report; prada
TRANSCRIPT
C3311542
Leeds Beckett University
Faculty of business and law
BA (Hons) Business Management
MKH330032 - Managing for Competitive Advantage - 22194 - Y – 201415
TABLE OF CONTENTS
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Introduction
This report will identify and examine Prada’s strategy formulation and
implementation, strategic capabilities and current issues with the application of
relevant theories such as the VRIO, Porter’s 5 forces and PESTLE analysis. These
academic theories are significant to the report as they provide credible analysis of
the overall strategy, and also determine potential short and long term
recommendations for Prada; as a supposition adapted for the critical discussion and
analysis of the future strategy of Prada.
The macro environment will be matched against an analysis of Prada’s capabilities in
order to analyse its strategic position which will then progress to evaluate the
competitive advantage. Following, the report will analyse the strategic challenge
behind Prada. Subsequently, the implementation of Prada’s strategy will be
discussed to see if the strategy has had a negative or positive impact on the
company and if so, which areas have been influenced.
Furthermore, a final conclusion will be produced that will be drawn as a result of the
analysis conveyed through previous sections of the report. Likewise, two short and a
long-term recommendation will be put forward from the strategic analysis.
History
Founded in 1913, Prada was established by Mario Prada (Miuccia’s Grandfather) in
Milan, “located in the prestigious Galleria Vittorio Emmanuelle II, Prada was an
exclusive, stylish store selling luggage, accessories and luxury goods, in fine
materials and of sophisticated workmanship,” (Prada Group, 2015). Quickly, the
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Milan store was favoured with Italian aristocracy and was appointed to the royal
household.
Fig 1. Timeline
1913 Mario and Martina Prada founded a luxury goods shop in Milan, known as Fratelli Prada.
With excellent strategic location, the brothers were linked in upper class retailing since the
opening in 1877; affecting factor that helped Prada claim premium market positioning
according to Moore (2010, p.84).
1919 Appointed the “Official supplier to the Italian Royal Household”
1950 Prada announced its work of innovation by launching a new type of nylon.
1977 Miuccia Prada and Patrizio Bertelli started their partnership after Miuccia was given the
option to take over in 1978 (Caroline Daily, 2011). Also setting up the I.P.I spa to
consolidate production resources.
1980’s
Miuccia began to develop and market an innovative line following in 1979 for the official
release of the elements of Avant-garde.
1983 Bertelli opened more Prada stores, the second being in Via Della Spiga, Milan.
1984 Due to low sales, Prada launched nylon bags that were processed to resemble silk.
1985 “Classic Prada Handbag”
1986 Globalisation: New stores in NY, London, Madrid, Paris and Tokyo.
1988 First runway with the pret-a-porter collection
1990’s
“Growth Platform Phase”
1993 Launch of diffusion brand, Miu Miu
Received Council of Fashion Designers of America award
Patrizio and Miuccia created Fondazione Prada; to create a customer experience full of
architecture, philosophy and culture formerly known as an exhibition “Milano Prada Arte”
1995 “Designer of the Year”
1996 Opening of Prada Boutique in Manhattan, the largest chain at that time (Prada Group,
2011).
1997 Patrizio tried a new marketing technique by starting to sponsorship “Prada Challenge for
the America’s Cup 2000”.
1998 Prada sales were at $31.7m
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First menswear boutique opened in Los Angeles
Prada was determined to hold leading portfolio as its biggest competitors were Gucci and
LVMH. Thus, main strategy was stock actions and cooperation.
In the summer, ambitions were proved as its acquisition of 9.5% interest at $260m of
Gucci shares
Prada sold it’s shares shortly after to LVMH at a profit exceeding $100m (The M&A
Journal, 2002).
1999 Rejoined LVMH in brand alliance to purchase 51% stake in Fendi, 25.5% belonging to
Prada worth $241.5m
Acquisition of shoe brands proved to be successful as Prada secured ownership of
Church’s and Car Shoe. The two acquisitions gave access for production and technical
skill and complimentary design that would develop the core shoe business.
2000 Prada mergers and acquisitions slowed
Loose agreement with Azzedine Alaia to produce skin products, introduced in US, Japan
and the EU.
Realised expansion may provide a redefining of the brand so introduced to types of
stores: typical and unique. The unique; Epicenter store was opened in 2001 in Soho, NY.
