Forever 21 fast fashion chain competes against other bricks-and-mortar players (including Zara, H&M and GAP). Forever 21, stylised as FOREVER 21, is an American-only fast fashion retailer headquartered in Los Angeles, California. Forever 21 began as the store called Fashion 21 with 900 square feet (84 m2) in Highland Park, Los Angeles, in 1984. Eventually the company has grown into the clothing lines Forever 21, XXI Forever, Love 21 and Heritage with over 700 stores in the Americas, Asia, the Middle East and the UK.

Forever 21 is known for its trendy offerings and low pricing. The company sells accessories, beauty products, home goods and clothing for all sexes but they are mostly targeting younger group of customers aged 21-25. The company has been involved in various controversies, ranging from labour practice issues to copyright infringement accusations to religion.

Which of the following statements seems most plausible for Forever 21s business unit strategy? (choose ONE answer)

Forever 21s business unit strategy is focused low cost because their prices are the same as, or smaller than, competitors; and they target the segment of young low income customers.

Forever 21s business unit strategy is low cost because they price the same as, or less than, most competitors in many areas and target a wide range of customers.

Forever 21s business unit strategy is focused differentiation because they have many brands and target young low income customers.

Forever 21s business unit strategy is blue ocean because they have innovative fashion products which other competitors do not provide.

Cirque du Soleil

Cirque du Soleil, which was founded in 1984 by a group of street performers, managed the extraordinary feat of turning itself around from a long term decline, due to threats from alternative forms of entertainment such as sporting events, TV, and video games. Children started to prefer Play Stations to circus acts. Also, importantly, there was a rising sentiment, fuelled by animal rights groups, against the use of animals. As a result, the industry was hit by steadily decreasing audiences and increasing costs. The method used by Cirque to achieve a business turnaround did not involve making money by competing within the confines of the existing industry and attempting to win customers from existing players. Instead, it created uncontested market space that made the competition irrelevant. It attracted a whole new group of customers who were traditionally noncustomers of the circus industry. In strategic lexicon terms it created a blue ocean space in contrast to the traditional red ocean space where industry boundaries are defined and accepted, and the competitive rules of the game are well accepted.

Which ONE statement below explains blue ocean strategy? (choose ONE answer)

Blue ocean is essentially about innovation, creating solutions so unique that they create their own market and demand from customers.

Blue ocean is about exploiting existing product lines and existing customer base.

Blue ocean is a form of product line rationalisation which follows industrys traditional practice, and not a radical departure from normal operating practice in the industry.

Blue ocean strategy is the same as hybrid strategy as explained by Michael Porter.

Netflix

Netflix has been changing its strategy and disrupting the market since founded in 1997, when it developed a subscription model to deliver movies through the mail to members homes. Members paid flat monthly fee, and there were no extra charges. The fees included late fees, shipping and handling fees.

In 2007, Netflix started offering an online streaming option in order to attend a demand of how consumers viewed movies: 50% of the decline in traditional tv viewership directly. Netflixs latest innovation resides in offering an original content: TV shows, movies, and documentaries.

Netflixs globalisation strategy centred on carefully selected markets in terms of geography and psychic distance (region by region and sometimes country by country), or perceived differences between markets (international subscribers often prefer local-language programming) and customisation of offer.

Nowadays Netflix owns its own distribution channel and operates in over 190 countries. It has over 300 million subscribers worldwide. However, they are facing new challenges: national regulatory restrictions and more competitors.

What type of competitive / business level strategy has Netflix developed most of the time? (choose ONE answer)

Blue Ocean as they have always disrupted the industry since the original idea of renting DVDs by post.

Differentiation strategy as they offer a customised offer of service (TV show / movies) at a low price.

Red ocean strategy as they are competing in an existing market space.

Cost leadership as the TV shows / Movies offered vary in each country.

Airbnb

Airbnb is an online marketplace which lets people rent out their properties or spare rooms to guests. Therefore, Airbnb offers travellers the opportunity to have access to short-term accommodation. Currently, it offers more than seven million rooms, flats and houses in 100,000 cities and over 220 countries around the world. This business can be classified in the hotel/lodging industry that has disrupted the market, offers an innovative solution and captures a new demand of travellers who prefer a homely atmosphere accommodation. Expedia and Priceline have begun to take advantage of the sharing economy in order to compete with Airbnb. This business is worth 38 billion and their profits are rising.

The criticism to Airbnb resides on its social impact in the community including: a limit availability of long-term lets for people, excessive noise, and other. For that reason the government is exploring regulation to mitigate the negative impact of short-term rentals including: a mandatory registration system for hosts and a 90-night limit.

The strategy that Airbnb started with is an example of: (choose ONE answer)

Cost leadership strategy as it provides only an affordable accommodation.

Differentiation strategy as it provides a unique experience for travellers who want a homely atmosphere accommodation.

Red ocean strategy as it competes in existing market space.

Blue ocean strategy as it competes in an unknown market space.

WBS

Westminster Business School (WBS) is located at the heart of London offering a broad range of UG/PG business education. It attracts a broad range of international students, and its faculty is compiled both by practitioners and academics. There are lot of extra support services for students such as the career centre and consulting services. The average price of studying on WBS is considered to be mid range in the UK market. Over the recent years the number of WBS students has increased whereas at the same time the number of faculty members have remained the same or even declined.

The overall UG market seems to decrease because the market now demands new programs and new style of delivery full of innovation/shorter studies/digitalised education and modular approach. Finally, when it comes to income generation and research output, there has been a decline in the past 5 years and now major efforts are made to improve these areas.

