Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel
Esquel Group is one of the world's leading producers of premium cotton shirts, and among the most dynamic and progressive global-scale textile and apparel manufacturers. The company was founded in 1978 in Hong Kong. Over the years Esquel, which was part of an old-fashioned industry, gradually grew to become a larger and more modern organization: it expanded its product offering as well as its scope of operations, adding to garment manufacturing the production of woven and knitted fabric, spinning operations, and eventually cotton ginning and farming; it opened manufacturing facilities outside China and multiple representative offices in the U.S., the U.K. and Japan; developed strong product development capabilities and expanded its service offering to its customers; and invested in supporting IT and supply chain management applications and applied advance RFID solutions to improve efficiency of internal operations. In parallel, a strong corporate culture was established, emphasizing ethical business practices, creativity, and continual improvement. All these initiatives provided Esquel with the means to offer high-quality, innovative products and services, and to secure a loyal customer base consisting of some of the world's best known and most highly respected brands. While striving to run a successful business, Esquel also took steps to ensure the well-being of its employees and to have a positive impact on society, and was devoted to protecting the environment in areas where it operated. Describes in detail the transformations the company has gone through over the years, and the uniqueness of its corporate culture, and product and service offerings. In addition, discusses the pros and cons of Esquel's strategy and provides some perspective about the future of the company (e.g., what steps it should take to meet its growth targets; how will the elimination of quota restrictions impact Esquel; etc.).
Swot Analysis of "Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel" written by Barchi Peleg-Gillai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Esquel Cotton facing as an external strategic factors. Some of the topics covered in Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel case study are - Strategic Management Strategies, Government, International business, Mergers & acquisitions, Organizational structure, Supply chain, Sustainability and Organizational Development.
Some of the macro environment factors that can be used to understand the Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel casestudy better are - – supply chains are disrupted by pandemic , increasing transportation and logistics costs, increasing commodity prices, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, increasing household debt because of falling income levels,
increasing energy prices, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Esquel Cotton, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Esquel Cotton operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel can be done for the following purposes –
1. Strategic planning using facts provided in Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel case study
2. Improving business portfolio management of Esquel Cotton
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Esquel Cotton
Strengths Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Esquel Cotton in Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel Harvard Business Review case study are -
Analytics focus
– Esquel Cotton is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Barchi Peleg-Gillai can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Esquel Cotton is one of the leading recruiters in the industry. Managers in the Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Esquel Cotton has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Successful track record of launching new products
– Esquel Cotton has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Esquel Cotton has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Cross disciplinary teams
– Horizontal connected teams at the Esquel Cotton are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Esquel Cotton is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Esquel Cotton is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Organizational Development field
– Esquel Cotton is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Esquel Cotton in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Esquel Cotton is present in almost all the verticals within the industry. This has provided firm in Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Esquel Cotton has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Esquel Cotton has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of Esquel Cotton
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Esquel Cotton does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Esquel Cotton in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel are -
Slow decision making process
– As mentioned earlier in the report, Esquel Cotton has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Esquel Cotton even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Increasing silos among functional specialists
– The organizational structure of Esquel Cotton is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Esquel Cotton needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Esquel Cotton to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Esquel Cotton, firm in the HBR case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Esquel Cotton has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Esquel Cotton supply chain. Even after few cautionary changes mentioned in the HBR case study - Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Esquel Cotton vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel can leverage the sales team experience to cultivate customer relationships as Esquel Cotton is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel, in the dynamic environment Esquel Cotton has struggled to respond to the nimble upstart competition. Esquel Cotton has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Esquel Cotton 's lucrative customers.
Products dominated business model
– Even though Esquel Cotton has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel, it seems that the employees of Esquel Cotton don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Opportunities Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Esquel Cotton in the consumer business. Now Esquel Cotton can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Esquel Cotton is facing challenges because of the dominance of functional experts in the organization. Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Esquel Cotton can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Esquel Cotton can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Esquel Cotton can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Esquel Cotton to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Esquel Cotton to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Esquel Cotton can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Esquel Cotton can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Esquel Cotton can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Esquel Cotton can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Esquel Cotton can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Esquel Cotton has opened avenues for new revenue streams for the organization in the industry. This can help Esquel Cotton to build a more holistic ecosystem as suggested in the Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel case study. Esquel Cotton can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Esquel Cotton can use these opportunities to build new business models that can help the communities that Esquel Cotton operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Leveraging digital technologies
– Esquel Cotton can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Esquel Cotton can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel .
Shortening product life cycle
– it is one of the major threat that Esquel Cotton is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Esquel Cotton high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Esquel Cotton needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Increasing wage structure of Esquel Cotton
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Esquel Cotton.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Esquel Cotton business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Esquel Cotton demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Esquel Cotton can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Esquel Cotton in the Organizational Development sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Esquel Cotton needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Esquel Cotton.
Weighted SWOT Analysis of Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Esquel Cotton needs to make to build a sustainable competitive advantage.
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You can download Excel Template of Case Study Solution & Analysis of Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel
