A Critical Study on Tommy Hilfiger in Europe and Evaluation of its coping Mechanism in Adapting to European Fashion Market
Chapter 1
Introduction
In a volatile and every shrinking global economy that has started before this century, businesses from all sectors – from technology, pharmaceuticals, construction, architecture, communications up to arts – has been faced with the inevitable and crucial problem of adapting from the multi-faceted culture of different regions they engage their businesses in and the legal systems that work here. This cannot be avoided.
Then there are basically two cultures known: the West and the East or rather the Occidental and Oriental Culture. But doing business with the Western countries even if you're business comes from West, proves to be tricky. Each Western region still has differences from their neighboring regions which before had been clustered as same with their culture.
This can be seen remarkably in the Fashion business where US-based fashion companies that sell apparels and retail ready to wear clothes are being confronted with when they sell their wares in the European market, particularly the UK
It is because Europe alone has over 30 different countries. Then within Western Europe , there are already ten different languages spoken, mainly English, French, and German. Each of these countries has its own legal and taxation system. Add to that the introduction of the Euro that somehow removes some complexity but still the problems with the local currencies exists since not all countries in Europe are within the Euro sector.
The living standards vary in Europe that even within Western Europe there are big differences between living standards. There are also cultural differences within Europe itself, like habits, food, events, and tastes for fashion and so on. Within the European market there are many local competitors to put the market more complex, which unavoidably increases competition across the continent. In Europe there are no big, pan-European department stores. There are a lot of local retail structures something the foreign-based apparel company has to contend with.
Apparel companies like Tommy Hilfiger has to contend with all of these factors to stay afloat and be ahead of the pack taking a chance to corner the fashion market in Europe, particularly in UK
In dire need to expand their market in the globalize economy, Tommy Hilfeger in Europe needs to upgrade, cope, adjust and restructure their thinking of what is fashionable according to the fashion sense of European taste. Helpful will be the knowledge in the issue on the emerging fashion trend in the retail market for ready to wear merchandise in the European scene.
This proposed study will provide a theoretical framework with which to see how a US-based apparel company can maneuver itself in making a niche for itself in the European fashion market through knowledge on the prevailing market in the region, adjustment and adaptation on its fashion idiosyncrasies, with all the cultural aspects in consideration.
There will also be a comparative study of different US-based apparel companies operating in Europe that for a time have been getting favorable positive market share in the region.
Conceptual Framework
This study will utilize the model of competitive advantage to explore, explain and analyze the dynamics of the fashion industries in Europe and also relation on apparel companies' to adjust, adapt, establish or improve its presence in the European, particularly UK, fashion market.
A cross-sectional study will be made on different apparel companies operating in European countries, particularly UK Europe and their different approach on the market. Consequently, the theoretical debate on the kind of strategies that would be most efficient and competitive in the market would be evaluated.
This paradigm was chosen for the study because of its dynamic approach on the topic of persistence and advantage among contenders for market supremacy and competitiveness. Competitive advantage discusses the condition which enables an apparel company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefits accruing to that company.
Primarily, it deals with the concept of change, adaptation and how fashion companies are able to cope up with it and get the bigger share of the market. Business pundits have been talking about change and adaptation as the key to success and survival for at least two decades in this business of selling apparels. It is equally clear that the rate of change is getting faster. And adaptation to the market and consumer's fashions taste is the key for success. But there's a deeper current than mere adaptation to the market – it is how well fashion-company adapt very well that really matters in this area.
This cross-sectional study[1] will utilize the data available on these five prospective apparel companies:
Tommy Hilfiger Corporation. The Group's principal activity is to design, source and market men's and women's sportswear, jeans wear and childrenswear. The Group operates in three segments: wholesale, retail and licensing. The wholesale segment consists of the design and sourcing of men's, women's and childrenswear for wholesale distribution. The retail segment include operations of the Group's outlet, specialty and flagship stores. The licensing segment licenses the Group's trademarks for specified products in specified geographic areas. The Group also provides other products including fragrances, footwear, home furnishings and other accessories. At 31-Mar-2002, the Group operates 110 outlet stores and 53 specialty retail stores. The Group also has operations in Canada and Europe . In fiscal 2002, the Group acquired T.H. International N.V. Wholesale clothing distribution accounted for 77% of fiscal 2002 revenues; retail clothing distribution, 20% and licensing, 3%.