Which of the following statements best describes the above situation? (choose ONE answer)

WBS is aiming to keep its position as a mid-range priced institution aiming for high care teaching and managing its costs trying to navigate between cost leadership and differentiation.

WBS is trying to reposition itself as a leading educational institution with major emphasis on research aiming for a differentiation approach within the educational market.

WBS is trying to reposition itself as a leading educational institution in the London area emphasising on managing costs that would allow it to survive the Brexit and Coronavirus crises and keep its number of students. The strategy should be of cost leadership.

WBS is trying to diversify into identifying new revenue streams and trying to reinvent itself within the educational market.

BIC and MontBlanc

The Bic Cristal (also known as the Bic pen) is an inexpensive disposable ballpoint pen mass-produced and sold by Socit Bic of Clichy, Hauts-de-Seine, France. It was introduced in December 1950 and is the best-selling pen in the world the 100 billionth was sold in September 2006. It has become the archetypal ballpoint pen and is considered present everywhere around the world. Its hexagonal form and design mimics a classic lead pencil and it is sold in 6 types of point and 18 colours around the world. Although it is extremely cheap, BIC profits through huge economies of scale in production and retailing. BIC does manage its cost structure extremely efficiently and offering the product at a low/competitive price, makes it a amazing value for money overall.

On the other hand, Montblanc pens is a very different story. These are high end, luxury pens with a long history, high quality materials, elite design and exquisite branding and promotion. The Montblanc pens represent a symbol of power, affluence, style and more. These pens are for high end customers but still very successful in the broader market.

Thinking of the competitive strategies of BIC and MontBlanc pens please choose the right statement below explaining what can be done in the near future for these two companies according to Strategic clock theory. (choose ONE answer)

BIC can create a more expensive pen without compromising its strategy and competitive advantage. Montblanc cannot do the opposite by creating a cheaper version of its pens since it would compromise its competitive advantage.

BIC cannot create a more expensive pen without compromising its strategy and competitive advantage. Montblanc can do the opposite by creating a cheaper version of its pens since it would not compromise its competitive advantage.

Both companies can create cheaper or more expensive version of their pens-there is no strategic issue.

Zara

Zara is the largest and most internationalised brand within the fast fashion strategic group within the global fashion industry, with 2200 plus stores in countries around the world. The business system developed by Zara is distinctive in that it manufactured its most fashion-sensitive products internally. Zaras designers continuously track customer preferences and place orders with internal and external suppliers. Products are shipped directly from the highly automated central distribution centre to well-located attractive stores twice a week, eliminating the need for warehouses and keeping inventories low. Zara is able to originate a design and have goods in stores within a month. This quick response leads to a significant compression of cycle times, enabled by improvements in information technology and encouraged by shorter fashion cycles and deeper markdowns, particularly in womans wear. This is much faster than competitors cycle times. The main competitors of Zara in the area of Fashion Retailing are: The Gap (US), Hennes & Mauritz (Sweden), Benetton (Italy) Mango (Spain) and UNIQLO (Japan). All players attempt to differentiate themselves by having different value propositions to offer to customers.

Which one of the following statements explains why Zaras business level strategy is successful? (choose ONE answer)

Zara has the ability to maintain tight cost control over its operations, especially through economies of scale in production, distribution and sales.

Zaras value chain supports and offers a value proposition that emphasises quick response and fast fashion cycle times. Offering huge discounts for a long period of time, can be one of these factors that support this value proposition.

All players in a similar strategic group within the fashion industry must offer a very similar value propositions to customers to remain competitive.

Ford

Fords Model T, introduced in 1908, is a classic example of a strategic move that challenged the conventions of the automotive industry in the United States. It made the automobile accessible to the mass of the market.

Until that time, Americas five hundred automakers built custom-made novelty automobiles. Despite the number of automakers, the industry was small and unattractive with cars unreliable and expensive, costing around $1,500, twice the average annual family income. But Ford changed all of that with the Model T.

He called it the car for the great multitude, constructed of the best materials. Although it only came in one colour (black) and one model, the Model T was reliable, durable, and easy to fix. And it was priced so that the majority of Americans could afford one. In 1908 the first Model T cost $850, half the price of existing automobiles. In 1909 it dropped to $609, by 1924 the price was down to $240. A 1909 sales brochure proclaimed, Watch the Ford Go By, High Priced Quality in a Low Priced Car. And indeed it was a high quality car that could not easily break down, but at the same time at a lower price compared to the rest of the cars.

Fords success was underpinned by a profitable business model. By keeping the cars highly standardized and offering limited options and interchangeable parts, Fords revolutionary assembly line replaced skilled craftsmen with ordinary unskilled laborers who worked faster and more efficiently, cutting the labour hours by 60 percent. With lower costs, Ford was able to charge a price that was accessible to the mass market. Sales of the Model T exploded. Model T replaced the horse-drawn carriage as the primary means of transport in the United States.

Which of the following statements best describes the strategy that Ford Motor followed? (choose ONE answer)

It was a blue ocean strategy, since it did allowed Ford to create a new market within the existing car market. Ford created affordable mass market cars with both quality and competitive price.

It was clearly a cost leadership strategy since it allowed Ford to economise extremely well and offer a lower price than the market average.

It was clearly a differentiation strategy that allowed Ford to improve quality, offer a faster delivery of its products, ensure spare parts availability and even better customer service.