Please help with the questions at the end

9:19 "73' '8 0 \"full ..|I| Soko lnternat...ester 2020 Soko Jewellery. Fast Fashion. Soko was a medium-sized fashion company (under US$10 million) producing brass, horn, and bone jewellery for mid-tier customers worldwide. It had an average compound annual growth rate (CAGR) of 92% between 2014 and 2017, 60 full-time employees, and 2,300 artisans throughout Kenya who manufactured jewellery on a contract basisand Soko's revenue had been doubling yearover-year since 2014. The firm was not yet profitable, but had very healthy margins on jewellery production, and Peinovich's team was confident that they would break even in the next several years. Peinovich was especially proud of the fact that her artisans retained 20% of overall revenue. as compared to the industry standard of only 510%with the exception of highly trained 3D-printed jewellery technicians who capture around 40% of overall revenue as full~time factory employees, but these technicians do not own their tools (see Figure 1 below).1 Soko's artisans captured roughly the same percentage of revenue per item of jewellery as fair trade artisans,2 though they were able to sell more jewellery through Soko due to its seasonal fashion changes (see the "Staying Competitive in a Crowded Market Segment" section below). Many of Soko's artisanal suppliers received roughly a 5x increase in annual income after becoming contractors for Soko. \"They've gone from a handful of products by the side of the road every day,\" said Peinovich, "to now hundreds of products in retail shops around the world." Most importantly, Peinovich explained how Soko was also contributing to social mobility: Figure 1: Approximate worker revenue as percentage of company revenue Approx Artisan Revenue a5 % of Company Revenue 40% i 35% 30% 25% 20% 15% 10% 5% - 5 0% Soko, Kenya Independent artisans, Fair trade artisans, 3Drnrinted jewelry Industrial Jewelry Kenya Kenya factory. US lictol'j',Cl1il'la Source: Case \"utters, using data from Ebeling, Crustal], Drugs, and Soko (as cited in footnotes) We see a number of people moving out of the slums. They are paying their dowries for the _l l J L first time, paying the school fees for their boys and their girls, and putting three meals on the table every day. This is a huge point of pride, because we at Soko really believe that we are helping artisans to lift themselves out of poverty. Despite her success, however, Peinovich was dissatisfied with the state of her business that summer. Results from an impact analysis last year indicated that Soko's impact, indicated by artisans' overall share of Soko's revenue, had decreased from 2014 to 2016 as increasing overhead costs of sales, retail sales and other key business expenses cut into artisans' revenue: As an additional challenge to Soko's intended impact, the majority of Soko-generated gains were captured by the 20% of Soko artisans who worked full-time. while the rest of the firm's artisans worked part-time and 2040% of artisans in any given quarter were inactive. Although these artisans worked for other jewellery companies or practiced in other trades, nearly all had expressed an interest in working full-time for Soko. Could Soko provide all its artisans with a decent share of revenue, or would the firm have to shift its business model in order to actually become profitable? From Peinovich's point of view, a shift away from supporting artisans would decrease Soko's overall effectiveness as an ethical producerwas this the only way for Soko to compete with modern technologies and assembly line factories? Thn r-nmnnnu'c unit nrnnrlh hnrl mnetlu Imrnllnrl nut nnrl tlm inr-rnnen in rminnim wnc nartiallu I 4 9:20 \"73' 'G)' O lifnlll .illl Soko lnternat...ester 2020 The company's unit growth had mostly levelled out, and the increase in revenue was partially due to increased prices and better organization, rather than an increase in sales. Soko's current demand had not allowed them to substantially increase jewellery production, better utilize their current artisans, or even bring new artisans into their network without diluting the overall amount of work. If Soko's innovative virtual factory model hoped to globally disrupt the fashion marketwhich, after all, was the ultimate mission of Peinovlch and her teamthen the company would need a new strategy to scale up production. Pelnovich furrowed her brow, wondering whether she had saturated her current market segment of fashion-conscious millennials in Europe and North America. An even bigger challenge was that 40% of Soko's sales took place in the last quarter of the year for the holiday season, and Soko's overall production capacity for the rest of the year was sorely underutilized, at around 35%. If Soko's suppliers had consistently spent half their capacity working for Soko throughout 2017, the company could have increased its revenue by a factor of five. 30, Pelnovich mused, what should be the next step for Soko? Should she continue to sell jewellery to her current market segment of socially conscious consumers, or would it make more sense to diversify her product offering and/or her customer base? Most importantly, how could Peinovich's team scale up without sacrificing their mission to provide both livelihoods for their artisanal suppliers and elegant products for their customers? Soko V1 : Etsy for Africa Soko began as a simple platform for informal jewellery artisans in Kenya to sell their own products on the international marketplacean Etsy.com with additional retail and marketing support for Kenya's less technically savvy informal sector. While Pelnovich and Mahugu built the mobile-to-web retail and marketing platforms, Floyd curated a high-quality selection of jewellery sourced from artisans around Nairobi. This platform became a virtual marketplace for informal artisans to sell their goods directly to international consumers, so artisans wouldn't have to rely upon locals, tourists, and middlemen. 7 T J L Unexpectedly, Soko's team found themselves unable to consistently grow sales for their products after six monthsand, as with many marketplace solutions, Pelnovich struggled to properly manage everyone's expectations. None of the cofounders had ever run a retail business, and Soko's early days involved many challenges. The team knew how to find and market excellent products, but they lacked a sustainable business solution to reach profitability. They realized that they were solving the wrong problem: Connecting Kenyan artisans to international markets would never be enough, since the key challenge for artisans was the fact that they didn't know what international customers wanted to buy. After exhausting their market of friends and family, Soko's team had to come to terms with their stagnating sales. They initially expected that wealthy North Americans and Europeans would be willing to pay far more than Kenya's local market for handicrafts, but Soko's estimated price of its handmade goods and the actual price that customers were willing to pay (given the proliferation of similar machine-made goods) were, in Peinovich's words, \"completely misaligned." As she discovered through this failed Etsy model, it was very difficult to sell large volumes of diverse productsespecially when the artisans creating these products had little exposure to international trends, no concept of foreign customer preferences, and no experience with quality control standards. Every item in Soko's online store turned out differently, and traditional Kenyan designs were not always attractive to young, fashion-conscious consumers. In other words, Soko's Etsy for Africa would never amount to a profitable business. Pelnovich, Mahugu, and Floyd applied their design expertise to the problem and, after several harrowing brainstorming sessions, they pivoted toward developing their own fashion brand rather than relying upon local artisans as designers. Pelnovich explained, \"There's a spectrum: At the far end you have art, one-of-a-kind individual pieces [Soko V1]. Soko [V2] is somewhere between art and small-scale manufactured products... Can we meet the volumes that we're seeing in retailers?" Pelnovich was certain that Soko's jewellery business would become profitable so long as it stayed competitive with mass-manufacturers on price, quality, and design. The question then was: In which areas should Soko consider expanding? Any decision that Pelnovich made had to satisfy her team's high standards for ethics, quality, uniqueness, and overall disruptive global impact. In order to increase impact, Pelnovich had to increase her quantity of salesbut could this be done without sacrificing quality Typically, articulation must contain an introduction, a challenge, a solution, a benefit and a result. 1. Provide context for the situation at hand, that is primary issues (challenges) the business is facing.[40%] 2. Identify three possible solutions the business may explore and recommend one of these three solutions. Motivate your reasons why it is recommended. [60%] I 4