Situational Analysis of Ted Baker in the Fashion Industry

Business Strategy “Situational Analysis of Ted Baker in the Fashion Industry .” (Source: EMAP Publishing Limited, 2024) *Include University Name *Due Date *Module Leaders Module Code: 6WBS0008/9 Word Count: 1432 SRN 22038475 Contents TOC \h \u \z \t "Heading 1,1,Heading 2,2,Heading 3,3,"1.Introduction PAGEREF _Toc182150492 \h 22.External factors impacting Ted Baker (that impacted*) PAGEREF _Toc182150493 \h 22.1.Economic Volatility PAGEREF _Toc182150494 \h 33.Internal factors affecting Ted Baker PAGEREF _Toc182150495 \h 65.Recommendation PAGEREF _Toc182150496 \h 96.Conclusion PAGEREF _Toc182150497 \h 9References PAGEREF _Toc182150498 \h 11 *Table of Contents should also have the same font and font size as the rest of the report for uniformity 1 Introduction The high-end fashion industry is constantly evolving. Fashion brands within this industry are renowned for their artistry, meticulousness and use of the finest materials. Europe maintains a dominant market share of 34.24%, while the global market value is USD $63B (Fortune Business Insights, 2024). However, the industry faces challenges such as sustainability concerns, digital transformation, and economic volatility (Norton, 2022). - Reference Statista (2024) reported an industrial decline, see Figure 1. One company experiencing a downward trajectory is Ted Baker, a British luxury apparel brand incorporated in 1988, headquartered in London, United Kingdom, employing 985 people (Encyclopedia.com, 2019). According to BBC (2024), Reiss, Hugo Boss, H7M, and Zara are industry competitors. This report presents a situational analysis of Ted Baker, thoroughly exploring the key challenges and analysing its strategic issues. The following sections will examine internal and external factors, assess strategic options and provide recommendations. *Label your figures and reference them in the body Figure SEQ Figure \* ARABIC 1: Worldwide Luxury Apparel Sales Source: Statista, (2024) (142 words) 2 External factors impacting Ted Baker (that impacted*) External analysis in the fashion industry examines the broader macroenvironment and identifies impacting factors on brand performance (Ye et al., 2021). - reference PESTLE analysis (Appendix I) and Michael Porter’s 5 Forces (Appendix II) are two frameworks utilised for these external analyses: PESTLE analysis helps business leaders to understand the macro environment forces influencing strategic decisions. Porter’s 5 Forces help business leaders identify industry competitive forces (Whittington et al., 2019a). Environmental shifts introduce challenges and opportunities, so companies must remain agile or risk obsoletion. According to Lennox (2024), brands like Debenhams, the Arcadia Group, and Accessorize experienced shutdowns due to poor strategic decisions while addressing external factors. - you can use examples of actual companies in the fashion industry. Similarly, the fashion industry faces challenges, and while opportunities emerged, Ted Baker’s response was delayed. E-commerce and digital platforms expanded due to COVID-19, which saw competitors like LVMH gaining leverage by employing Virtual Try-ons and 3D campaigns to attract consumers (LinkedIn Corporation, 2024). 1 Economic Volatility Economic outcomes are unfavorable for British fashion labels like Ted Baker; see Figure 2 illustrating UK GDP growth. The UK fashion industry contributes 3.2% to GDP growth (Oxford Economics, 2022) - what is the link between GDP and the fashion industry? You should show a diagram with its contribution to GDP Figure SEQ Figure \* ARABIC 2: UK GDP Growth in the last decade Source: (The World Bank Group, 2024). Inflation, profitability margins, and declining consumer demands are primary economic constraints for British fashion labels, as illustrated below in Figure 2. The high inflation rate mitigated the purchasing power of British households while purchasing wardrobe apparel and accessories (Amed et al., 2023). According to Lennox (2024), inflation increased operational costs for Ted Baker since the company relied on physical stores during the pandemic. Competitors like Marks and Spencer (M&S) overcome the challenge by diversifying into digital solutions. However, Ted Baker’s digital capabilities failed to mitigate inflation while controlling operational costs. Hence, Ted Baker requires a contingency measure to overcome economic constraints 88. *This shows general information about the industry you need to apply to the company. How did this affect Ted Baker? How did other competitors cope with this same issue? Figure 2: Biggest Challenges in British Fashion Industry Source: (Amed et al., 2023) 2 Buyer’s Influence Nonetheless, the industrial environment is an additional burden on Ted Baker. Porter’s Five Forces (reference in appendix) explored the industrial environment of the British fashion industry. The results denote that the ‘Bargaining Power of Buyers’ is a significant force in the fashion industry. Gen-Z customers prefer minimalism in wardrobe choices and value for price. Fashion labels like Ted Baker cannot charge high prices for floral and quirky designs since customers demand sustainable, minimalist wardrobe solutions (Logans, 2024). - when did this occur? As a result, brand loyalty and customer retention become challenging for fashion retailers like Ted Baker to sustain operations in the long run (Mandaric et al., 2022). Shifts in buyer choices allowed competitors like M&S to capitalise on Ted Baker’s customers through minimalism solutions, leading to the brand’s recent shutdown (Lennox, 2024). 125. You need to state the impact of this external factor. How did it lead to the closure of the business? Profits declined? What exactly happened? *How did competitors react to this change? 3 Substitution Effect Lastly, the ‘Threats of Substitute Products’ is a secondary source influencing Ted Baker’s industrial environment. According to Chevalier (2023), demand for athleisure fashion is replacing traditional wardrobe choices for Gen-Z customers. Gen-Z customers are health-conscious, and athleisure complements their lifestyle choices. Besides, athleisure brands like Nike and Adidas offer sustainable product solutions with minimalism to increase sales (Chevalier, 2023; See Figure 3 below). Figure SEQ Figure \* ARABIC 3: Rise of Athleisure Brands in the UK Source: (SRD, 2024) Athleisure substituted quirky designers like Ted Baker, causing a loss of market share to Nike and Adidas. Floral designs and color vibrance were unique selling propositions (USPs) for Ted Baker in the British fashion industry. However, paradigm shifts in customer base and changing trends influenced fashion relevance. 