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Tenfold Organic
Textile
Case Analysis Report
Lecturer: Dr Chong Yit Sean, Esther
Tutor: Dr Tan Seow Kian, Sharon
Word Count:
Table of Contents
Executive Summary.........................................................................................2
1.0
Introduction.............................................................................................3
1.1
1.2
Company information...........................................................................3
1.3
Assumption..........................................................................................3
1.4
Methodology........................................................................................3
1.5
Purpose of Report.................................................................................3
Executive Summary
Tenfold Organic textile is a company that provides naturally dyed organic cotton
products to consumers, manufacturers and retailers. Tenfold attracts its customers
by being an environmentally responsible organization that produce apparel using
eco-friendly and chemical-free dye. The purpose of this report it to analyze the
strengths, weakness, opportunities and threats of Tenfold in order to address the
main issues that the company can improve. Furthermore, using academic journals,
two alternative strategies will be discussed to improve and enhance the
organizations strategic position. The first issue that Tenfold faces is that there are
many brands that are being sustainable and socially responsible in the long run,
however, not much apparel companies have the capacity to reach the goal with
Tenfold to be the right partner. The second issue is that there are low barriers to
entry as a result of highly fragmented market which allows more competitors in the
market. Two alternatives are provided in this report. The first alternative is using the
strategic alliance strategy to help reducing costs with suppliers and support
development of new products and technologies. The second alternative is using the
Blue Ocean Strategy to create value innovation by offering different kind of organic
apparel to the partner brand. Moreover, blue ocean strategy can help Tenfold to
enhance the organizations strategic position. All in all, the best strategy for Tenfold
is the blue ocean strategy since it can decrease the number of its competitors when
using this strategy.
1.0 Introduction
1.1Purpose of the report
The purpose of the report is to analyze and discuss the main issues that
Tenfold organic textile need to improve and provide alternatives to get a
superior performance. Assessing the companys strengths and weaknesses
will help Tenfold to have a planned strategy, gain more profit and create a
well-known
brand.
Furthermore,
clear
understanding
about
the
1.2Company information
Tenfold Organic Textiles is a company that manufactures naturally dyed
organic cottons which was founded by Leah Weinstein and her brother Paul
Weinstein in 2006. Tenfolds main mission is to provide organic apparel
using naturally dyed fibers by reducing the use of the chemicals in textile
manufacturing. They believe that fashion industry should not pollute the
environment with chemicals and synthetic dyes. In order for the cotton to
get an organic label, it must meet the standards mandated by the organic
foods production Act of 1990 which can be very costly to farmers. Tenfolds
main objective is to provide high quality fashionable products from the
organic textile. In 2007, Tenfold signed a two-year contract with Aura
Herbal wear in India that uses modern conventional dyeing machinery. The
agreement was to give Tenfold exclusive right to naturally dye fabric
produced by Aura and sold in the U.S. and Canada.
1.3Assumption
The information of the company that are sourced from textbook is
considered based on the date of the case study presented. Hence,
the SWOT analysis and alternative strategies may not be accurate as
of today as there is no latest information about the company found.
1.4Methodology
The sources of information that are used for this report are academic
journals that provide different management theories and strategies
and examples of how a company can improve its strategic position.
Besides that, case study on this company were analysed to carry out
SWOT analysis
1.5Purpose of Report
The report will first discuss the SWOT analysis, external and internal
environment of Tenflod in order to identify two main issues to improve
the companys strategic position. After that, the report will evaluate
the two alternatives that the management should consider to
improve the identified main issues. Finally, the report will conclude
the recommendation for the best strategy to be used.
2.1.1 Strengths
Many of the apparels uses synthetic dyes because it is cheaper and have
various color variation. However, synthetic dyes can cause environmental
degradation and health impact such as toxic exposure for dye workers. With
that, the natural dyes could be the alternative and this will serve as a
strength for Tenfold as more people would incline on using organic apparel
with natural dyes especially in a business-to-business market when more
friendly
solution
which
then
further
strengthen
the
Brand association with the consumers is the main strength which includes
the
innovation
of
the
organic
apparels
production,
good
corporate
to be the only company that has such access to unique dyeing technology.
Tenfold has a solid management team consist of experienced marketing
professionals, outsource a PR agency to enhance branding and promotion of
the company and also assemble of advisory team to further improve the
companys growth.
2.1.2 Weaknesses
Tenfold is using natural dye to produce organic apparel. However, there are
disadvantages of natural dyes. According to Wild Colours (n.d.), natural dyes
require large quantities in order to produce. Besides that, the range of colour
of the natural dyes is limited compared to synthetic dyes. This is also
because of high cost of producing the natural dye which leads to limited
variation of the colours.
2.1.3 Opportunities
The global retail sales for organic products will be set to reach
around $1.1 billion and $ 2 billion in 2007. Hence, there will be
strong demands of sustainable type of product which then enhance
the growth of the sustainable apparel (Refer to Figure 1 in
Appendix). Using organic food as an example, it has made a
significant impact in the food industry by shifting the purchasing
and consumption habits of consumers (Regmi, 2001). Hence,
5
During the recession that happened in 2007, consumers in the United State
are being cost adverse on purchasing apparel. Consumers are not purchasing
because of economic uncertainty. They are trying to reduce consumption of
the apparel or goods do not bring them good cause. Hence, the reason for
buying organic apparel can be desirable to the consumers because it is for a
market.
Tenfold emphasize on using private-label strategy. Most of the brands such as
Abercrombie & Fitch have no capacity to produce natural dye products.
