Zhejiang SimerLtd Case Solution
In current scenario the bottlenecks faced by Semir are
- The one-child policy which has decreased or stagnant the sales of kids wear.
- The market is shifting towarddifferent channels of shopping, which is affecting the sales margins of the company; one channel is the ecommerce, which is cutting the sales of the company.The other channel is the shopping malls, where people have built use different word to make purchases due to ambiance, ease and variety. The issue with Semir is the factor of unacceptability to placeSemirClothing in Big mall, due to it’s under perceived value by the market forces.
Keeping the current environment and the business strategy in mind, a framework is developed to deeply understand the strategicplacement of the Semir in the market. These frameworks will help Semir; develop more precise and accuratestrategies to further operate in the market while keeping sustainability as top priority.
Due to less political influence in China, it has been determined that Semir would achieve its long-term objective by freely operate in the particular market and to manage the growth rate under control because none of the government intervention is activated in an economy for the businesses, in particular for the emerging one.(It is done through analyzing the case not googled)
China seems to be one of the stable economies in the world with high production level as well as managed GDP rate. The country has a lowest interest and inflation rate with allowing the businesses to boost subjected to strong growth rate. Therefore, in a case of Semir, the company would be able to increase its operational efficiency by utilizing the resources and make high-profit margins through maximum sales volume.(It is done through analyzing the case not googled)
The social element of the company composed of the target of youngsters as well as kids that would allow increasing the sales in a country. However, China has some limitations in the growth of children under 1 child policy that would not allow Semir to manage the growth for long-term.
The country has a long history of providing technological innovations in the industrial sectors. Therefore many firms like Semir would take advantage to utilize the state technology and improve the operations consistently.
The law and order situation in China is high and thus allow the businesses and community to live in the secure environment. So for Semir, it is one of the best advantages of the company long-term position.(It is done through analyzing the case not googled)
The environmental factors include the fair weather conditions in China, which would allow Semir to increase the sales of the particular products. On the other side, the infrastructure of the country is continuously improving and allow the businesses to growing in a fast pace related to the use of products for the targeted customers(It is done through analyzing the case not googled)
Porter 5 forces Model
Threat of rivalry
The threat of rivalry for the Semir is quite high, It has to fight for market sustainability and penetration against the external brands like ZARA and also the internal local brands which are producing a good apparel at low cost, due to low production cost
Threat of substitution
The threat of substitution is relatively very high because of multiple local and international brands, while the other reasons are the emerging channel of shopping, which is providing he customers array of variety and also the array of means through which they want to make purchase.
Power of Supplier
The power of suppliers relatively low with Semir. Semir builds long-term trustworthy relationship with the freedom to suppliers to switch, if they don’t find Semir fits for them.Due to thereputation of the organization, many suppliers are inclined to work with Semir.
Power of Buyer
The power of buyer to Semir is very high. The market of china is an emerging market, which has opened gates for many brands to enter the market, which has given the customer a wide range of choices.The threat is high because the switching cost is very low , he customer can switch to other Brands without incurring any additional cost while the quality of the products remain uncompromised and relatively same in the market.
Threat of New Entrant
The market of china is an emerging Market, with a lot of growth and buying potential. Many businesses are planning to enter into the markets of china, throughacquisitions, Joint ventures or Strategic alliances. The main reason is the barrier ease, which china has removed after long time and the government is encouraging foreign direct investments to fill in the country. This trend has also increased the threat of new entrants in the market, due to large population and space in the markets............................................
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