Knights Apparel and the Alta Gracia Factory: Paying a Living Wage SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Knights Apparel and the Alta Gracia Factory: Paying a Living Wage
In 2014 The Alta Gracia clothing factory in the Dominican Republic was doing something quite unusual in the industry; it was paying its employees a living wage, which was 350 percent higher than the country's minimum wage. Knights Apparel, which owned the four-year old factory, also provided benefits, health care, and allowed the workers to unionize. Most apparel factories paid employees a minimum wage, which in some places was not enough to pay for workers' basic needs and the needs of their families. Knights Apparel founder and CEO Joe Bozich, the driving force behind Alta Gracia, came to this decision from both business and personal motivations. Knights Apparel was the number one provider of licensed collegiate logo apparel, and Bozich saw the opportunity presented by the growing number of college students unhappy with the working conditions of the people making their schools' branded apparel. Personally, Bozich said he wanted to provide "hope and a pathway out of poverty for generations to come." However, Alta Gracia's production costs were 20-30 percent higher than at Knights' other factories, and Alta Gracia was losing over half a million dollars a year. Knights was able to keep Alta Gracia open only by subsidizing it with funds from its profitable business units. Knights was a private company, but Bozich was still accountable to his board and the company's large multi-billion-dollar institutional investors. Over time, Bozich had convinced many of them to back Alta Gracia, but he needed to pull the factory into profitability soon in order to prove it was a viable business model. If Alta Gracia was successful, Knights would have to decide if it should be expanded. There was also the question of whether Knights would be able to replicate Alta Gracia, and if it could, should it? Other companies had tried and failed to offer a living wage and become profitable. Would Knights be different?
Swot Analysis of "Knights Apparel and the Alta Gracia Factory: Paying a Living Wage" written by Paul Brest, Debra Schifrin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Knights Gracia facing as an external strategic factors. Some of the topics covered in Knights Apparel and the Alta Gracia Factory: Paying a Living Wage case study are - Strategic Management Strategies, Budgeting, Compensation, Emerging markets, Manufacturing, Social responsibility, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Knights Apparel and the Alta Gracia Factory: Paying a Living Wage casestudy better are - – increasing household debt because of falling income levels, wage bills are increasing, technology disruption, there is backlash against globalization, central banks are concerned over increasing inflation, increasing transportation and logistics costs, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Knights Apparel and the Alta Gracia Factory: Paying a Living Wage
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Knights Apparel and the Alta Gracia Factory: Paying a Living Wage case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Knights Gracia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Knights Gracia 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage can be done for the following purposes –
1. Strategic planning using facts provided in Knights Apparel and the Alta Gracia Factory: Paying a Living Wage case study
2. Improving business portfolio management of Knights Gracia
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Knights Gracia
Strengths Knights Apparel and the Alta Gracia Factory: Paying a Living Wage | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Knights Gracia in Knights Apparel and the Alta Gracia Factory: Paying a Living Wage Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Knights Apparel and the Alta Gracia Factory: Paying a Living Wage firm has clearly differentiated products in the market place. This has enabled Knights Gracia to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Knights Gracia to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Knights Gracia 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Knights Gracia in the sector have low bargaining power. Knights Apparel and the Alta Gracia Factory: Paying a Living Wage has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Knights Gracia to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Knights Gracia digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Knights Gracia 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.
High brand equity
– Knights Gracia has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Knights Gracia to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Knights Gracia has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Knights Gracia 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.
Ability to lead change in Strategy & Execution field
– Knights Gracia 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 Knights Gracia in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Knights Gracia 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Knights Gracia is present in almost all the verticals within the industry. This has provided firm in Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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.
Innovation driven organization
– Knights Gracia is one of the most innovative firm in sector. Manager in Knights Apparel and the Alta Gracia Factory: Paying a Living Wage Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Knights Gracia is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Knights Apparel and the Alta Gracia Factory: Paying a Living Wage | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Knights Apparel and the Alta Gracia Factory: Paying a Living Wage are -
Increasing silos among functional specialists
– The organizational structure of Knights Gracia is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Knights Gracia needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Knights Gracia to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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 Knights Gracia has relatively successful track record of launching new products.
Need for greater diversity
– Knights Gracia has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Knights Gracia has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Knights Gracia products
– To increase the profitability and margins on the products, Knights Gracia needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Knights Apparel and the Alta Gracia Factory: Paying a Living Wage, in the dynamic environment Knights Gracia has struggled to respond to the nimble upstart competition. Knights Gracia has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Knights Gracia 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.
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 Knights Gracia supply chain. Even after few cautionary changes mentioned in the HBR case study - Knights Apparel and the Alta Gracia Factory: Paying a Living Wage, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Knights Gracia vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Knights Gracia has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Knights Apparel and the Alta Gracia Factory: Paying a Living Wage HBR case study mentions - Knights Gracia 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul Brest, Debra Schifrin suggests that, Knights Gracia 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.
Opportunities Knights Apparel and the Alta Gracia Factory: Paying a Living Wage | 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Knights Gracia is facing challenges because of the dominance of functional experts in the organization. Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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.
Developing new processes and practices
– Knights Gracia can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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. Knights Gracia can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Knights Gracia 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 Strategy & Execution segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Knights Gracia can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Knights Gracia to increase its market reach. Knights Gracia will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Creating value in data economy
– The success of analytics program of Knights Gracia has opened avenues for new revenue streams for the organization in the industry. This can help Knights Gracia to build a more holistic ecosystem as suggested in the Knights Apparel and the Alta Gracia Factory: Paying a Living Wage case study. Knights Gracia can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Knights Gracia 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Knights Gracia to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Knights Gracia can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Knights Gracia can use these opportunities to build new business models that can help the communities that Knights Gracia operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Knights Gracia can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Knights Gracia can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Knights Gracia 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.
Threats Knights Apparel and the Alta Gracia Factory: Paying a Living Wage External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Knights Apparel and the Alta Gracia Factory: Paying a Living Wage are -
High dependence on third party suppliers
– Knights Gracia 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Knights Gracia in the Strategy & Execution industry. The Strategy & Execution 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.
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 Knights Gracia.
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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Knights Gracia can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Knights Gracia with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Knights Gracia needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Knights Apparel and the Alta Gracia Factory: Paying a Living Wage, Knights Gracia may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Regulatory challenges
– Knights Gracia 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 Strategy & Execution industry regulations.
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. Knights Gracia 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Knights Gracia 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage .
Technology acceleration in Forth Industrial Revolution
– Knights Gracia has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Knights Gracia needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing wage structure of Knights Gracia
– 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 Knights Gracia.
Weighted SWOT Analysis of Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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 Knights Apparel and the Alta Gracia Factory: Paying a Living Wage 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 Knights Gracia needs to make to build a sustainable competitive advantage.
