Vous êtes sur la page 1sur 17

MGW3401 STRATEGIC MANAGEMENT

Tenfold Organic
Textile
Case Analysis Report
Lecturer: Dr Chong Yit Sean, Esther
Tutor: Dr Tan Seow Kian, Sharon

Cheok Huei Chun (24826200)


Teoh Tong Aik (26094193)
Florian Navintach Zeorelli Samerawickreme (24729833)
Clement Marsha (25342754)
Habiba Almahrooqi (25384589)

Word Count:

Table of Contents
Executive Summary.........................................................................................2
1.0

Introduction.............................................................................................3

1.1

Purpose of the report...........................................................................3

1.2

Company information...........................................................................3

1.3

Assumption..........................................................................................3

1.4

Methodology........................................................................................3

1.5

Purpose of Report.................................................................................3

2.0 Strategic Analysis......................................................................................4


2.1 SWOT ANALYSIS......................................................................................4
2.1.1 Strengths..........................................................................................4
2.1.2 Weaknesses......................................................................................5
2.1.3 Opportunities..................................................................................5
2.1.4 Threats.............................................................................................6
2.2 Main issues.............................................................................................6
2.2.1 Issue 1..............................................................................................6
2.2.2 Issue 2..............................................................................................7
3.0 Evaluation of Alternative Strategies..........................................................7
3.1 Alternative 1...........................................................................................7
3.2 Alternative 2...........................................................................................9
4.0 Implementation.......................................................................................10
5.0 Conclusion...............................................................................................12
6.0 Reference list...........................................................................................13
7.0 Appendix..................................................................................................14

Executive Summary

Tenfold Organic textile is a company that provides naturally dyed organic cotton
products to consumers, manufacturers and retailers. Tenfold attracts its customers
by being an environmentally responsible organization that produce apparel using
eco-friendly and chemical-free dye. The purpose of this report it to analyze the
strengths, weakness, opportunities and threats of Tenfold in order to address the
main issues that the company can improve. Furthermore, using academic journals,
two alternative strategies will be discussed to improve and enhance the
organizations strategic position. The first issue that Tenfold faces is that there are
many brands that are being sustainable and socially responsible in the long run,
however, not much apparel companies have the capacity to reach the goal with
Tenfold to be the right partner. The second issue is that there are low barriers to
entry as a result of highly fragmented market which allows more competitors in the
market. Two alternatives are provided in this report. The first alternative is using the
strategic alliance strategy to help reducing costs with suppliers and support
development of new products and technologies. The second alternative is using the
Blue Ocean Strategy to create value innovation by offering different kind of organic
apparel to the partner brand. Moreover, blue ocean strategy can help Tenfold to
enhance the organizations strategic position. All in all, the best strategy for Tenfold
is the blue ocean strategy since it can decrease the number of its competitors when
using this strategy.

1.0 Introduction
1.1Purpose of the report
The purpose of the report is to analyze and discuss the main issues that
Tenfold organic textile need to improve and provide alternatives to get a
superior performance. Assessing the companys strengths and weaknesses
will help Tenfold to have a planned strategy, gain more profit and create a
well-known

brand.

Furthermore,

clear

understanding

about

the

opportunities and threats of the organization can help the management to


identify the changes and new alternatives that can be made to enhance the
organizations strategic position

1.2Company information
Tenfold Organic Textiles is a company that manufactures naturally dyed
organic cottons which was founded by Leah Weinstein and her brother Paul
Weinstein in 2006. Tenfolds main mission is to provide organic apparel
using naturally dyed fibers by reducing the use of the chemicals in textile
manufacturing. They believe that fashion industry should not pollute the
environment with chemicals and synthetic dyes. In order for the cotton to
get an organic label, it must meet the standards mandated by the organic
foods production Act of 1990 which can be very costly to farmers. Tenfolds
main objective is to provide high quality fashionable products from the
organic textile. In 2007, Tenfold signed a two-year contract with Aura
Herbal wear in India that uses modern conventional dyeing machinery. The
agreement was to give Tenfold exclusive right to naturally dye fabric
produced by Aura and sold in the U.S. and Canada.