Hence, Tenfold have the opportunity to partner with businesses to create and
produce such products. In fact, Tenfold has already developing products for
Aveda.
2.1.4 Threats
Organic cotton would be falling under a regulatory framework. In United
State. Organic cotton must meet all the mandatory requirement and
standards which is under Organic Foods Production Act of 1990. In order to
meet this requirement, farmer would want to incur extra cost to produce it.
As organic cotton is grown without herbicides, pesticides and synthetic
fertilizers. This will result in a lower yield. Organic cotton according to U.S.
standard must be grown for three years before it can be commercialized and
responsible
-
labor
practices
to
environmental
friendly
packaging
and
distribution.
In garment industry, the sustainable category in the apparel industry is
highly fragmented with low number of barrier to entry. Hence, this lead to
the entrance of many competitors which will affect the marketplace. Hence,
3.1 Alternative 1
The appropriate alternative that has been identified to address these
issues is a corporate level strategy which is strategic alliance strategy.
Strategic alliance is an agreement between two or more companies to
cooperate in a unique business activity (Isoraite, 2009). This strategy
will help the companies involved in the alliance to benefit from each
other's strengths and gain a competitive advantage over their
competitors. The companies involved in the strategic alliances would
also share available knowledge in their area of expertise. Moreover,
this strategy can also assist in reducing costs and risks with suppliers
and support development of new products as well as technologies
(Isoraite, 2009).
As stated above, numerous companies are making an effort to
incorporate sustainability into their business. An example of a
successful strategic alliance in the form of creating sustainability is the
alliance between Procter & Gamble and World Wildlife Fund's Global
Forest & Trade Network in 2008. This alliance assists companies with
sourcing more of their wood and paper products from responsiblymanaged forests (Confino, 2012).
Tenfold Textiles has the capacity to exploit this opportunity that would
help to improve their organisations strategic position. Tenfold uses
natural dyes that are completely sustainable in nature compared to
synthetic
dyes
used
by
competitive
companies
which
causes
3.2 Alternative 2
The appropriate alternative to address these issues is a business level
strategy which is Blue Ocean Strategy. Blue Ocean Strategy was
developed by W. Chan Kim and Rene Mauborgne. It helps companies
to create new markets, instead of competing in existing ones and by
standing apart by dialing up value for buyers, yet keeping costs low.
Moreover, it creates new demand and making the competition
irrelevant (Kim and Mauborgne, 2004). Thus, this will position a
company to be superior with value innovation to stay competitive.
4.0 Implementation
Based on the SWOT analysis and the issues of Tenfold, it can be seen
that Tenfold has a competitive advantages of being able to produce
organic garments. But the apparel market has a low barrier entry. And
by Tenfold itself is capable of avoiding the sustainability and social
responsibility due to social pressure by themselves as they were to
produce such apparel. Its a better choice for Tenfold to use the Blue
Ocean Strategy, as the strategy create a new markets, Tenfold will
have less competitor and their capability of producing organic
garments is a value innovation will be an important advantages. This
will result in Tenfold having an uncontested market space. Which will
solve the issue no.2, while the strategic alliance will make Tenfold
compete in the existing market which has a low barrier entry.
By using Blue Ocean Strategy, Tenfold will be able to have more control
over their organic product quality and they will be able to avoid being
dependent on their allied companies. An example of a successful
company that used the Blue Ocean Strategy is AirAsia. Air Asia
positioned themselves on a new market that target middle class, while
majority of flight industry target on upper class.
Tenfold can also do line extension with this strategy. This will allow
Tenfold to offer more varieties of product even though they have their
weakness of incapable of producing variety of colours because of the
limitation of organic dye or textile. By doing so, Tenfold will be able to
maintain its strategic position to gain competitive advantage. Like for
example, Tenfold can produce product like scarves, and since Tenfold
uses organic dyes, they will also be able to produce garments using
traditional methods like Batik.
12
5.0 Conclusion
In conclusion, SWOT analysis on Tenfold textile are conducted and
according to the analysis, two main issues are identified which are how
Tenfold can produce more organic apparel with multinational brands
that emphasise on being sustainable. The second main issue is the
low
barrier
to
entry
in
the
sustainable
apparel
industry.
Two
Retrieved from
http://www.strategiccompliancegroup.com/docs/BOS.pdf
Kim, W. Chan & Mauborgne, Renee. (2004). Blue Ocean Strategy. Harvard
Business Review. Retrieved 6 May 2015, from
http://www.syv.pt/login/upload/userfiles/image/Reinventing%20Your
%20business%20model%20HBR.pdf#page=71
McKinsey & Company. (n.d.). The Business of Sustainability: McKinsey Global
Survey Result. Retrieved 5 May 2016, from
http://www.mckinsey.com/business-functions/sustainability-andresource-productivity/our-insights/the-business-of-sustainabilitymckinsey-global-survey-results
Polo Ralph Lauren Case Study. (2016). Blue Ocean Strategy. Retrieved 6 May
2016, from
https://www.blueoceanstrategy.com/bos-moves/ralph-
lauren/
Regmi, Anita. (2001). Changing Structure of Global Food Consumption and
Trade. Retrieved 5 May, 2016, from
http://www.ers.usda.gov/media/293645/wrs011_1_.pdf
15
Wild Colours. (n.d.). About Natural Dyes. Retrieved 5 May 2016, from
http://www.wildcolours.co.uk/html/natural_dyes_comparison.html
7.0 Appendix
Figure 1
16