Gucci Case Essay

933 words - 4 pages

Gucci Business-Level and Corporate Strategy During the late 1990’s, Gucci portrayed the characteristics of a firm with a differentiated business-level strategy. Gucci provides value to their customers with high quality luxury goods which consist of unique product features in relation to their rival competitors. One example of Gucci’s distinct quality is the prestigious image of their brand name using the famous “GG” logo on their items. Gucci is a successful firm in the luxury goods industry with many resources and capabilities that differentiate them from other companies within the industry. The first resource is the management team of Gucci following the ...view middle of the document...

The third resource Gucci has developed is its manufacturing and logistics capabilities. Gucci has a highly flexible production system built on three pillars: skilled artisans, advanced technology, and efficient logistics. This system possesses valuable, rare, and non-substitutable characteristics. By developing a loyal supplier base with complexity and product quality control, Gucci cultivated an attribute that gives them a sustainable competitive advantage. Gucci should develop a website and begin using the internet as a distribution channel for its line of products. At the time of the case study, the retail industry was exponentially growing in sales via e-commerce. This capability would be valuable for the Gucci firm because they are failing to attract consumers that are too distant from a distribution outlet. The internet grants access to billions of people internationally and products can be shipped directly from the warehouse to the customer without being placed in store inventories. Gucci’s value chain is very well suited for its business level strategy. When Gucci reorganized the company, Tom Ford and DomenicoDe Sole immediately addressed the Porter Value Chain and began repositioning the company. One of the first steps in turning the company around was overhauling and streamlining inbound and outbound logistics to decrease costs, increase productivity and maintain high quality. Also, they nearly doubled their marketing budget and launched a new advertising campaign to develop and promote their brand image across the globe. De Sole and Ford altered Gucci to correlate the firm’s value chain with management’s strategy of differentiation. Gucci should avoid using vertical integration as part of its operating plan. Gucci has developed tight control over its suppliers by implementing a strict quality control program and maintaining manufacturer loyalty. Vertical integration has also proven costly for...

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