1.3Assumption
The information of the company that are sourced from textbook is
considered based on the date of the case study presented. Hence,
the SWOT analysis and alternative strategies may not be accurate as
of today as there is no latest information about the company found.

1.4Methodology
The sources of information that are used for this report are academic
journals that provide different management theories and strategies
and examples of how a company can improve its strategic position.
Besides that, case study on this company were analysed to carry out
SWOT analysis

1.5Purpose of Report
The report will first discuss the SWOT analysis, external and internal
environment of Tenflod in order to identify two main issues to improve
the companys strategic position. After that, the report will evaluate
the two alternatives that the management should consider to
improve the identified main issues. Finally, the report will conclude
the recommendation for the best strategy to be used.

2.0 Strategic Analysis


2.1 SWOT ANALYSIS
-

2.1.1 Strengths
Many of the apparels uses synthetic dyes because it is cheaper and have
various color variation. However, synthetic dyes can cause environmental
degradation and health impact such as toxic exposure for dye workers. With
that, the natural dyes could be the alternative and this will serve as a
strength for Tenfold as more people would incline on using organic apparel
with natural dyes especially in a business-to-business market when more

businesses are getting more sustainably focused.


Tenfold gain attention by focusing on two things which are environmentally
responsible and having emphasis on fashion at a reasonable price. The
purpose of it is to attract the customers as well as providing an
environmental

friendly

solution

which

then

further

strengthen

the

consumers trust towards Tenfold.


4

Brand association with the consumers is the main strength which includes
the

innovation

of

the

organic

apparels

production,

good

corporate

transparency. They also emphasize on producing apparel using eco-friendly


-

and chemical free dye in addition to fashionable products.


Tenfold has been in a partnership with Aura Herbal Wear, which has
developed a patented and unique natural dyes production in commercial
quantities using modern conventional dyeing machinery. This allows Tenfold

to be the only company that has such access to unique dyeing technology.
Tenfold has a solid management team consist of experienced marketing
professionals, outsource a PR agency to enhance branding and promotion of
the company and also assemble of advisory team to further improve the
companys growth.

2.1.2 Weaknesses
Tenfold is using natural dye to produce organic apparel. However, there are
disadvantages of natural dyes. According to Wild Colours (n.d.), natural dyes
require large quantities in order to produce. Besides that, the range of colour
of the natural dyes is limited compared to synthetic dyes. This is also
because of high cost of producing the natural dye which leads to limited
variation of the colours.

2.1.3 Opportunities
The global retail sales for organic products will be set to reach
around $1.1 billion and $ 2 billion in 2007. Hence, there will be
strong demands of sustainable type of product which then enhance
the growth of the sustainable apparel (Refer to Figure 1 in
Appendix). Using organic food as an example, it has made a
significant impact in the food industry by shifting the purchasing
and consumption habits of consumers (Regmi, 2001). Hence,
5

organic apparel as a sustainable purpose could be the driver to the


strong demand and growth which serve as the opportunity for
Tenfold Textiles.
-

During the recession that happened in 2007, consumers in the United State
are being cost adverse on purchasing apparel. Consumers are not purchasing
because of economic uncertainty. They are trying to reduce consumption of
the apparel or goods do not bring them good cause. Hence, the reason for
buying organic apparel can be desirable to the consumers because it is for a

good cause. Hence, this will serve as an opportunity.


As many large multinational brands are incorporating sustainability as their
core mission for corporate social responsibility purpose (McKinsey &
Company, n.d.). Tenfold can produce organic apparel to brands such as Nike,
Walmart and smaller brands which will enhance Tenfolds positioning in the

market.
Tenfold emphasize on using private-label strategy. Most of the brands such as
Abercrombie & Fitch have no capacity to produce natural dye products.
Hence, Tenfold have the opportunity to partner with businesses to create and
produce such products. In fact, Tenfold has already developing products for
Aveda.

