Assignment # 2
Title: An external assessment of Coach Inc.
(A case analysis for 'Accessible Luxury Goods" Industry)
Course information: Strategic Management course
Prepared by: Submitted to:
Mohammad Nurul Quader
Student Id: 500542381
Professor Ian Sakinofsky
Ted Rogers School of Business Management
Date of submission : 10th February 2014
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Case: Coach Inc in 2012: It's Strategy in the "Accessible" Luxury Goods Market.
We are assigned to submit two separate Appendices one for external and other for internal assessments of Coach Inc. First, we are required to complete our external assessment as an Appendix by using appropriate strategic tools from Chapter 3 of our text.
As a first step we would complete our external assessment of the industry related to Coach Inc. We would conduct a Strategic Audit and analyze relevant data and information from the case; and finally summarize our findings to demonstrate the strategic significance of our analysis.
Part1: First, we would identify some of the Industry's dominant economic characteristics related to the luxury goods industry in the following segments:
a. Overall size and market growth rate:
Overall size of luxury market is more than $224 billion as of 2010 while the hand bag and leather accessories segment of the industry was estimated at $28 billion. Currently the growth in luxury goods sales is expected to be 7.8% annually in the China and other emerging markets and it is expected that by 2015 market would be about $350 billion.
b. Number and sizes of buyers and sellers (rivals)
The luxury goods are divided into three categories: Haute-couture is 'custom" product for extremely wealthy customer; as number of customers is limited only few producers sell these exclusive products. Traditional luxury is the exclusive products of leading brands like Prada, Hermes, and Burberry etc; in U.S. market top 1% of wage earners with household income of $300,000 or better are the consumers of traditional luxury. Accessible luxury has basically developed as a submarket of traditional luxury while luxury goods manufacturers lower their profit margin to extend market for the middle income consumers. For example, luxury products are highly demanded by the growing numbers of China's middle class people. On an average top 20% wage earners can be the consumers in the booming accessible luxury market. Some 60 global luxury fashion and accessories brands are selling in the emerging market like India. Some of the accessible luxury market producers are Coach, DKNY, Giorgio Armani, Gianni Versace etc.
c. Geographic boundaries of the market
The market (buyers) of luxury goods are mostly in the wealthy countries. For example, 30% buyers are in U.S., 30% buyers are in Europe, 20% buyers are in China, 11% buyers are in Japan and rest 9% buyers belong to other countries of the world. On the other hand, luxury goods manufacturers (sellers) are from few...