2003 Agreement with PUIG Fashion and Beauty group
Second Epicenter opened in Tokyo – highly important in terms of revenue
Literature recognition – Devil wears Prada
2005 Made short film “Thunder Perfect Mind” at berlin film festival that increased Prada’s brand
value
2006 To reduce debt, 5% of Prada was sold to Banca Intesa for 100m euro’s
2007 Collaborated with LG to create a mobile phone
First corporate website
2008 Released second smart phone
2009 Prada Book was published to create brand essence
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Globalisation and localisation was expressed by launching "Prada Made in…” labels
Online store launched in Europe
2010 Online store launched in US
2011 Prada launched Hong Kong Exchange
Source: Compiled by Author
Strategic Position
Process
Design
As a unique approach, Prada has the ability to set trends whilst still experimenting
with new products and techniques; the Prada products are full essential components
of design through experimentation and exchange of philosophies. Miuccia Prada has
an articulate ability to combine strong fashion sense, intellectual curiosity, culture,
unconventional and new ideas and society but also based on method and discipline;
giving the ability to establish Prada as genuine ‘in-house’ design culture.
Moreover, the partnership between Miuccia and Patrizio attracts the desire of work
from many entrepreneurs in all innovative trades “this results in formidable teams in
all aspects of the creative process: from fashion design to manufacture, from
architecture to communication and photography, from interior design of the stores to
all unique and special projects in which the Prada Group is involved,” (Prada Group,
2013, p.19).
Production
Prada’s employees in the production department, on average, have been working for
20 years thus leading to the highest level of speciality, extensive knowledge of the
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brand and ensures security of core values within the company. Through a network of
external sub-contractors, products are made in 11 facilities in the EU, coordinated by
a team of specialists internally and particularly selected for their craftsmanship skills.
Distribution
o Epicenter concept store programme located in NY, Los Angeles, Tokyo
in collaboration with Rem Koolhaas & Herzog & De Meuron
o Retail networks
As a result of new store openings, the retail channel limited its
net sales decrease compared to the prior year to -1.3%, also the
EU saw net sales drop by 4.8% according to Prada Group
(2014, p.21)
o DOS expansion, also to improve communication; consistent brand
image
In comparison of December 2014 to January 2014, net
operating working capital had increased by (eu) 153.6 million
due to the an immediate increase of 54 DOS and a different
replenishment strategy to improve the retail range, adopted in
the final months of 2014.
o The wholesale channel
Generated net sales of (eu) 532.5 million, a decrease of 3.4% in
comparison to 2013; in line with the Group strategy that solely
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prioritises the progression of the retail channel, essentially
relative to the EU and US markets
Human Resources
An international environment enables higher efficiency, effectiveness and closer
cooperation in order to analyse certain processes. This also enables employees to
make the most of specific local characteristics in order to improve the business as an
ongoing process and to also achieve integration between central and subordinate
parts of the business with a whole focus.
Culture
Fondazione Prada was born in 1995 with the purpose of receiving and
communicating what Miuccia Prada calls “the most powerful mental and cultural
provocations of our time” (Prada Group, 2014, p. 25) – also turning into a vital
attraction for the company’s culture. The importance of culture for Prada is also
supported by Liedtka (2000) whom argues that the key purpose of strategy is to
create a focused space that allows desired activities, relationships and behaviours to
flourish. Moreover, implementation as a part of the strategy formulation process is a
bottom up activity rather than top down (Johnson et al., 2013, p.78).
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VRIO Analysis
Organisations facing the same environment as Prada, with multiple changes at
different levels creating new opportunities and threats, have different capabilities;
these distinctive capabilities may lead to a competitive advantage. As a result,
organisations including Prada may respond by changing or maintaining their
strategic position. A VRIO analysis will enable one to evaluate more of Prada’s
strategic capabilities in order to find a better understanding of the strategic position.
Value
Prada has many products and attributes of high worth that provide high rivalry in
the luxury industry such as the leather line and their tourist attraction flagship
store. Not only has this, but the rapid expansion of DOS provided extreme
pressure on competitors such as Gucci and Fendi.
Rarity
Although one may classify any capabilities of Prada as ‘rare’, the company has
excelled in fabric innovation and is the only retail company to use Patented
fabric – Pocone and Saffiano leather which many upper class clients will find
irreplaceable. Also, unlike any of its competitors, Prada has been classed in
modern literature such as ‘The devil wears Prada’.
InimitabilityPrada’s product line, unfortunately, is easy to imitate especially as there is ‘fake
Prada’. Although a problem, many rival competitors have a similar problem such
as fake Burberry, Chanel and Gucci.
Organisation
The risk of substitution is extremely low. Moreover, Prada has since its
establishment retained its brand equity through attention to detail in design,
production and its moral of culture, however, innovative industries are becoming
larger and of higher prioritisation therefore Prada needs to remain an innovative
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organisation in its products and DOS.
Source: compiled by author
Although the VRIO analysis gives a brief indication of Prada’s competitive advantage
in comparison to its rival competition, it does not give more of an insight to a
comparison the company’s strategic position, resources or competences as much as
a competition analysis could.
Fig 2. Competition Analysis
Prada Burberry Bottega Veneta
Background
Produces 8 collections
each year
Positioned at discretely
higher price points than
LV, Gucci and Burberry
Burberry Prosum,
Burberry London and
Burberry Brit
Core business:
Outwear
Targets highest
wealthy, modest
and discreet
customers
Core business:
Bags 85% of
revenue in 2012
Resources – Tangible
Listed in HK and in its
IPO raised $2.14 bn
Distribution network of
over 564 directly
operated stores
Patented fabric –
Pocone, Saffiano
leather
Tremendously low staff
turnover
29.04.2013 Burberry’s
capitalisation was
£5968.76m
2 factories in UK and
90 external
manufacturers – a
majority in Italy
Patented Fabric –
Gabardine
Trademark of checked
Company under
PRR, listed in
Paris since 1988
A single factory in
Vicenza
Intrecciato
technique
Resources - Intangible
According to Millward
Brown Optimor, in
2012 Prada was the 6th
most valuable luxury
brand with a brand
value of $5788m
According to Millward
Brown Optimor, in
2012 Prada was the
10th most valuable
luxury brand with a
brand value of $4090m
Over 100 artisans
all skilled in
intrecciato
Capabilities Fabric Innovation Close association with
British culture
Philosophy of
stealth luxury
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Competitive RivalryModerate – High: As a
high quality luxury brand, Prada has many rival competitors such as Gucci, Chanel, Louis
Vuitton, and Versace who are all continually
competing and trying to innovate against each
other.
Threat of New EntrantsLow - Prada has
extremely high brand loyalty, high awareness of
all customers and continues in innovation
through stores and products.
Buyer PowerLow - Prada has a high market segmentation relative to customer
satisfaction as they have extremely loyal
customers. Moreover, the switching cost is also
relatively high.
Threat of SubstitutesModerate - Although
Prada is a unique luxury brand, there are
exceptionally precise imitations known as ‘Fake Prada’ which could be of high threat to Prada as some consumers may
prefer to pay a lot less for a replicate.
Supplier PowerLow – Moderate: Prada
has exclusively high quality products inclusive of external and internal
suppliers.
Avant – Garde design
philosophy
Global sourcing of
skilled artisans
Diverse product
portfolio as a result of
effective management
Pioneer in digital
marketing
Flagship store on
Regent street –huge
tourist attraction
Commitment to
corporate responsibility
Use of S.A.P worldwide
branding
Craftsmanship is
a long term
Sustainability
Less diverse
product portfolio
Source: Compiled by author
Competitive advantage can be improved and sustained by presented new
opportunities and threats by the macro and competitive environment. Prada’s
competitive strategic position can be further evaluated through the Porter’s five
forces analysis.
Fig 3. Porters 5 forces
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The macro strategic position needs to be analysed through the evaluation of the
external macro environment especially as Prada announced that the
“Macroeconomic environment was more challenging than expected,” (Prada Group,
2014, p.327).
Fig 4. PESTLE Analysis
Political Political tension that affected several important markets for Prada Global political developments (War in Iraq 2003) Geopolitical factors could lead to reduced tourists and travel
therefore having a negative impact on Prada’s sales and results – which has happened in the past.
Economic The international economic environment in Prada, operated in 2014, was challenging due to ongoing economic uncertainty
“The performance of the luxury goods market greatly depends on general economic conditions. Therefore, the Group’s profitability and operating performance are exposed to global macroeconomic risk factors as a consequence of its operations on an international scale,” (Prada Group, 2014, p.78)
The international economic environment could have a negative impact on demand of products and credit accessibility which may therefore have a negative impact on cash flows and the financial condition of Prada.