Lacoste – Short of couple of decades to reach a century as one of the oldest apparel company operating in Europe since launched in 1933, with an estimated 200 EM profit per year, Lacoste's products are best known and popular for the casualness of its products and the consistency it has built through its long decades of existence. Though it still has to expand a little bit since it operates in a very regional territory and the clothes/product it offers are so narrow in choices consumers have not enough products to choose from what it offers.
Levi's – Probably the most successful apparel company of the century worldwide with an earning of 1,240 EM each year in Europe alone. First launched in the European market in 1959 and from then on never looked back as one of the best selling apparel in Europe . Best known for the consumer's awareness of its product and denims sales that supports a huge chunk of its sales. The only trouble with the company is trade relations and a repositioning in the European market.
Mexx – Mexx apparel company is earning a modest but ahead of the pack with 380 EM in Europe . Launched only two decades ago in 1980 it is known already for its strengths in marketing and affordable price for the consumers who are mostly women. Though very regional in its operation, it needs to upgrade its products on the aspect of selling menswear.
Polo/Ralph Lauren – Polo/Ralph Lauren was launched in European fashion market during the early 80's, 1983, and quickly made a dent in the European fashion sense. In its two decades of existence in the volatile European fashion market, it is already earning 300 EM per annum, being known already as a success in the fashion business. It clothes quality is known for its consistency and stereotyped as good apparel company catering for men for its menswear products. The only downside with this company is its pricing on its products, weak selling points in womenswear and denims, and add to these is its aging client base.
Statement of the Problem:
This study will attempt to answer the following questions:
1. What are the knowledge management strategies of apparel companies particularly of those leading in the fashion market in the United Kingdom and other major cities in Europe ?
2. How do apparel companies cope up with the rapid change in the European fashion trend using knowledge about cultural and other issues in Europe ?
3. What are the effects of this knowledge on strategies on the goals, objectives and long-term plans on the apparel companies and the case of Tommy Hilfiger in Europe in particular?
4. How potent is knowledge about cultural and other issues in management of attaining of apparel companies goals/objectives, keeping up with competition on other fashion companies in the market and in accomplishing long-term management, financial goals and healthy existence of the company in the market?
Hypothesis
This study attempt to prove the following null hypothesis:
1. The higher the level of knowledge of an apparel company on the cultural and other issues in the prevailing regional environment where it operates, the greater the tendency of the compnay's success in terms of profitability
2. Conversely, the lesser the level of knowledge on cultural and other barriers where its company is set, the lower the tendency of the bank's success in terms of profitability
3. The success of the apparel industry is directly proportional to the execution of knowledge about management cultural and other issues
4. Conversely, knowledge management on cultural diversity of a region where an apparel company operates is inversely proportional to the failure of the apparel sector
Scope and Delimitation
This study will undertake the relationship between knowledge management on cultural and other barriers confronted by an apparel company in a certain region and provide the background on the understanding of how this knowledge can be used in promoting growth and profit and established the apparel company's niche in the market. A comparative study of other apparel companies will be done to find out the positive or negative result of such knowledge in cultural and other issues affecting the operation of a foreign-based apparel company in a certain region. And also to effectively analyze the extent to which companies will need such knowledge in their operation.
This study will be limited to the above-mentioned and data not relating to the specified apparel in United Kingdom United Kingdom
Significance of the Study
This study is an attempt to illustrate the significance of knowledge ini cultural and other issues being confronted by foreign-based apparel company in general and the Tommy Hilfiger in Europe in particular. This will also be an informative guide for students, professors and fashion enthusiasts on the basics of operating an apparel company in a certain region and how it is being utilized to meet goals and survive competition. Further, this analysis will be beneficial for the fashion business as well and those used for the study as a tool in improving or reforming their operational systems.
Definition of Terms:
Apparel Company – an organization that designs clothes for selling and cater to the public market with their needs for read to wear clothes, both for men and women, either jeans, sportswear, shirts, women's accessories and the like
Competitive Advantage - Condition which enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefits accruing to that company.
competitive advantage
Sector - A distinct subset of a market, society, industry, or economy, whose components share similar characteristics.
Management - The group of individuals who make decisions about how a business is run.
[1] A research design where subjects are assessed at a single time in their lives. A cross sectional study is fast and can study a large number of patients at little cost or effort. This study is efficient at identifying association, but may have trouble deciding cause and effect. This design was chosen because of the following reasons: cheap and simple; ethically safe; may study several outcomes; control over selection of subjects; control over measurements; and relatively short duration.
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