Assignment 1: Veja, Sneakers with a Conscience, Pearce and Robinson Page 27.1. Due before 1st February 2018
Carry out comprehensive analysis of the case identifying unique philosophies, theories, challenges, strengths and any internal inconsistencies, conclusions and recommendations.
Marillion and Kopp founded Veja, an eco- sneaker company to serve the ethical fashion industry (Ethical Responsibilities, Strategic management 13th Edition). This case focuses on the development of sustainable business practices in organic cotton, natural rubber and leather. Veja shows that they can create a product that is both appealing and conscientious. The company grew rapidly due to praise from the media and word of mouth.
Veja, were the first Eco sneakers company in the world. In 5 years, the venture had become a reference in ethical fashion and an inspiration for other eco fashion start up, this was because customers expect ethical products in the first place(Ethical Responsibilities, Strategic management 13th Edition). Being the few players in the ethical fashion industry (Brand indentity, strategic management for the Capstone business), Veja enjoy their first mover advantage of selecting the finest suppliers (Supplier concentration, strategic management for the capstone business). Also venja entered the market at the right time because this niche market is growing at a fast rate. Customers are also embracing the green lifestyle and being more aware of ethical fashion. In addition, the corporate culture at Veja allows the employees to be happy, which in turn contribute to the success of the company.
Veja business model is that of a small business with an entrepreneurial spirit. Since the company started very small, Veja founders were able to control every aspect of their business. The founders knew very little about the fashion industry, aside from the fact that both of them are sneaker addicts. The difference in Veja’s model is that the company learns by doing and making mistakes and willing to take some risks. Veja’s distribution is also different. Instead of having their own store or section for display, the company decided to place their products next to non-ethical brands. This may lead to consumers thinking that their products are just the same as the other name brands. However, this model works for them because Veja’s products are appealing to the mass and the fact that the products were placed in trendy avenues increased their appeals
Veja also works solely with cotton and rubber families to produce organic materials. Doing so not only help preserve the Amazon rainforest, but also employ the families in the poverty-stricken area of northern Brazil. Also, Veja continues to research ways to make leather sustainable and works in collaboration with specialist in the field to ensure a sustainable product. This type process improvement mentality is rarely seen in the fashion industry.
Veja employs two distinct strategies: zero advertising and zero stock. Since most of the cost of producing a sneaker was dedicated to marketing, Veja was able to save on cost by having a no advertising policy. Veja benefitted widely from media coverage, blogs, and word of mouth due to their eco-friendly products and ethical business line. Also, most outlets had fewer Veja sneakers than they could sell. Veja did not produce extra, only according to orders placed six months in advance. Doing so ramped up Veja’s popularity because their products are now becoming scarce. Veja’s main business goal was not to make money only by having large volumes, but they want profitability with a conscience.
However, Veja encountered challenges due to their small-scale operation at first and the inherent fierce competition from big players in the market. Customers expect ethical products in the first place, so having eco-shoes in Veja’s production line may raise unnecessary costs. Since Veja does not spend on advertising, they may not be able to get the message to the customers that their stores are different from everyone else. In addition, supply for organic materials such as cotton and rubbers are limited, which may hinder Veja’s future growth and interrupt their supply chain should adverse weather affect their sources. According to Michael Porters of Harvard university, availability of substitute for raw materials in important since this reduces over dependency on one products/sources, this will ensure that supply of raw material is significantly assured.
In conclusion, Vejas business model is quite impressive, from young high school young boys to creating a business empire and more so ethical products that are eco-friendly. Their products entered the market when customers are also embracing the green lifestyle and being more aware of ethical fashion, thus accelerating their growth in the industry very fast.
My recommendations to the venjas, would be, to have diversity of their products, have various products that will complement each.
I would also recommend them to embrace advertising in their business, they should not rely on a word of mouth along, let them set aside a budget for the same.
Research would also be an important aspect of their business, I doing this they will be in a position to come up with other new upcoming technologies in the market that will enhance their competitive edge.
They should also embark on the global consumer preference study, in doing this they would be in constantly update on what is expected of them by their customers.(Employ a global strategy in action)
Goal setting would also be key in this business aspect, by doing this, they will have their minimum targets per ascertain period of time, this should be measurable and corrective action mechanism be put in place.
They should embrace more CSR activities of giving back to the society since where their source their raw material from Amazon rainforest, examples of this could be free medical camps to the society around. They should also come up with CSR activities that are long term and durable
Pettus, Michael L. Strategic Management for the Capstone business simulatio. Tabour school of business Millikin University.
Pearce II, John A ; Robinson, Richard B ( 13th edition), Strategic Management Planning for DOMESTIC ; GLOBAL competition. Villanova school of business ; Darla Moore School of