Pertinent Issues that Coach Inc Management needs to Address.
The significant matters that Coach Inc requires to attend to are; the company needs to deal with overwhelming competition from big luxury brands, expansion issue of the market into the European luxury, tackle the issue of forming alliances with the already established organizations, and deal with the declining stock price shift by stabilizing the profit margins. The five forces affecting Coach Inc are threats of substitute luxury products produced by rival companies (Truong, Simmons, McColl, & Kitchen, 2008). The company has specialized in manufacturing traditional leather bags. Customers developed new tastes and preferences for stylish French and Italian brands. In addition, the intensity of competitive rivalries who are the leading companies in the production of luxury poses threat to Coach Inc.
The SWOT analysis for Coach Inc indicates that the company gained strength in areas of research and development programs. It strategized in this area to come up with the products that suited the changing customers’ tastes and preferences. This helped the company come up with new products based on market research. The company had strength in its pricing strategy and strong quality that enabled it to satisfy customers who preferred traditionally luxury brands (Truong et al., 2008). The company’s weakness is identified by the fact that the company has not opened enough outlets in the target markets that have the potential to increase its customer base that is, in China-Japan, and India. This is contrary to their rivalries that have more operating outlets in these regions. It is recommendable for the company to increase its outlets to have more direct customer touch hence producing what fits their needs most. The company should also utilize the available opportunities like forming alliances with the leading companies to benefit from their existing strong brand names and hence penetrating the market with ease (Dwyer, & Tanner, 2002). Threats exposed are caused by emerging counterfeited products, which pose a great threat to the original products produced. The company has to consider the political and legal practices in the countries of operation to avoid liabilities. It is also ought to consider social needs, especially in India when launching its products. This will help it market what customers need to win an edge over competitors (Dwyer, & Tanner, (2002). Additionally, it has succeeded in utilizing technology in carrying out its marketing, which is a recommendable method of increased customer direct contacts.
Coach Inc’s financial ratios indicate that the company growth is recommendable. The company has lower returns on investment (ROI) ratios, which are forcing its stocks price to decline. The capital turnover ratios are also lower indicating that the assets invested are not generating equivalent sales to the company’s investments. The operating expenses ratio for Coach Inc is desirable. This indicates that company expenses incurred to generate sales are prudent (Dwyer, & Tanner, (2002).
Exhibit 6 indicates that Coach Inc has experienced continuous growth in both net sales and operating incomes from the year 2009 to 2011. The over the whole performance of Coach Inc is recommendable supported by increased retail distribution channels, factory, and full-priced stores. Its growth is observed to be in progress from the year 2000 to the current year. This indicates the optimism of the company to maintain its competitive strategies in the market (Truong et al., 2008). The comparison of capital turnover ratio = total sale/ total assets for years 2011 and 2010 indicates the company performance is recommendable. I.e. year 2010 the ratio was 3,607,636/2,467,115= 1.5 and 2011, 4,158,507/2,635,116= 1.6 which has gradually increased by 0.1%.
Dwyer, F. R., & Tanner, J. F. (2002). Business marketing: Connecting strategy, relationships, and learning. New York, NY: McGraw-Hill.
Truong, Y., Simmons, G., McColl, R., & Kitchen, P. J. (2008). Status and conspicuousness–are they related? Strategic marketing implications for luxury brands. Journal of Strategic Marketing, 16(3), 189-203.