Founded in 1899, Vanity Fair (VF), the world’s largest publicly owned apparel company, offers various products such as jeans, bags, sportswear, footwear and outerwear. It operates mainly in the US and Europe, but also in developing countries like India, Russia and China. In the last decade, VF made some acquisitions including The North Face, Napapijri, Nautica and Vans. Five major coalitions consist of multiple brands – a total of 700 brand stores in 2009 – leading the “Growth Plan” strategy. The company recorded, in 2008, $7,561,621 of revenues.

VF brands are attempting to establish close relationships with its suppliers to reduce production costs, respond to changes in other cost factors, and shorten the lead time that occurs with the traditional suppliers. Also, Fraser, the President of the Supply Chain International for VF brands, is concerned that the company’s current supply chain strategies will not satisfy the future demand that will occur in the Asia-Pacific areas. In this paper, we will analyze four alternatives that VF brands can execute for its global expansion into the Asian markets. Those 4 alternatives are as follow; (1) To abandon the Third Way; (2) To continue with the current supply chain strategies; (3) To pick the best method for each coalition and products categories; and (4) Gradually switching to Third Way altogether in the end. Based on our analyses of the 4 alternatives and the apparel industry, we will suggest the best solution that will satisfy the new demand and help the other areas to become more efficient and effective in the future.

SWOT ANALYSIS

Strengths

Since the company was established more than a century ago, it was able to develop certain competencies in various areas and a good reputation. One of them is the strong performance in its internal plants, and the know-how and expertise involved. All these led to VF’s own sustainable competitive advantages. In addition, the company built a technical know-how and engineering capabilities, which are very difficult to imitate. The rapid production at the internal plants and its supply chain are very valuable. Moreover, a large number of suppliers and the experience gained accumulated over time give VF a considerable and reliable network. Also, during the various acquisitions, VF preserved the unique organizational cultures and brand identities to keep the design groups intact. Every brand has then a strong personality that can be managed and developed individually, giving more diversity. Besides, the financial situation of VF is strong with a low level of debts and a high cash position that can help them in case of tough economic situations and give them more flexibility to respond accordingly.

Weaknesses

When operating such a big and diversified company, some difficulties may occur. The first one is the lack of coordination and trust among suppliers and the company. A bullwhip effect may be observed due to the lack of inventories. Also, the supply chain is often illogical and highly fragmented due to various outsourcing locations. Certain dependence may be caused by some suppliers, making it very costly (ex: Nicaragua). Thus, building a reliable supplier network is very expensive. VF has a sheer complexity of its product line, leading to different needs and priorities among its numerous brands. The diversity of ideas between coalitions and directors causes some problems in the decision-making as well. Low costs pressuring for outsourcing can lead to quality matters and lack of control. Additionally, not much differentiation can be made in terms of supplying and transportation.

Opportunities

As the apparel industry is changing at a very rapid rate, innovative companies can see various opportunities. The supply chain management is a very first change in the company’s structural changes; then the “Third Way” is described as an opportunity to gain another competitive advantage, going forward. Partnerships can be developed in a long term vision. Moreover, the expansion of sales in developing countries represents a huge growth opportunity. Asian markets seem like a favourable location for new stores. Also, the development of new line products at a broad range of price can be designed at any time to satisfy a new market segment. Fashion is seen differently around the world, thus, various strategies are used to fulfill each need. Future acquisitions can also contribute to the growth of VF.