Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges

New and existing companies are looking for ways to thrive in a competitive environment with innovative business models while respecting society and avoiding actions that harm the planet. Trends such as the circular economy, fair trade, lowsumerism, and the sharing economy are some of the many emerging entrepreneurial approaches that address this issue, but there is still a gap between what theory argues and the levels of environmental and social sustainability realized when theory is put into practice. In fact, most research on the topic of sustainable business models is still exploratory and does not fully acknowledge these emerging approaches, whose definitions, boundaries, and defining characteristics are still somewhat vague. This study seeks to contribute to the understanding of the inner entrepreneurial dynamics of innovative sustainable business models. In particular, we focus on the fashion business, a resource-intensive industry in which opportunities to reduce environmental impacts and to innovate business models abound. The aim of our research is to investigate innovative business models in the fashion industry that have sustainability as their defining characteristic, especially in terms of value proposition. In order to do that, we combine a systematic review of the literature with empirical research comprised of six interviews with specialists in sustainability, business model innovation, and the fashion industry, along with eight case studies on innovative fashion startups we define as 'born sustainable.' As a result, we propose a synthesizing framework that discloses trends and drivers of innovative and sustainable business models in the fashion industry. We also highlight opportunities and challenges for researchers and entrepreneurs interested in this topic.

Authors :: Bruna Villa Todeschini, Marcelo Nogueira Cortimiglia, Daniela Callegaro-de-Menezes, Antonio Ghezzi

Topics :: Innovation & Entrepreneurship

Tags :: Growth strategy, Sustainability, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges" written by Bruna Villa Todeschini, Marcelo Nogueira Cortimiglia, Daniela Callegaro-de-Menezes, Antonio Ghezzi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fashion Models facing as an external strategic factors. Some of the topics covered in Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges case study are - Strategic Management Strategies, Growth strategy, Sustainability and Innovation & Entrepreneurship.

Some of the macro environment factors that can be used to understand the Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, wage bills are increasing, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, technology disruption, competitive advantages are harder to sustain because of technology dispersion, etc

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Introduction to SWOT Analysis of Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fashion Models, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fashion Models 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges can be done for the following purposes –
1. Strategic planning using facts provided in Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges case study
2. Improving business portfolio management of Fashion Models
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fashion Models

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Strengths Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Fashion Models in Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges Harvard Business Review case study are -

Ability to lead change in Innovation & Entrepreneurship field

– Fashion Models 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 Fashion Models in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Cross disciplinary teams

– Horizontal connected teams at the Fashion Models 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.

Organizational Resilience of Fashion Models

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fashion Models does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Highly skilled collaborators

– Fashion Models 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 Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Low bargaining power of suppliers

– Suppliers of Fashion Models in the sector have low bargaining power. Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fashion Models to manage not only supply disruptions but also source products at highly competitive prices.

Training and development

– Fashion Models has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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.

Innovation driven organization

– Fashion Models is one of the most innovative firm in sector. Manager in Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Superior customer experience

– The customer experience strategy of Fashion Models in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Effective Research and Development (R&D)

– Fashion Models 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 Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Learning organization

- Fashion Models 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 Fashion Models is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Strong track record of project management

– Fashion Models is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Analytics focus

– Fashion Models 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 Bruna Villa Todeschini, Marcelo Nogueira Cortimiglia, Daniela Callegaro-de-Menezes, Antonio Ghezzi 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.

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Weaknesses Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges are -

Low market penetration in new markets

– Outside its home market of Fashion Models, firm in the HBR case study Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

High operating costs

– Compare to the competitors, firm in the HBR case study Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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 Fashion Models 's lucrative customers.

High cash cycle compare to competitors

Fashion Models 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.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges, it seems that the employees of Fashion Models 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.

Capital Spending Reduction

– Even during the low interest decade, Fashion Models 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.

Lack of clear differentiation of Fashion Models products

– To increase the profitability and margins on the products, Fashion Models needs to provide more differentiated products than what it is currently offering in the marketplace.

Slow to strategic competitive environment developments

– As Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges HBR case study mentions - Fashion Models 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 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 Fashion Models supply chain. Even after few cautionary changes mentioned in the HBR case study - Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fashion Models vulnerable to further global disruptions in South East Asia.

No frontier risks strategy

– After analyzing the HBR case study Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fashion Models is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges, in the dynamic environment Fashion Models has struggled to respond to the nimble upstart competition. Fashion Models has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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Opportunities Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges | 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 Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges are -

Buying journey improvements

– Fashion Models can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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, Fashion Models 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, Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges, 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

– Fashion Models 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fashion Models 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 Fashion Models to hire the very best people irrespective of their geographical location.

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fashion Models 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. Fashion Models 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fashion Models can use these opportunities to build new business models that can help the communities that Fashion Models operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.

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 Fashion Models in the consumer business. Now Fashion Models can target international markets with far fewer capital restrictions requirements than the existing system.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Fashion Models in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.

Manufacturing automation

– Fashion Models can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Fashion Models is facing challenges because of the dominance of functional experts in the organization. Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Fashion Models can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Low interest rates

– Even though inflation is raising its head in most developed economies, Fashion Models 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.

Loyalty marketing

– Fashion Models has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.

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Threats Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges are -

Stagnating economy with rate increase

– Fashion Models 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges, Fashion Models may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .

High dependence on third party suppliers

– Fashion Models 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.

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. Fashion Models needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.

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. Fashion Models 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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fashion Models with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

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 Fashion Models in the Innovation & Entrepreneurship sector and impact the bottomline 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 Fashion Models.

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.

Easy access to finance

– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fashion Models can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Technology acceleration in Forth Industrial Revolution

– Fashion Models has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Fashion Models needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.

Regulatory challenges

– Fashion Models 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 Innovation & Entrepreneurship industry regulations.

Environmental challenges

– Fashion Models 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. Fashion Models can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.

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Weighted SWOT Analysis of Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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 Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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 Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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 Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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 Innovation and Sustainable Business Models in the Fashion Industry: Entrepreneurial Drivers, Opportunities, and Challenges 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 Fashion Models needs to make to build a sustainable competitive advantage.

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