Strategic CapabilitiesEssay Preview: Strategic CapabilitiesReport this essayOver the last decades, the Hong Kong garment industry has enjoyed the golden time with the accelerating trend of economic globalization. Being a renowned international brand is one of the significant business strategies for building competitive advantages. Koyo Jeans is a fashion brand that has successfully transformed from a local garment wholesaler and retailer to international brand. Its international expansion is a deliberately designed and long-term strategy that well utilizes existing capabilities of the firm and leverages their unique capabilities in search of location-specific advantages (Dunning 1988). In the course of international expansion, Koyo Jeans is identifying the opportunities and risks, propelling the strengths, promoting creativities and avoiding the weakness. This assignment is based on the analysis of internationalization of Koyo Jeans, by assessing its value chain, strategic capabilities and SWOT.
Koyo Jeans (1999)
“Koyo Jeans” is a term coined to describe the brand emerging from the Hong Kong garment sector. Hong Kong, like other cities, enjoys high level of trade and commercial prosperity. But at the same time, most of its foreign citizens face severe and prolonged financial insecurity and are unable to provide for themselves and their families and work opportunities. With globalization, Hong Kong is a global economic powerhouse that is both global and local. The market is dominated by two, interlocking industries, Hong Kong’s “good, clean, decent and cheap” is often touted as a major determinant of economic success in the world. The “good” or “good” trade policy is, however, one that has little effect on the overall quality of its products (Kong 2004). The “bad” trade policy can be expressed as an increased demand for cheap and/or unsafe trade practices. Hong Kong’s government has a long and ongoing history of enacting and enforcing policies that may be detrimental to its economic and financial performance, while at the same time fostering policies to combat the adverse consequences of economic globalization (see below). A recent government study concluded that one of the two main causes of negative outcomes for the Hong Kong economy was globalization, an effect that became evident following the successful completion of the 2011 budget for the Ministry of Commerce. Hong Kong is home to seven of China’s 50 largest economies, and two additional are expected to receive rapid growth in new manufacturing, manufacturing of goods from the outside world, and manufacturing manufacturing that provides for high quality services for consumers (see Chang 2005). One factor that caused the high prices and high vulnerability of Hong Kong’s foreign workers to the financial crisis is the high number of poor quality Hong Kong immigrants to Hong Kong (Chen and O’Toole 1985a). In an effort to minimize the effects of low birth costs and weak labor force health, the government instituted the HK-10 government-subsidized education system and promoted a minimum daily living standard in public university students. However, Hong Kong does have a long history of institutionalized discrimination against labor in general, which has led to economic inequality and a large share of the population being excluded from the quality-of-life indices and the quality quality-of-life tests conducted by all government agencies under the Ministry of Commerce System (Wong 2012). In recent years in Hong Kong, the government has enacted measures that may reduce labor costs, increase worker participation, and increase opportunities for innovation. To remedy these needs, the government imposed quotas on labor on five government enterprises and other sectors. The government has since implemented the most recently implemented “minimum wage” by law, which also restricts public employment, reduced the number of public sector employees, and increased the employment of state servants and contractors at the government’s industrial base. The government recently adopted a variety of measures to address labor pressure, including a strong public employment code which also requires government representatives to report to work without pay, and increased the minimum wage to $15 (Khan 2005). The minimum wage in Hong Kong also has to be accompanied by a specific policy aimed at promoting the participation of workers and a strong public participation policy, especially in education. As per regulations enacted by the government, public institutions including colleges, universities and government libraries, public transport, and commercial and government workers can accept and provide students with education on the latest available material. Moreover, universities, while free of charge, can allow their members a free and unrestricted access to free university courses and work and employment opportunities. The government has introduced additional labor rights and employment standards that could reduce the employment of public sector employees. The government has introduced other labor reforms and educational measures to provide for increasing employment opportunities and greater economic opportunity. For example, during the last fiscal year, labor reform legislation was introduced by the government as a policy to meet workers’ economic needs, the “job pooling” program, and a new National Consumer Development Plan, the “Economic Transformation of the Land of the Rich” (Khan 2008). The government has also expanded public university enrollment (including public libraries) by opening 30
Koyo Jeans (1999)
“Koyo Jeans” is a term coined to describe the brand emerging from the Hong Kong garment sector. Hong Kong, like other cities, enjoys high level of trade and commercial prosperity. But at the same time, most of its foreign citizens face severe and prolonged financial insecurity and are unable to provide for themselves and their families and work opportunities. With globalization, Hong Kong is a global economic powerhouse that is both global and local. The market is dominated by two, interlocking industries, Hong Kong’s “good, clean, decent and cheap” is often touted as a major determinant of economic success in the world. The “good” or “good” trade policy is, however, one that has little effect on the overall quality of its products (Kong 2004). The “bad” trade policy can be expressed as an increased demand for cheap and/or unsafe trade practices. Hong Kong’s government has a long and ongoing history of enacting and enforcing policies that may be detrimental to its economic and financial performance, while at the same time fostering policies to combat the adverse consequences of economic globalization (see below). A recent government study concluded that one of the two main causes of negative outcomes for the Hong Kong economy was globalization, an effect that became evident following the successful completion of the 2011 budget for the Ministry of Commerce. Hong Kong is home to seven of China’s 50 largest economies, and two additional are expected to receive rapid growth in new manufacturing, manufacturing of goods from the outside world, and manufacturing manufacturing that provides for high quality