2.1.4 Threats
Organic cotton would be falling under a regulatory framework. In United
State. Organic cotton must meet all the mandatory requirement and
standards which is under Organic Foods Production Act of 1990. In order to
meet this requirement, farmer would want to incur extra cost to produce it.
As organic cotton is grown without herbicides, pesticides and synthetic
fertilizers. This will result in a lower yield. Organic cotton according to U.S.
standard must be grown for three years before it can be commercialized and

sold as organic products.


In conventional clothing industry, there are wide array of sizes and styles for
consumers to choose. However, in the organic apparels, the choices remain
limited because they need a lot of considerations ranging from socially
6

responsible
-

labor

practices

to

environmental

friendly

packaging

and

distribution.
In garment industry, the sustainable category in the apparel industry is
highly fragmented with low number of barrier to entry. Hence, this lead to
the entrance of many competitors which will affect the marketplace. Hence,

this can be served as a threat.


Critics from investors in terms of Tenfolds partnership with Aura may have
cause the company to lose some funding due to the different direction that
the company is heading and still going for the same direction after being
advised by investors. The company then may have issue in expanding due to
lack of funds.

2.2 Main issues


Two main issues are identified from the outcome of the SWOT analysis of
Tenfold:
2.2.1 Issue 1
From the Opportunity above, most of the multinational brands have
been aware of being sustainable and socially responsible in a long
run due to social pressure from the communities, government and nongovernment organizations. However, as stated in the opportunity part
of Tenfold, not much apparel companies have the capacity to reach the
goal with makes Tenfold the right partner for them to produce such
apparel.
2.2.2 Issue 2
From the information in the Threats above, there are low barrier to
entry due to highly fragmented market which allow more competitors
in the marketplace.

3.0 Evaluation of Alternative Strategies


Defining a companys business strategies is vital as it will determine
the direction of the business and how it will address the issues the
company is facing. By using a clearly defined business strategy, the
company will be able to enhance the organizations strategic position.
Once the main issues are identified, appropriate alternative strategies
can be formed in the basis of functional strategies, business strategies
and/or corporate level strategies. These strategies will then be used to
address the issues and to achieve companys business goals.

3.1 Alternative 1
The appropriate alternative that has been identified to address these
issues is a corporate level strategy which is strategic alliance strategy.
Strategic alliance is an agreement between two or more companies to
cooperate in a unique business activity (Isoraite, 2009). This strategy
will help the companies involved in the alliance to benefit from each
other's strengths and gain a competitive advantage over their
competitors. The companies involved in the strategic alliances would
also share available knowledge in their area of expertise. Moreover,
this strategy can also assist in reducing costs and risks with suppliers
and support development of new products as well as technologies
(Isoraite, 2009).
As stated above, numerous companies are making an effort to
incorporate sustainability into their business. An example of a
successful strategic alliance in the form of creating sustainability is the
alliance between Procter & Gamble and World Wildlife Fund's Global
Forest & Trade Network in 2008. This alliance assists companies with
sourcing more of their wood and paper products from responsiblymanaged forests (Confino, 2012).

Tenfold Textiles has the capacity to exploit this opportunity that would
help to improve their organisations strategic position. Tenfold uses
natural dyes that are completely sustainable in nature compared to
synthetic

dyes

used

by

competitive

companies

which

causes

environmental degradation and negative health impacts.


Therefore, Tenfold can create a strategic alliance with other major
apparel companies such as H&M, Zara, Uniqlo and Marks & Spencer to
help improve and incorporate sustainability and social responsibility
value into their products and core strategies. Tenfold could produce
organic apparels for these brands for them to add into their products
lines. Therefore enabling these brands to incorporate social
responsibility and sustainability into the nature of their business which
would in turn help Tenfold improve their competitiveness in the
industry. Using this strategy, Tenfold would also create awareness of
their brand, increase customer base and gain the opportunity to reach
new markets (Buckles, 2011).
The strategic alliance strategy would also be competent in addressing
another issue faced by Tenfold which is the low barrier of entry in the
garment industry. Barrier of entry is the existence of an obstacle that
prevents new competitors from easily entering an industry or an area
of business. A low barrier of entry type of industry such as the garment
industry discussed in this report, however, would convey that there is
minimal obstacle that prevents new competitors from entering the its
industry. This would pose a threat to companies that are already
competing in the market as there will be more competition from new
entrants. It would also increase production capacity without concurrent
increase in demand which would reduce the profits of the existing
companies such as Tenfold itself.

