Polo Ralph Lauren Performance Measurement

Notes on the sneaks. Ag destinationa Our agenda follows exactly the guideline that was given to us in monastic order to carry out this assignment. The Comp some(prenominal) Short overview of the firm. The Fashion fabrication It is based brinyly on intangible assets, rather than capital or knowledge-intensive assets.Moreover, nowadays fashion companies are less affected by the fuss of seasonality indeed they experience sales that are pretty much st totallys over the year in spite of this, PRL experiences different levels of sales in the different quarters, due mainly to sells shipments and in coincidence with holiday periods. manu incidenture Analysis We used the Five Forces Model to assess the characteristics of the industry in which PRL competes in.The fashion industry is a very competitive one, rivalry among firms is tall some competitors are bigger than PRL, so they in like manner switch more(prenominal) resources, but still PRL is a pretty well-knit name and the attach to has a large customer base. The threat of new entrants is low because at that place are strong incumbents, brand loyalty in the lavishly-price segment is higher(prenominal) and access to suppliers and distributors is limited.Even though PRL has a high brand recognition which sheds end customers less price sensitive, the bargaining power of the buyers is high as the transport customers of the firm are mainly large part stores (and the gist of the connections revenues comes from the wholesale sector). The threat of substitutes is mark as loyal customers angle to buy that from them but in general people whitethorn vary their purchases and also buy from the competitors.For what concerns the suppliers, its grand to specify that PRL does not manufacture its products itself, but instead relies on licensees and other manufacturers to do so. Its suppliers are therefore manufacturers which supply the company with the finished goods. The bargaining power of suppliers is moderate as the company doesnt actually manufacture anything that it sells down the stairs his brand, it has to cuss pretty much on manufacturers and licensees high quality suppliers are some and theres high competition among high-quality firms to find such time-tested manufacturers.On the other hand though, PRL produces in some(prenominal) different countries, mainly outback(a) the US, thus working with many different suppliers, and this lowers the suppliers strength in bargaining. In total they have 350 manufacturers, with none of them providing more than 8% of total production. indispensable and External Factors In order to get a better taste of the competitive environment from the firms perspective as tumefy as of firm-specific resources and capabilities, we conducted a SWOT analysis.The company has successfully gr admit and pass its range of product lines and brands, as well as his presence in the international mart. One of its main strengths is the brand it inspires a precise modus vivendi and virtually every(prenominal)body knows it this high brand awareness and recognition, as stated above, make the end consumer less sensitive to the price. They decided to leverage on their strong brand in order to enlarge the profitability of the business and flip ones lid it by only diversifying the range of product offerings and apparel brands, which are percentd out into Polo brands and Collection brands (the most expensive).The firm manages to have high margins on its sundry(a) brands, peculiarly in the Collection brands. They also have no line in accessing the end consumers as their presence is considerably high, thanks to what they accost multiple channel distribution this means that they have both their own stores and sell to third parties such as surgical incision stores, specialty stores and milling machinery stores.Their major weakness is the high dependence on department stores as stated above, their revenues depend highly on this form of sell store, especially in the US and Canada (their biggest market, we give see that from a pie chart later) they have little influence on what the department stores buy and offer to their customers, no influence on the way the merchandise is displayed and in general no creative control over the marketing.Department stores may exercise pressure on the firm to obtain merchandise at lower prices (in order to summation their own margin). Moreover, fashion firms compete for the floor space in the department stores, and the company stated in its Annual Report of 2009 that there may be competitors with greater resources which could therefore represent a threat to them under this point of view.Other weaknesses are that PRL depends on manufacturers for what concerns the quality of its products (they have to utilize hard-and-fast quality checks) and they have no direct control over the licensing partners they get dressedt get the full revenues from sales, they cant manage the retail stores directly and a consequence of this is that they cannot get direct feedback from customers and cannot respond to market trends since theyre not the ones who actually sell the finished goods.They face many opportunities the Asian market is growing, especially Chinas they may boom out their presence in prestigious sport tournaments in order to further promote their brand moreover, we think its of fundamental importance that they expand their e-commerce by selling online also in Europe and Asia, and not only in the United States as it is now their web-site has the great potential to increase their sales. They could also expand their range of product offerings and develop private labels in collaboration with department stores, as the latter are creating private labels themselves and this threatens PRLs shelf space.Thus this could be a good solution in order to decrease the likelihood of seeing their space turn outd. As this document is supposed(a) to be just an explanation of some points that might not be clearly explicateed in the slides, we wont go through all of the weaknesses, but we cite the worrying fact that the major department stores in US are undergoing a wave of M&A, and the consequence of this result be a higher customer power (because the number of customers ordain be lower). We will add more to this subject when we will remonstrate about one of the main organizational latent hostilitys Reliance on department stores.The 4 Ps of Strategy Strategy as a fancy unfortunately the company doesnt allow for any quantitative forefinger of success or specific time frames for their main objectives. They only chat more specifically about their plan to transform their wholesale and retail businesses in Southeast Asia from a licensed to a wholly possess operation in January 1, 2010. Balancing Tensions This slide describes the five major tensions every company needs to balance in order to implement a performance measurement and control system ef fectively.Revenue Sources Assessing their revenue distribution among segments and geographical regions, we see that two tensions already emerge their dependence on the wholesale segment (as mentioned before) and the fact that revenues are not evenly distributed among countries. Specifically, we see that lacquer only makes up 8% of total revenues. Financial Data This slide shows a comparison between PRLs and PVHs most important financial indicators of performance.We chose PVH because some of PVHs fashion companies compete directly with PRL (like Calvin Klein) and also because its one of the few peers of PRL that has public financial statements. Besides the fact that revenues are distributed unevenly among segments and regions, the financial data does not show any other indicators of tensions. Main Organizational Tensions We have identified four tensions, which should be taken into consideration when implementing a performance measurement system.The first tension is Revenue goals for the Asia- Pacific region when comparing PRLs market share in Asia to the market share of its main competitors, we see that it has just 3% of the market share compared, for example, to the 60% market share of LVMH, a root that owns fashion brands such as Luis Vuitton and Marc Jacobs. The second chart shows that PRL generates small amount of its total revenue from Asia, while for example Hermes, which is a lot littler than PRL comparing total revenues, manages to generate over 40% of their revenues in Asia.The high reliance on department store (second tension) is also negative because, as the chart shows, such retail stores are doing pretty badly, with their net income fall at a fast rate. If they have financial problems they would probably reduce their purchases and the likelihood of bad debt for PRL increases. The other two tensions are exhaustively address in the slides. How PRL Should Address These Problems PRL should create its own Balanced Scorecard, and here we explain why we think its the right performance measurement shaft to use.The Balanced Scorecard The Balanced Scorecards objectives address the main tensions that we identified in the company as well as provide guidance for future success. This strategic management tool anyways should be in line with the other performance measurement and control systems that the company implements. break System It is worth mentioning that we didnt find any precise breeding about the performance measurement and control systems currently employed at PRL. Reading the Annual Report of 2009 we only found out that the company focuses on quality processes as well as licensee supervision.In addition, we believe that they should implement a control system for the wholesale segment (monitoring trends in integrating and reacting to them, supervision of the department stores financial situation etcetera ) and for the Asia Pacific market (benchmarking how do competitors perform, adoption of best practice processe s and strategies). windup With our Balanced Scorecard and the new control systems in place, we believe that PRL will be able to achieve its main goals and operate successfully in the next years.