Case Project

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AlAzhar University in Cairo *

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MISC

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Management

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Nov 24, 2024

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docx

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Case Project -A risky business What are the option’s strengths and weaknesses? Option 1: Organic growth Strengths:  Allows Hi-Style to invest in the business and improve distribution, sales, and product ranges.  Enhances the company's image through brand development and hiring top retailing executives.  City Associates can provide a thorough review of all Hi-Style's activities. Weaknesses:  Requires significant financial investment (up to €10m).  Success is not guaranteed, and results may take time to materialize.  May not address the core issue of Hi-Style being out of touch with its target consumers. Option 2: Acquisition of Smart wear Ltd Strengths: Access to a creative design department,  Established sales agents.  Connections with Indian manufacturers. Weaknesses:  Recent bad press about working conditions in overseas factories and the risk associated with the disappearance of stock due to customer liquidation. Option 3: Acquisition of Tan Clothing Company Strengths:  Regular orders from the armed forces, ownership of a large factory, and potential for expansion. Weaknesses:  Political unrest in the country,  Internal conflicts among the Tan family members, and  The threat of legal action. Option 4: Research and Development Strengths:  Potential for innovative breakthroughs in materials technology,  Giving Hi-Style a competitive edge. Weaknesses:  High cost of research, uncertain outcomes, and  The need for increased debt.

What opportunities does it offer Hi-Style? These opportunities can help Hi-Style regain its competitive edge and reconnect with its target consumers. Option 1: Organic growth offers several opportunities for Hi-Style: 1. Improved distribution and sales: By entering into an exclusive agreement with a major retailer, Hi-Style can expand its reach and increase sales. 2. Launching new product ranges: Hi-Style can introduce fresh and innovative fashion lines through major advertising campaigns, attracting new customers and revitalizing its brand. 3. Enhanced image: Employing brand development consultants can help Hi-Style reposition itself in the market, appealing to its target consumers and improving its overall image. 4. Top retailing executive: Hiring an experienced retailing executive can bring new perspectives and strategies to the business, leading to improved performance and profitability. 5. Thorough review by City Associates: This option allows Hi-Style to gain valuable insights into its operations, identifying areas for improvement and optimizing its business activities. Option 2: Acquisition of Smart wear Ltd Opportunities: 1. Access to a creative design department with exciting new ideas, 2. established sales agents in Europe and Asia, and 3. Strong connections with Indian manufacturers. Option 3: Acquisition of Tan Clothing Company Opportunities: 1. Regular orders of uniforms and footwear for the armed forces, 2. ownership of a large factory, and 3. Potential for expansion in the Far East market. Option 4: Research and Development Opportunities: 1. Potential for innovative breakthroughs in materials technology, 2. giving Hi-Style a cutting-edge image and 3. A competitive advantage in the market. How about the risks - for example, financial, legal, operational? It is important for Hi-Style to assess and mitigate these risks through proper planning, market research, and effective risk management strategies. When considering the risks associated with the options, it is important to evaluate the financial, legal, and operational aspects. Financial risks may include the cost of investment, potential loss of revenue, and the impact on profitability. Legal risks could arise from acquiring companies with legal issues or facing legal challenges

in the target market. Operational risks involve challenges in implementing the chosen option, such as supply chain disruptions or difficulties in managing new product ranges. Option 1: Organic growth presents various risks for Hi-Style: Financial risks: Investing up to €10m in the business carries the risk of not achieving the desired returns on investment. There is no guarantee that the improvements in distribution, sales, and product ranges will lead to increased profits. Legal risks: Employing brand development consultants and hiring a top retailing executive may involve legal contracts and agreements. Hi-Style needs to ensure that these contracts are well-drafted and protect its interests. Operational risks: Implementing changes in distribution, sales, and product ranges can disrupt existing operations. Hi-Style needs to carefully manage the transition to avoid any negative impact on its current business. Major advertising campaigns: While advertising campaigns can create brand awareness and attract new customers, there is a risk of not achieving the desired response or failing to resonate with the target audience. This can result in wasted resources and financial losses. Option 2: The risk involves the negative publicity surrounding working conditions in overseas factories and the loss of stock due to customer liquidation. Option 3:  Carries the risk of political unrest and legal disputes within the Tan Clothing Company. Option 4:  Entails the risk of incurring debt for research and development without a guaranteed return on investment.  Each option presents its own set of risks, and it is crucial to carefully assess and mitigate them to ensure the success of the chosen strategy. What will be the likely effect on Hi-Style's current business?

