Springbok Co is a clothing retailer, with stores selling mid-price clothes and clothing accessories throughout Europe. It sells its own-brand items which are produced by small manufacturers located in Africa, who work solely for Springbok Co. The recent European sovereign debt crisis has affected a number of countries in the European Union (EU). Consequently, Springbok Co has found trading conditions to be extremely difficult, putting pressure on profits and sales revenue. The sovereign debt crisis in Europe resulted in countries finding it increasingly difficult and expensive to issue government bonds to raise funds. Two main reasons have been put forward to explain why the crisis took place. Firstly, a number of countries continued to borrow excessive funds because their expenditure exceeded taxation revenue. Secondly, a number of countries allocated significant sums of money to support their banks following the credit crunch and the banking crisis. In order to prevent countries defaulting on their debt obligations and being downgraded, the countries in the EU and the International Monetary Fund(IMF) established a fund to provide financial support to member state threatened by the risk of default, credit downgrades and excessive borrowing yields. Strict economic conditions known as austerity measures were imposed on these countries in exchange for receiving financial support. The austerity measures have affected Springbok Co negatively. 2018 and 2019 have been particularly bad with sales revenue declined by 15% and profits by 25% in 2018 and remained at 2018 levels in 2019. On investigation, Springbok Co noted that clothing retailers selling clothes at low prices and at high prices were not affected as badly as Springbok Co or other mid-price retailers. Indeed,the retailers selling at low-priced clothes had increased their profits and retailers selling luxury, expensive clothes had maintained their profits over the last two to three years. In order to improve profitability, Springbok Co’s board of directors expects to cut costs where possible. A significant fixed cost relates to quality control which includes monitoring the working conditions of employees of Springbok Co clothing manufacturers as part of its ethical commitment -Discuss the competitive advantages that a global multinational clothing retailers would have over a clothing retailer based in one Eurozone country.
Springbok Co is a clothing retailer, with stores selling mid-price clothes and
clothing accessories throughout Europe. It sells its own-brand items which are
produced by small manufacturers located in Africa, who work solely for
Springbok Co.
The recent European sovereign debt crisis has affected a number of countries in
the European Union (EU). Consequently, Springbok Co has found trading
conditions to be extremely difficult, putting pressure on profits and sales
revenue.
The sovereign debt crisis in Europe resulted in countries finding it increasingly
difficult and expensive to issue government bonds to raise funds. Two main
reasons have been put forward to explain why the crisis took place. Firstly, a
number of countries continued to borrow excessive funds because their
expenditure exceeded
allocated significant sums of money to support their banks following the credit
crunch and the banking crisis. In order to prevent countries defaulting on their debt obligations and being downgraded, the countries in the EU and the International Monetary Fund(IMF) established a fund to provide financial support to member state threatened by the risk of default, credit downgrades and excessive borrowing yields. Strict economic conditions known as austerity measures were imposed on these countries in exchange for receiving financial support. The austerity measures have affected Springbok Co negatively. 2018 and 2019 have been particularly bad with sales revenue declined by 15% and profits by 25% in 2018 and remained at 2018 levels in 2019. On investigation, Springbok Co noted that clothing retailers selling clothes at low prices and at high prices
were not affected as badly as Springbok Co or other mid-price retailers. Indeed,the retailers selling at low-priced clothes had increased their profits and retailers selling luxury, expensive clothes had maintained their profits over the last two to three years.
In order to improve profitability, Springbok Co’s board of directors expects to cut costs where possible. A significant fixed cost relates to quality control which includes monitoring the working conditions of employees of Springbok Co clothing manufacturers as part of its ethical commitment
-Discuss the competitive advantages that a global multinational clothing retailers would have over a clothing retailer based in one Eurozone country.
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