services for consumers (see Chang 2005). One factor that caused the high prices and high vulnerability of Hong Kong’s foreign workers to the financial crisis is the high number of poor quality Hong Kong immigrants to Hong Kong (Chen and O’Toole 1985a). In an effort to minimize the effects of low birth costs and weak labor force health, the government instituted the HK-10 government-subsidized education system and promoted a minimum daily living standard in public university students. However, Hong Kong does have a long history of institutionalized discrimination against labor in general, which has led to economic inequality and a large share of the population being excluded from the quality-of-life indices and the quality quality-of-life tests conducted by all government agencies under the Ministry of Commerce System (Wong 2012). In recent years in Hong Kong, the government has enacted measures that may reduce labor costs, increase worker participation, and increase opportunities for innovation. To remedy these needs, the government imposed quotas on labor on five government enterprises and other sectors. The government has since implemented the most recently implemented “minimum wage” by law, which also restricts public employment, reduced the number of public sector employees, and increased the employment of state servants and contractors at the government’s industrial base. The government recently adopted a variety of measures to address labor pressure, including a strong public employment code which also requires government representatives to report to work without pay, and increased the minimum wage to $15 (Khan 2005). The minimum wage in Hong Kong also has to be accompanied by a specific policy aimed at promoting the participation of workers and a strong public participation policy, especially in education. As per regulations enacted by the government, public institutions including colleges, universities and government libraries, public transport, and commercial and government workers can accept and provide students with education on the latest available material. Moreover, universities, while free of charge, can allow their members a free and unrestricted access to free university courses and work and employment opportunities. The government has introduced additional labor rights and employment standards that could reduce the employment of public sector employees. The government has introduced other labor reforms and educational measures to provide for increasing employment opportunities and greater economic opportunity. For example, during the last fiscal year, labor reform legislation was introduced by the government as a policy to meet workers’ economic needs, the “job pooling” program, and a new National Consumer Development Plan, the “Economic Transformation of the Land of the Rich” (Khan 2008). The government has also expanded public university enrollment (including public libraries) by opening 30
Porter (1998) defines value chain as the activities taken by the business and relates them to the analysis of business strengths and weaknesses. It consists of primary activities and support activities. Primary activities are directly associated with producing and delivering products or service (e.g. inbound logistics, operations, outbound logistics, marketing and sales, and service). Relating the Koyo Jeans case study, inbound logistics , it is headquartered in Hong Kong and manufactured in Humen factory and this implies that its most raw materials can be sourced from China where it is cost-effectives. Also, the Hong Kongs ports are convenient so that the logistics cost and cycle can be reduced. Second, regarding to operations, Koyo has two different production lines: low-end products for wholesale markets and high-grade Koyo products (Koyo William). The wholesale ran on a short inventory cycle and helped the high-brand products proceeding. The branding Koyo products help the firm build competitive advantage and customer loyalty in the long-term. For outbound logistics, Koyo expanded to international markets under franchising . It only chooses the experienced franchisee to ensure the brand reputation in the global markets. The company introduces a computer system that produces a complete analysis report for franchisee to help them plan and control their orders and inventory accurately. As to sales and customer service, Koyo runs two types of stores, proprietary and franchise stores . The proprietary stores provides the fastest and most direct customer feedback that is beneficial to gathering market response and meeting customer needs. Franchise store is good for rapid expansion and adaption to local markets. Moreover, Koyo embarked on online shopping for young customers and used system management software in sales and inventory ordering. Turning to Koyo marketing, the firm continuously run fashion show and participates exhibitions for its products . Also, it keeps sponsoring the outfits of singers, actors and program hosts for promoting brand exposure and recognition. In addition, Koyo has strict requirements for store decoration and displays for creating unique image and good visual effects for customers. Its computer system has pictures of all shops, their sizes, the sizes of show windows and other information. Therefore, the computer is able to show simulations of how to display when launching new products.
Support activities are backup activities which are not directly involved in manufacturing, and helpful to improve effectiveness and efficiency (Johnson et al. 2008). It may involve human resource management, research and development and facility management. Firstly, Koyo meet some limitations in terms of human resource management due to rapid expansion. It experienced the shortage of talented individuals, especially for regional managers and visual merchandisers. On the other hand, in line with the expansion, the employees were promoted relatively quickly and delegated appropriate authority such as office infrastructure purchase, particularly in mainland China. Second, the design and development department is responsible for catching up fashion flow and quality improvement. The unremitted efforts enable Koyo Jeans close to international standard. For the facility management, the Koyo case shows that it has introduced a computer system to control ordering and managing market responses. Also different balance sheets are used to manage two production lines to guarantee efficiency.
A clear understanding of value chain benefits to identify the strategic capabilities of Koyo Jeans. Strategic managers need to clarify which activities within the value chains are associated with building competitive advantages for the organization (Johnson et al. 2008). Strategic capability is referred as the adequacy and suitability of the resources and competences of an organization for it to survive and prosper(Johnson et al. 2008:95). Only when the strategic capability is distinct from other competitors, the competitive advantage could be created (Thomson et al, 2004). The strategic capabilities involves threshold capabilities and capabilities for competitive advantages. Regarding to Koyo Jeans case, the threshold capabilities include