Question:

Complete a Value Chain analysis for the company with the objective of identifying valuable resources and capabilities. Identify any resource bundles and provide a brief explanation. Then use the 4 tests to determine competitive advantage and sustainability. (At least 400 words)

case:

Coach Inc. in 2012: Its Strategy in the "Accessible Luxury Goods Market Ronald W. Eastburn John E. Gamble University of South Alabama University of South Alabama same-store sales productivity The company's strategy sible luxury market in ladies handbags made on five key initiatives it among the best-known luxury brands in Build market share in North America by opening North America and Asia and had allowed its sales to approximately 15 new full-price retail stores and 25 grow at an annual rate of 20 percent between 2000 and factory outlets. 2011, reaching $4.2 billion. During that period, the Build market share in Japan through the addition company's net income increased from s16.7 million of 15 new locations to $880 million. In 2012, Coach Inc. designed and marketed women's and mens bags, leather accesso- Raise brand awareness and build share in under penetrated markets, including Europe and South ries, leather apparel items, business cases, footwear America and, most notably Asia, with 30 new loca jewelry, travel bags, watches, and fragrances. All o the company's leather products were manufactured tions planned in the region. by party suppliers in Asia, while Coach-branded Increase sales of products targeted toward men. footwear, eyewear, watches, and fragrances were made Specifically, new store openings in North America available through licensing agreements. and Japan would focus on men's products, while Coach's strategy, which focused on matching key the new shops in China would offer dual-gender luxury rivals in quality and styling while beating them product lines. by 50 percent or more, yielded a competi on price Raise brand awareness and build market share tive advantage in attracting not only middle-income through coach.com, global e-commerce sites, and consumers desiring a taste of luxury, but also affluent social networking initiative and wealthy consumers with the means to spend con siderably more on a handbag. Another distinctive ele While the company's performance was commendable ment of the company's strategy was its multichannel and its strategy seemed to have merit, the company's distribution model, which included indirect wholesale profit margins were still below the levels achieved prior to the onset of a slowing economy in 2007. In sales to third-party retailers but focused primarily on addition, its share price had experienced a sharp direct-to-consumer sales. In 2012, Coach operated 345 full-price retail stores and 143 factory outlets in North decline during the first six months of 2012. Going America, 169 stores in Japan, and 66 stores in China, into fiscal 2013, it was undecided if the company's recent growth could be sustained and its competi along with Internet and catalog sales. The direct-to- consumer segment accounted for 87 percent of the tive advantage would hold in the face of new acces- company's 2011 net sales. Coach's indirect wholesaler sible luxury lines launched by such aggressive and successful luxury brands as Michael Kors, Salvatore segment had 2011 net sales of $540 million, with the US wholesale segment serving about 970 department Ferragamo, Prada Giorgio Armani, Dolce & Gabbana store locations and the Coach International group sup and Versace. plying 211 department store locations in 20 countries The company's two primary strategic priorities in Copyright (c 2012 by lohn E Gamble and Ronald Eastburn. global distribution and improve 2012 were to increase All rights reserved