On September 10, 2001, French retailer Pinault Printemps Redoute (PPR) agreed to acquire Gucci Groupthe Italian-based fashion house and luxury goods maker. On November 4, 2003, the managers and shareholders of the two companies were stunned to learn that Chairman Domenico De Sole and Vice Chairman Tom Ford would be leaving Gucci in April, 2004.The duo had masterminded Gucci's transformation from a near-bankrupt family firm with an over-extended brand into one of the world's hottest fashion houses. As creative director, Tom Ford had established Gucci as a style leader and hired young designers such as Stella McCartney and Alexander McQueen. De Sole's astute leadership had instituted careful planning and financial discipline, and built Gucci's global presenceespecially in Asia. How great a blow was De Sole and Ford's departure to the parent PPR? In principle, a new CEO and new head of design could be hired. In practice, talent of the ilk of De Sole and Ford was rareespecially a combination of designer and CEO who could collaborate around a shared vision. The stock market's reaction was ominous. On November 3, 2003, Gucci's share price was $86.10; on November 6 it had fallen to $84.60. However, in the absence of PPR's guarantee to acquire Gucci's shares at $85.52, analysts estimated that Gucci would be trading at around $74. The implication was that Gucci was worth $1.2 billion less without De Sole and Ford than with them.

1)Use industry analysis to explain why in Fast fashion industry competition is more intense and profitability is low than in other industries.

2)Evaluate the potential for a Gucci's resources and capabilities to confer sustainable competitive advantage.

3)Recommend survival strategies for Gucci.

Introduction, key facts and conclusion - 5 marks

Industry analysis - 5 marks

Identification of resources and capabilities - 5 marks

Recommendation of strategies - 5 marks