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Organic growth is likely to have several effects on Hi-Style's current business: Improved brand image: By employing brand development consultants, Hi-Style can enhance its brand image and perception in the market. This can lead to increased customer loyalty and attract new customers. Increased sales and market share: Through improved distribution and sales strategies, Hi-Style can expand its customer base and increase its market share. Product diversification: Launching new product ranges can help Hi-Style cater to a wider range of customer preferences and stay relevant in the competitive fashion industry. Operational changes: Implementing the recommended improvements may require changes in Hi- Style's operations, such as supply chain management, inventory control, and marketing strategies. These changes can optimize efficiency and effectiveness. Overall, the likely effect of organic growth on Hi-Style's current business is a positive transformation, revitalizing the brand, expanding the customer base, and improving financial performance. The likely effect on Hi-Style's current business will depend on the chosen option. If Hi-Style decides to invest in brand development consultants, it can have a positive impact on the company's image and brand perception. The consultants can help Hi-Style reposition itself in the market and attract the target consumers. This can lead to increased brand recognition, customer loyalty, and ultimately, higher sales. By working with brand development consultants, Hi-Style can gain insights into consumer preferences, market trends, and effective marketing strategies. This can result in the development of a more appealing and competitive product range, which can help Hi-Style regain its appeal among 18- to 30- year-olds. However, it is important to note that the success of this option will depend on the expertise and effectiveness of the brand development consultants. Hi-Style needs to ensure that the consultants understand the company's vision, target market, and competitive landscape to provide valuable recommendations. Overall, investing in brand development consultants can have a positive impact on Hi-Style's current business by revitalizing its brand image and attracting the desired consumer base. How much will the option cost? The total cost of implementing this option can range between €10 million and potentially higher, depending on the specific strategies and initiatives undertaken by Hi-Style.

The cost of each option varies, and it is important to consider the financial implications before making a decision. Option 1: Organic growth can cost up to €10 million for Hi-Style. This budget allocation includes various investments and expenses such as:  Distribution and sales improvement: Costs associated with establishing an exclusive agreement with a major retailer, expanding distribution channels, and enhancing sales strategies.  Launching new product ranges: Expenses related to product development, manufacturing, marketing, and advertising campaigns for the new fashion lines.  Brand development consultants: Fees for hiring external consultants to work on improving Hi- Style's brand image and perception in the market.  Hiring a top retailing executive: Compensation package for recruiting an experienced retailing executive to lead and manage the business.  City Associates review: Fees for conducting a thorough review of all Hi-Style's activities by the management consultants. Option 2 Involves the acquisition of Smart wear Ltd, and the acquisition price is stated as €10 million. However, additional costs may be incurred to address the issues related to the disappearance of stock and the negative press about working conditions in overseas factories. Option 3 Involves the acquisition of Tan Clothing Company, and the acquisition price is also €10 million. However, potential legal costs associated with the disagreements among the Tan family members should be considered. Option 4 Which is research and development, the cost is estimated to be between €10 million and €12 million. This investment would be used to finance research in areas such as crushproof material, color-altering clothes, and warm clothing for cold climates. It is important for Hi-Style to carefully evaluate the costs associated with each option and assess their potential return on investment. This will help determine the feasibility and affordability of each option.

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