However, through strategic alliance, Tenfold would able to better


compete with other competitors and new entrants. By forming an
alliance with major and well known apparel brands, Tenfold would be
able to benefit by marketing their products through these brands.
These brands are further established in the industry and would be
more capable of overcoming the competition posed by the low entry of
barrier. Brand that are well established would also have a strong
consumer base which Tenfold can use to their advantage. By marketing
their products through these brands, Tenfold would acquire improved
brand awareness and recognition through the existing consumer base
which will widen their grasp in the garment industry, hence, improving
their competitive advantage.

3.2 Alternative 2
The appropriate alternative to address these issues is a business level
strategy which is Blue Ocean Strategy. Blue Ocean Strategy was
developed by W. Chan Kim and Rene Mauborgne. It helps companies
to create new markets, instead of competing in existing ones and by
standing apart by dialing up value for buyers, yet keeping costs low.
Moreover, it creates new demand and making the competition
irrelevant (Kim and Mauborgne, 2004). Thus, this will position a
company to be superior with value innovation to stay competitive.

To address issue 1, the blue ocean strategy involving value innovation


as such that Tenfold would create value by offering different kind of
organic apparel to the partner brands such as H&M and Zara. With the
concept of sustainability practised by the companies, Tenfold could
leverage to produce more products using their organic cotton which at
the same time helping the companies to achieve the value of
10

sustainability. This allow the companies to maintain their brand image


and also promote the awareness of Tenfold. For example, Tenfold could
deliver value innovation to apparel companies in a way that they are
benefiting more from getting the organic apparels. They could insert
the same value into their customers and hence, this would create a
win-win situation for both Tenfold and the companies (INSEAD
Knowledge, 2015).
To address issue 2, although Tenfold is in a fragmented market and
barriers of entry are low, the blue ocean strategy will help Tenfold
enhance the organizations strategic position by creating uncontested
market space, making the competition irrelevant and creating &
capturing new demand. Instead of concentrating on customers, focus
should be on non-customers (Kim & Mauborgne, 2005). Hence, Tenfold
would need to shift the focus on create awareness to attract them to
be new customers. This can be done by using various marketing
strategies which also includes guerilla marketing styles as what Paul
has mentioned in the case study.
This could be also involve creating different kind of product lines
ranging from scarf to other wearable product by using the organic
concept. With this, Tenfold has ultimately created a uncontested
market space and hence would even strengthen the strategic position
of Tenfold compared to its competitors which are Prairie Underground
and Stewart and Brown. Due to the situation in the market where new
competitors are present every day, it is important that Tenfold maintain
its strategic position to gain competitive advantage. An example can
be seen from an apparel company known as Ralph Lauren. They
managed to implement blue ocean strategy to create uncontested
market space by combining the features of haute culture and classical
lines in their production of their polo shirts (Polo Ralph Lauren Case
Study, 2016). With that, their position is strategically strengthened.
11

4.0 Implementation
Based on the SWOT analysis and the issues of Tenfold, it can be seen
that Tenfold has a competitive advantages of being able to produce
organic garments. But the apparel market has a low barrier entry. And
by Tenfold itself is capable of avoiding the sustainability and social
responsibility due to social pressure by themselves as they were to
produce such apparel. Its a better choice for Tenfold to use the Blue
Ocean Strategy, as the strategy create a new markets, Tenfold will
have less competitor and their capability of producing organic
garments is a value innovation will be an important advantages. This
will result in Tenfold having an uncontested market space. Which will
solve the issue no.2, while the strategic alliance will make Tenfold
compete in the existing market which has a low barrier entry.
By using Blue Ocean Strategy, Tenfold will be able to have more control
over their organic product quality and they will be able to avoid being
dependent on their allied companies. An example of a successful
company that used the Blue Ocean Strategy is AirAsia. Air Asia
positioned themselves on a new market that target middle class, while
majority of flight industry target on upper class.
Tenfold can also do line extension with this strategy. This will allow
Tenfold to offer more varieties of product even though they have their
weakness of incapable of producing variety of colours because of the
limitation of organic dye or textile. By doing so, Tenfold will be able to
maintain its strategic position to gain competitive advantage. Like for
example, Tenfold can produce product like scarves, and since Tenfold
uses organic dyes, they will also be able to produce garments using
traditional methods like Batik.

