top and leading brand in market. The company operates its unit in various country because of having such a beautiful design. Company offered different styles of footwear at such a cheap rates to their customers and as a result this factor helps a company to attract wide range of customers towards them. In addition to this, Havaianas also focus on extremely strong relationship with their distributors and franchisees abroad. Another key aspect for its strength is provide great discount, low cost strategy which further combined with differentiation in outlook (Girão, 2015). Company have an efficient and stylish internet store as well as website which offers good material of footwear with high quality at cheap rate.
Weaknesses: Company faces struggle to build up a brand image because of lack of brand awareness and the products are also informal and at initial stage the company offer their product with such a cheap quality and have no labour who help them in their production. Company also suffer from their people negative reviews so that it affect the brand image in market. Weak management system of Havaianas also did not lead to further progress of a company and the cost structure of a company is also not perfect such that there is up and down in a prices of their products. In addition to this, a quoted company also have weak supply chain and as a result the products are not supply to the main market which directly affect the profitability of a company. Hence, this weaknesses needs to overcome as the time passes.
Opportunities: The company has an opportunities such that it wants to expand their current business at further level of success. Therefore, it is quite necessary for the company to operates their business at low cost structure as compared to their rival company. Even by adopting the new technology as well as introduce the new product will be helpful for a company to operates its business in further level. The emerging market of the company also become an opportunities for Havaianas so that it will be helpful to maximizes the current profit sales (Robson, 2017). The international expansion of the company can be also consider an opportunities for Havaianas because the company produces the best quality of products for their customers and as a result, by developing new products in new market will be helpful for them to expand their business at international market.
Threats: For Havaianas, it also faces some threats such as in this high competition, there are so many rivals of the company and as a result, there is a tough competition in a market and this will also lead to decreases the chances of maximization of profit. The changes in taste of the customers is another threat for the Havaianas. In addition to this, the customers consistency is another major issue for the company which affect their overall profitability as well as productivity. As the taste of people also changes and there is a threat in Havaianas to keep producing those products which a market needs. To determine the threat then it will be helpful for the company to produce best variety of products as compared to others.
3.1 Analysis of Current strategy (Competitive advantage or competitive dynamics)
To determine the competitive advantage of Havaianas, porter five force model will be helpful because it helps to analyses the competition market in the country and it consist of five forces which are mentioned below:
Bargaining power of suppliers: It has been analysed that a powerful suppliers of the company will help to enhances the profit of a company and as a result, if the company is charging higher prices of their offered products that it will affect the entire working system of the company (Nguyen, 2017). Havaianas have diverse distribution channel and also have good suppliers that will be helpful to maximizes their current market situation. It has been analysed that if the company have good suppliers then it will help them to increases their current sales and maximizes the profit. For Havaianas, the suppliers group are not depend upon the industry and for its revenue. Such that if the industry is only account for their large portion of their suppliers then it will help to raise the volume of a company and they further switch their cost of changing suppliers.
Bargaining power of buyers: In Havaianas, the buying power of the customers are so strong and as a result, it captures more values in order to forcing down the prices and also demanding the better quality of products as well as services. Even all the expenses of the industry are also profitability. If the company have few power and each of the customers are purchase in a volume such that there are large relative to the size of a single vendor. Even many buyers are also switch their cost in order to satisfy their needs. Buyers are also threaten and produces the industry product. Moreover, the quality of the products or a services are also little affected by the industry's product and as the company have high buying power then it will also help to raise the profit margin of a company (Hine and et.al., 2018). Therefore, to keep enhancing the buying power of the company, it is quite necessary for them to produce best quality of products as compared to their rivals.
Threat of substitute: Company faces threat of substitute and as a result the profitability of a company also suffers. Hence it is quite necessary for the company to best quality of products at reasonable rates. The company faces high substitute because it offer the footwear in an attractive way, so if the relative value of the products are better then it may tighter the lid of an industry. Havaianas faces such because it is the extent to which the price and performance of the substitute are also match the need of their industry's product and on the other side, if the customers are willing to switch their product from another brand then also the threat are high for Havaianas (Yunna and Yisheng, 2014). On the other side, if the company is also have a threat regarding to substitute then it can be overcome by reducing the cost of their products. If you are worried about essay writing service in the UK from expert writers? We provide the best assignment writing service with chat support.
Threat of new entrant: Havaianas faces low threat of new entrant because if any company wants to enter into an industry then it requires high investment which is not possible for many company. Therefore, if the new entrant move into such an industry then it will gain the market share and the position of Havaianas is quite strong such that if there is any barriers of the threat of new entrant then the industry can also have more than one. Moreover, if a new company wants to enter into new industry then there are long procedure which needs to be follow and the investment cost are also high therefore, this factor discourages the new entrant and Havaianas faces low threat of new entrant.
Rivalry among existing competition: the company faces tough competition from Zappos and amazon and many more. Therefore, if the rivals are more then there is increase chances of making the competition tough in market. Even the exit market barriers are also high and at that time the company thinks that they needs to be stay in a market only. As the rival of Havaianas also offer the best variety of products to their customers and in similar way, their rival firms also produces the same variety of products and due to this, there are many companies which offer these products and as a result, in this tough competition, the company also faces this threat of their rival company (Mathooko and Ogutu, 2015).
3.2 Introduction to future strategy
It has been analysed that in today market there is a high demand of Brazilian products and in the world the company only supplied 35% of their global need. The company also import their product therefore, it is quite important for the company to offer best quality of products to their customer so that it will help them in order to raise the market share. There are many future strategy which Havaianas can apply in order to expand their current business as well as develop new strategies which are mentioned below:
- By build the strong and brand image in market, the company should also launch new products in regular basis so that it will keep catching eyes of the new people.
- The key element of Havaianas's strategy is constant and also focus on the product innovation, therefore the consistent global marketing as well as marketing and communication strategy so that they will keep keep responding to customers taste as well as their preferences (Indiatsy and et.al., 2014).
- As the company regularly introduces new sandals with different variety so that it will help a brand to keep catching the eyes of their customers. Even the marketing strategy should also be differ from place to place and the target market for the company will also varies as per the needs of their customers.
- The biggest strength of the company is such that it react fast with the market intelligence then it decreases the chances of taking or bearing the risk management. Therefore, it also help them to maximizes the profit of the company.
- In this high competition world, the company needs to offer best quality of products as per the demand of their customers and therefore, Havaianas adopt competitive pricing strategy in order to expand their current business in a market. By offering low price product then it will also help them to expand their business at global level and even maximises the profit as well as sales (Dälken, 2014).
- If the company offer the best price of product with largest discount to their regular customers and as the company only focus on the innovation and global production only then it will help them to expand their current business and can expand their current business with good marketing strategy.
- Company must opt new and modern marketing strategy which help to promote their business at global level and through such marketing activity, people will let know about their new offers. On the other side, if the company have a good management then it will also help them to achieve the goals and objectives of the company and as a result their target can be achieved in the prescribed way.
- It has been analysed that the company have a brand image in market then through innovative products and services, the company will also deliver the best quality of service (Cope, 2018). For their future, the company needs to adopt all new techniques which are actually used by Havaianas so that they reduces the extra expenses which are incurred during production stage. Having a online business will help a company to saves time as well as labour cost. Therefore, this strategy will be helpful for the company to expand their current business.
By summing up above report it has been concluded that a strategic management have their own importance in every business. For this reason, the report present the PESTLE as well as SWOT analysis in order to determine the exact market situation of the company. Through porter five force model, the company also determine the competitive advantages and report also concluded that by build a strong brand image in market, the company will also expand their business at global level and also describe many future strategies in order to expand their current market.