102 *this 3rd factor sounds very similar to the 2nd. You must also show actual numbers and specific data on how the external factor impacted the company. 1 Internal Factors Affecting Ted Baker Whittington et al. (2019) discuss a critical phase of organisational strategic planning for the future as internal analyses to ascertain opportunities and strengths. The frameworks chosen for examination are a SWOT analysis (Appendix III) and Porter’s Value Chain (Appendix IV) of Ted Baker. The internal environment is significant for companies to understand core competencies and areas of improvement for strategic growth. Brands must evaluate financial strength, brand value, and resource diversity to measure their internal strength to cope with external forces (Dawid, 2024). 43* what is the importance of the internal environment? What are some internal factors? Provide an overview and explain the purpose of the frameworks used to analyse the internal factors. 1 Value Chain Analysis The value chain analysis is necessary for brands to identify cost-saving opportunities through logistics, acknowledge competitive advantages through differentiation, and optimise strategic decision-making. Brands could use the framework to align internal factors for synergy (Adama et al., 2024). (importance, impact and reference of the diagram) The framework found Ted Baker in a robust position to recover from external environment constraints. For instance, the company’s inbound logistics has a diverse global value chain (GVC) network to procure high-quality and sustainable raw materials to manufacture fashion apparel and accessories (Ted Baker, 2024). Ted Baker’s outbound logistics uses omnichannel, physical and online, to manage its retail business. However, digital distribution is weak, and the company relies on physical store performance for profitability (Ted Baker, 2024a). 81 Furthermore, Ted Baker’s value chain emphasises consumer focus, facilitating customers through post-purchase product returns and information about future campaigns (Ted Baker, 2024). The human resource department includes diverse teams that manage retail, marketing, production, operations, design, inventory, and supply chain functions. The value chain framework also found that Ted Baker has an infrastructure disadvantage due to a weak digital presence (Ted Baker, 2024b), such as Zara. Hence, the analysis confirms that Ted Baker has underutilised its competencies to succeed in the British fashion industry. 101- this sounds more like a recommended strategy. What are some flaws in the company’s value chain analysis? 2 SWOT Analysis The SWOT analysis framework identifies Ted Baker’s core strengths and weaknesses, followed by potential opportunities and threats in the business environment (Ghaleb, 2024).- reference SRD (2024) confirms that the fashion industry relies on brand visibility to connect with customers. Ted Baker has substantial visibility worldwide and retail experience to penetrate emerging markets. 88- This sounds like a solution, so highlight the issue. On the contrary, the fashion propositions are a fundamental weakness for Ted Baker in the modern epoch. The brand relies on floral designs and quirky color palettes that are distant from Gen-Z’s fashion preferences. Competitors like M&S and ZARA embraced the trends and offered relevant wardrobe solutions to customers. Besides, Ted Baker struggles to manage operational and production costs due to economic constraints. The physical store dependency failed Ted Baker’s efforts to reduce operational costs, which athleisure brands like Nike capitalised on during the pandemic (SRD, 2024). Hence, the company lost its market share significantly. 61- how did this impact the company in general? Did Ted Baker attempt to mitigate the issue? Compare with competitors. 1 Strategic options Ted Baker will choose a differentiation strategy to overcome internal and external constraints. Differentiation strategy allows businesses to rebuild a brand proposition by innovating or changing product portfolio, revising target audiences, and improving servicescape delivery (Whittington et al., 2019). *Briefly describe the strategy and give reference to the core textbook 3 Metaverse McKinsey & Co. (2022) discuss the global fashion industry moving towards a metaverse. Metaverse is a virtual solution that delivers an immersive experience to users, creating an augmented reality (AR) for nonphysical interactions. Metaverse in the fashion industry allows customers to try outfits virtually and improve decision-making (McKinsey & Co, 2022). what is metaverse? give benefits Brands like Balenciaga, Burberry, Ralph Lauren, and other luxury labels embrace the metaverse to unlock a new customer experience. The investment empowered brands to connect with customers and trigger impulse purchasing behavior for robust sales. According to McDowell (2022), Balenciaga and Prada increased their market share by 15% since 2019 after integrating the metaverse experience- providing statistics of sales increasing as a result. Ted Baker’s marketing and IT departments should consider metaverse as a strategic option to expand brand proposition through internal collaboration. The analysis found that Ted Baker lost customer relevance due to reliance on physical stores and minimal changes to offer in the product portfolio. Metaverse would allow Ted Baker to reconnect with modern customers, offer personalisation, and generate more revenue from a diverse marketplace while retaining market share in the long run. 90- which issue will this alleviate? Link back to the previous section. Who should carry out this strategy? The Marketing department 4 Penetrate Operations in Emerging Markets According to Assomull (2023), the MENA region is an emerging market for fashion labels. MENA region demands fashion solutions offering luxury, heritage, and exquisite propositions. Besides, customers in the MENA region a...