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 - – central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs,
there is increasing trade war between United States & China, there is backlash against globalization, 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 -
High brand equity
– Esquel Cotton has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Esquel Cotton to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Esquel Cotton in the sector have low bargaining power. Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Esquel Cotton to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Esquel Cotton digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Esquel Cotton has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Strong track record of project management
– Esquel Cotton is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
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.
Effective Research and Development (R&D)
– Esquel Cotton has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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 -
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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Esquel Cotton is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel, is just above the industry average. Esquel Cotton needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Skills based hiring
– The stress on hiring functional specialists at Esquel Cotton has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Esquel Cotton has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High bargaining power of channel partners
– Because of the regulatory requirements, Barchi Peleg-Gillai suggests that, Esquel Cotton is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to strategic competitive environment developments
– As Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel HBR case study mentions - Esquel Cotton takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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.
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 -
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Esquel Cotton to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
Using analytics as competitive advantage
– Esquel Cotton has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Esquel Cotton to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
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.
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.
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.
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.
Manufacturing automation
– Esquel Cotton can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Esquel Cotton to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 -
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.
Environmental challenges
– Esquel Cotton needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Esquel Cotton can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Stagnating economy with rate increase
– Esquel Cotton can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Esquel Group: Transforming Into a Vertically Integrated, Service-Oriented, Leading Manufacturer of Quality Cotton Apparel, Esquel Cotton may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
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.
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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Esquel Cotton will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Esquel Cotton with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Esquel Cotton in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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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