Adverse economic conditions (e.g. the financial crisis of 2009) Intangible assets such as trademarks, store lease acquisition
costs, software are capable of producing economic benefit.Socio-cultural The luxury consumptions have been affected by a general
economic slowdown and the spending patterns of Chinese customers have been influenced by “anti-extravagance campaign”
Reduced brand loyalty due to rising competition increasing consumers’ influence and attitude making them more demanding, particularly in the Leather Goods segment.
The challenge of meeting customers' needs is growing, due to the
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ongoing change of new generations’ habits and culture(Prada Group, 2014, p.378)
Technological Innovative products and stores High expenditure in R&D and locations of DOS Prada needs to upgrade products a lot more and create something
innovative so they’ll outdo competitors easily. Legal Collaborations with multiple businesses
Merged and acquired with other partners and businessesEnvironmenta
l
Prada is renowned for being environmentally unfriendly and suggests this in their policies
One could suggest that Prada are a logical incrementalism due to environment uncertainty when locating the DOS and generic goals in their strategy.
Source: compiled by author
Strategy
Through application of theory to Prada’s strategy it has become evident that Prada
have a clear strategic position, competitive advantage and where the company lies in
terms of the macro environment. From the application, one could reflect that Prada’s
main strategies lie between distribution as internationalisation being a varied form of
diversification but into new geographical markets, and innovation.
Distribution
Over the last decade, Prada have opened over 594 DOS stores, a lot more than
immediate competitors, as part of their gradually changed strategy including
globalisation. Usually luxury retail businesses operate through retail or wholesale
strategy with a transaction period known as ‘Merchandise Mix’ for companies going
from one to the other. Prada could be considered solely as retail due to the nature of
the company being near the end of its transaction but on the published report it is still
operating through, “The products are distributed through a sales network of DOS
which are located in prime locations, as well as a wholesale channel comprising
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prestigious luxury multi-brand stores, department stores and franchise stores,”
(Prada Group, 2015).
Source: Prada Group (2014)
According to Chevalier & Gutsatz (2012, p.137), the DOS strategy has always
existed and especially in the luxury industry, due to outstanding increases in sales
and profitability, there has been a rapid escalated shift of brands from wholesale to
retail; which may be the purpose behind Prada’s strategy. In the early 2006, Prada
were still in that much debt they had to sell 5% of Prada to Banca Intesa for 100m
euros.
Yet, valuation and margins collectively with slower growth have been damaged by
Prada’s expensive store expenditure and as a result, stock may have to be sold or
have held recommendations on them as the share price has nearly halved in the
past two years. Nevertheless, the strategy of concentration on same-store sales has
produced success for some luxury brands for example; it was revealed after Louis
Vuitton invested majorly in new product types via Nicholas Ghesquiere, they
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received a strong rebound also halting the opening of more stores. This attainment
could be the instigation to “Prada is starting to focus on same-store sales growth
three years later than some of their peers as their priorities were elsewhere, ”
(Rambourg, 2014, p.56).
In contrast, Prada stopped reporting their same-store sales which may be due to
estimations showing that in the first quarter – January 31st there may have been at
least a 9% drop and there has been a fall on fall year by 12% in the last quarter to
October 31st, according to The Malay Mail (2015). The adopted strategy of DOS is
causing Prada financial problems which may be due to a “climate of lower gross
margins and unimpressive sales, the fixed costs of the stores mean it takes much
longer to break even,” (Galbraith, 2015).
In addition to the excessive expansion, after floating in 2011, Prada used cash up
front to secure the best locations of new stores. For example; a location was bought
for over 20 million euros, outbidding Apple and Gucci, to build a menswear store
opposite the 19th century Galleria Vittorio Emmanuelle shopping arcade. The
renovation of the entire Place du Rocher was financed for in order to make ‘a better
fitting address’ for Prada’s new boutique. The expenditure for such privileged stores,
however, has had quite an alternative impact on Prada’s reputation as customers
have expected the same quality and improvement in the products withheld in the
stores. Billions have been spent on the expansion of DOS, one of Prada’s main
strategies yet, Miuccia declares innovation of key importance but has taken no action
into proving this within the company.
Innovation
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Due to an advance in technology, customers have become increasingly more
demanding due to the increased accessibility to brand information and new product
designs, but also happy to find an alternative brand if there is a lack in innovation;
especially in fashion. However, Prada have slowly recognised this effect and have
stated in recent interim reports that the consequences of a more diversified and
sophisticated customer that are open to increasing competition, require Prada’s
prompt responsiveness whilst still investing for the long term (Prada Group, 2015).
The lack of innovation in Prada’s business strategy has been perceived as
consumers have recognised that rival competitors Fendi and Dior have been
observing the evolution of trends consistently. Yet, Prada’s stores are still only
stocked with original best sellers, even though the most recent trend in luxury goods
is to increase sales by curbing expansion and introducing innovative products. This
pure standardisation, based on dominant design, is restricting any potential
customisation or current interest in the brand.
Ratings have been upgraded to overweight by HSBC analysts on the reliance that
“issues of innovation in handbags and accessories” will eventually be amended. In
winter, however, the flagship store in Paris had no evidence of winter attire on
display yet, both Gucci and Louis Vuitton inclusive of promoting summer collections
had boots on display also; Gucci extended the displays so far as fur-line models.
Executive Manfredi Ricca, Interbrand, suggested maximising revenue in existing
stores is now more of a higher priority, in terms of strategy, rather than further
expansion, “Having many retail outlets is less important than being able to offer the
experience that clients look for in a brick-and-mortar shop.”
Risk of Prada’s ImplementationC3311542 Page 15 of 27
Prada have been allocating the same resources yearly but more recently they have
been seeing a drop in the retail channel by -1.3%, and the wholesale by 3.4%. Not
only this, but Prada’s Net Financial Position decreased from January 2014 to
January 2015 from 296m (eu) to 189m (eu):
Source: Prada Group (2015)
This downturn in financial performance shows symptoms of strategic drift and could
be due to the strategy being out of line with external competitive environment as
explained by the ESCO model. Prada’s strategy is mainly based on the
development of retail channel (DOS) and on expansion internationally, the
implementation of which is solely responsible for the ability to increase revenue and
profitability. There is also increased risk of managerial authorities maintaining
consistent brand image aligned with Prada’s identity and the interior of the DOS in
order for brand identification to be properly represented. Also, the market conditions
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and consumer trends in the new DOS location are extremely relative to the store
sales so monitoring should be kept at a maximum.
SWOT Analysis
The previous analysis of Prada’s strategy highlights the main strengths,
weaknesses, opportunities and threats of the organisation especially through
environment change. The capabilities recognised can be used to collect future
opportunities provided by the external environment; the achievability is however
affected by the culture of the organisation. The purpose of the SWOT will specify the
significances of Prada’s strategic choices in order to inaugurate recommendations.
Strengths Prada history and heritage Strong brand identity Diffusion brands such as ‘Miu Miu’ Successful merging and acquisitions Prada Sponsorships: Challenge for the America’s Cup 2000 Literature recognition Collaborations with multiple businesses Intimate control over the entire value chain Global expansion Hong Kong exchange
Weaknesses Slowing of merging and acquisitions due to debt 5% of Prada was sold to Banca Intesa for 100m euro’s to reduce debt Private company so there’s ongoing difficulty in acquiring funding and
corporate debts A lack in innovation of products Undesirable policies regarding environment Excessive DOS openings and reliance Reduction of high branding image due to so many merges
Opportunities
Global market growth – Prada already has recognised this and has taken full advantage
Outsourcing production Product alliances with current partners Digital market – which could also capture the younger generation more
so Innovative products – what could Prada produce that Gucci or Burberry
have not? The Fondazione could be made more of an attraction for Prada E-commerce
Threats Fake Prada EU Crisis
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Successful online retailers Cheaper but still good quality retailers such as ‘Misguided’ – pricing
strategy Existing competitors Transparency of Internet leading to price consistency ‘Burberry effect’
Source: compiled by author
Recommendations
Short-Term
Rigorous Cost Management
The overview of Prada’s strategy formulation and implementation indicates a huge
lack in financial control which is especially due to the huge expenditure of
internationalisation of DOS. Therefore, the first short term recommendation will be
rigorous cost management. Effective cost management will, hopefully, start to
increase Prada’s net profits and create financial stability. Effective cost management
can be split into four main priorities of spending:
Timely: Prada’s finances are only to be used in agreement with the new
corporate expenditure strategy
Wisely: Expenditure is only empowered when a gain is achieved
Correctly: Expenditure is only for those that are obligated
Perceptively: “Spending versus achievement variances are identified,
analysed, corrected or trended so that early warnings can enable timely
actions,” (Tichacek, 2005, p.2).