12

Another approach on the strategy is for Tenfold to be able to persuade


consumers to know the advantage of using organic textile compared to
synthetics. This will even further push Tenfolds competitive advantage
and give tenfold more brand consideration compared to its competitor.
This will open up new demand in the fashion industry for organic
apparels.
In order for the strategy to success, Tenfold will need to consider their
capability of closing the gaps as they will have lack of fund in
expanding, as most of their funds are already focused on producing
and obtaining the organic materials. If their scalability is unable to
handle the production of variation of product, they might need to
abandon the idea of producing the other variant of product. And with it,
they need to reconsider whether to choose Blue Ocean Strategy all
over They also need to consider the market demands of the current
market they operate for organic products.

5.0 Conclusion
In conclusion, SWOT analysis on Tenfold textile are conducted and
according to the analysis, two main issues are identified which are how
Tenfold can produce more organic apparel with multinational brands
that emphasise on being sustainable. The second main issue is the
low

barrier

to

entry

in

the

sustainable

apparel

industry.

Two

alternatives strategies are introduced which are the use of corporate


level strategy which is strategic alliance and business level strategy
13

which is blue ocean strategy. The alternative strategy proposed is blue


ocean strategy with the reason that they can control the company
easily, provide more variation to create more markets and reduce
competitions. Several considerations were debated which is the issue
of funding and the scalability to meet the current demand of the
organic apparel.

6.0 Reference list


Buckles, J. (2011). Understanding the Benefits and Challenges of Strategic
Alliances | International Franchise Association. Franchise.org. Retrieved 5
May 2016, from http://www.franchise.org/understanding-the-benefits-andchallenges-of-strategic alliances
14

Confino, J. (2012). Sustainability partnerships are the key to future business.


the Guardian.
Retrieved 5 May 2016, from
http://www.theguardian.com/sustainable-business/procter-gamblesustainability-report-partnerships
INSEAD Knowledge,. (2015). How to Build a Sustainable Blue Ocean. INSEAD
Knowledge. Retrieved 6 May 2016, from
http://knowledge.insead.edu/strategy/how-to-build-a-sustainable-blueocean-4219
Isoraite, Margarita. (2009). Importance of Strategic Alliance in Companys
Activity. Intellectual
Economics. Vol. 1(5), pp. 39-46
Kim, W. & Mauborgne, R. (2005). Blue Ocean Strategy How to Create
Uncontested Market

Space and make the Competition Irrelevant.

Boston: Harvard Business School Press..

Retrieved from

http://www.strategiccompliancegroup.com/docs/BOS.pdf
Kim, W. Chan & Mauborgne, Renee. (2004). Blue Ocean Strategy. Harvard
Business Review. Retrieved 6 May 2015, from
http://www.syv.pt/login/upload/userfiles/image/Reinventing%20Your
%20business%20model%20HBR.pdf#page=71
McKinsey & Company. (n.d.). The Business of Sustainability: McKinsey Global
Survey Result. Retrieved 5 May 2016, from
http://www.mckinsey.com/business-functions/sustainability-andresource-productivity/our-insights/the-business-of-sustainabilitymckinsey-global-survey-results
Polo Ralph Lauren Case Study. (2016). Blue Ocean Strategy. Retrieved 6 May
2016, from

https://www.blueoceanstrategy.com/bos-moves/ralph-

lauren/
Regmi, Anita. (2001). Changing Structure of Global Food Consumption and
Trade. Retrieved 5 May, 2016, from
http://www.ers.usda.gov/media/293645/wrs011_1_.pdf

15

Wild Colours. (n.d.). About Natural Dyes. Retrieved 5 May 2016, from
http://www.wildcolours.co.uk/html/natural_dyes_comparison.html

7.0 Appendix

Figure 1

16