Question

Jean L, a global jeans manufacturing company reached its peak sales in 1996 and then found its sales suddenly declining and within 5 years, the sales were down by 40%. A combination of good design, pursuit of new trends and savvy marketing helped competitors take share from Jean L. Jean L had focussed on jeans for men and company’s products were found to be outdated, expensive and rather unresponsive to changing market preferences. Jean L did not move its manufacturing base to low cost producing centres. The company then responded to the declining share by three steps. First, the company closed most of its plants in its home base, laid off Over 6500 employees and moved manufacturing to low cost countries. Second, it attempted to stay ahead in fashion trends rather than follow them, paying much more attention to women, with a series of new designs such as “superlow” line of jeans meant to be feminine, mass marketing the jeans within three months of testing. Third, the company announced its original Spin Programme to supply custom made jeans for individual customers, using web based technology and computer controlled production equipment to implement mass customization. Today, a full stocked Jean L store carries 130 pairs of ready to wear jeans and with original Spin Programme, ' * i the choices available can leap upto 750. Jean L charged premiufti of 20% for this service which helped redefine its relationship with the customers, by becoming customer’s personal ‘Jean Adviser’. The company installed a device to scan the entirebod.y of the customer to generate custom patterns that are instantly transmitted to the production plant to manufacture jeans, shirts or any type of clothing.

(i) What strategy did Jean L pursue originally ? Why did the strategy fail ? How do you evaluate the strategic change implemented by the company ?

(ii) What are the generic competitive strategies that companies can adopt ? Is it in the interest of a nation to allow shifting of production to low cost countries ? Examine in the context of income and employment generation.

Answer 1

What strategy did Jean L pursue originally ? Why did the strategy fail ? How do you evaluate the strategic change implemented by the company ?

Going forward with the case discussed initially Jean L was having edge in the market and all the products were directed towards the single audience Male as jeans manufactured by Jean L were focused on male audience and since company was already enjoying the best place in the market so they were enjoying the monopolistic position where in they were focused only on Male audience with no innovation and didn’t worked out the pricing strategy as per demand and also neglected the decision maker the female audience whereas competition started focusing on this audience segment and develop product s required by the market within the budget and immediately started capturing the area where Jean L didn't focused which ultimately resulting in the sales going down by 40% which on other hand Jean L lost their market position and it was purely a monetary losses to the company. Their strategy to stick on same product was not appropriate in the competitive market so it was totally a disaster to the company overall growth. If any business didn’t focused on market demand and stick to its own product strategy and no innovation is worked out using the technology or with current trend all such business gradually faces losses as Jean L did. Their strategy failed due to their stringent nature and not working out as per market demand and over and above blind confidence that company still enjoy the market leader position actually fail to worked out in favour to the company.  After evaluating the market trend and loosing 40% market share to the competition when detailed market analysis were studied by the management of Jean L, they immediately implemented the new plan of action to recaptured the lost market share while launching new brand "Superlow" for women’s and custom made products (jeans) for individuals using latest trends and using technology which helped the company to regain its market position and finally reach to its position again such change ib strategy shows that mindset of the people changed only when you see that something is going wrong and if corrective steps were not taken immediately company may face situation of closing down its operations which was not a god sign for anyone.

What are the generic competitive strategies that companies can adopt ? Is it in the interest of a nation to allow shifting of production to low cost countries ? Examine in the context of income and employment generation.

Basis on the fact that company lost it's 40% share due to not focusing on the market demand and with impression that since Jean L is the brand and people trust on their product so they can sustain in the market without changing its trend, product and cost may not be the right approach it longer term. So once they have taken corrective steps the company can adopt the generic competitive strategies as per the market requirement. They can work out on the cost depending upon the situation and requirements. At same time differentiation of the product with innovation so to attract more and more customers and having different products which was required by the customers or demanded by the end user can be priced higher or lower as per the market working process because differentiation strategy allow company in controlling the price in the market. Such a strategy needs strong segmentation, marketing and branding skills. At same time company needs to control its cost as well for which as defined Jean L finally shift the production to the low cost country which is ultimately helping company in saving good amount of money which can be further used in developing new product and strategy to market such product which ultimately helping economy in creating demand and once demand is created supply of the product started which finally helps economy to develop more as it gain from sales of the product.