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Integrated financial controls should be as follows:
Source: (Tichacek, 2005, p.3)
The advantage of effective cost management for Prada would not only be financial
stability but the ability to ensure that all costs are monitored and put on a central
record so on a financial interim Prada can publish specifically where the losses went
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rather than presume it was the ‘microenvironment’. Although at first it would be
difficult to cut losses and implement the strategy, the intense cost management
would be feasible to Prada as they are still a highly respected organisation therefore
sales would still be arising; giving a suitable refining strategy.
Strengthening of Processes
Source: www.bain.com
The second short term recommendation is to strengthen the organisational process
and culture. Prada has significant processes as an organisation; whilst prioritising
culture and design and although it may not be an obvious recommendation, Prada
needs to determine what needs changing in order to determine and help certain
decisions effectively rather than brusquely. By adopting the decision lens, Prada will
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gain an advantage of encouraged leaders knowing where their main focuses lie and
where their highest impact is throughout pessimism. Additionally, strengthening
Prada’s processes will situate themselves to accelerate when the economy turns
around.
One of the processes that Prada fails to take advantage of, also, is digital marketing
which is having an effect on the company’s brand identity. Prada’s website lacks
exceeding amounts of information on products and although it does have an online
shop, the actual Prada website does not disclose this or have immediate links to it.
The accessibility to increase Prada’s digital marketing is extremely low, it would also
be consistent and have advantages of higher sales and increased brand identity.
Moreover, Prada has low interaction and brand identity on social media which is the
core of communication – of high importance to Prada:
Burberry
Dior
Gucci
Chanel
Armani
Tiffany & Co
Prada
0 2000000 4000000 6000000 8000000 10000000 12000000 14000000
Facebook 'like' Competitive Comparison
Source: Compiled by author
Prada is the lowest in comparison to its rival competitors and although as a brand
they may feel too luxury to partake in social media, the interaction engages with
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customers and enhances CRM. If Prada increased their engagement through social
media or digital marketing, they would be able to understand more of what the
customer wants which could be in terms of products or more feedback on the DOS.
The engagement could still be ‘upper class’ to match the brand and be a lot more
suitable to the company and there would be high feasibility as it would take a lot of
management but would not affect the rigorous cost management.
Long-Term
Focus on product excellence
In the ‘strategic challenge’ section of the report, it is apparent that Prada is
prioritising DOS over product excellence and over any attempt of innovation in its
most recent products. Innovation is rapidly increasing internationally and especially
in industries that use technology.
One would highly indorse as a long-term strategy that Prada should nurture their
innovation skills. The organisation should focus on the heart of their organisation as
well as still focusing on internationalisation; universally, Prada have always been
recognised as a market leader in terms of design especially, but also style with a
substantial drive of trends in retail. If established, Prada could preserve their
centennial knowledge and craftsmanship and also invest in the value chain and
potentially up-stream vertical integrations; in order to preserve competitive edge.
To focus on product excellence would be highly feasible, consistent and
advantageous as Prada are a high luxury brand and have been since its
establishment. Once the product excellence was to the highest standard, the
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production would be consistent as long as new employees recognised the original
culture of Prada and kept the standards extremely high.
Prada could also hire technologists and retailers to innovate a completely new
product of clothing that would enhance the brand name, put Prada as an official
market leader and create a new sense of retail; as Apple did for technology.
Although this may seem unfeasible and at a disadvantage due to costs, the
suitability to Prada is extremely high and would put the brand at a complete
advantage.
Conclusion
Prada, an exclusive company, has had an intimate amount of detail in its strategy
since its establishment in 1913; it is evident to see how the company takes pride in
each of their processes and the highlighting of their significance. By conducting
several types of analysis such as VRIO and porter’s 5 forces, Prada’s competitive
advantage, strategic position and strategy implementation became apparent, as did
the effects of the macro environment and trends in competition.
One could reflect that Prada’s main strategies lie between distribution as
internationalisation being a varied form of diversification but into new geographical
markets, and innovation. The current issues amongst Prada’s strategy lie within
these main focus areas as Prada have created an imbalance of priority; too many
DOS with dated products. Not only has this had a contrasting influence for their
reputation and demand, the sales have plummeted and Prada are having financial
difficulty.
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The analysis of the strategy formulation and implementation evaluated in the report
has empowered one to create two short term and one long term recommendations;
rigorous cost management, strengthening of processes and focus on product
excellence, respectively. All three of which create solutions and high advantages for
the current issues in Prada’s strategic implementation.
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