Fortune Garments, one of Hong Kong's oldest trading groups, makes high quality clothing which is sold to wholesale distributors. The headquarters is in Hong Kong and they have had a large office in London, England since 1971. It has become a global company. It has over 3000 suppliers in 17 countries, including many of the Western European countries of the EU. It employs staff from all over the world in its head office and factories. It has expanded rapidly in foreign markets with current sales of over $US 1.8bn Fast delivery, innovative design, and reliable quality are essential for success in the fashion business. Fortune Garments' CEO, Michael Chau, is proud that his company can usually accept a major order and deliver the goods to a customer within four weeks. However, globalization has brought problems in the company's overseas plants, and this is having a bad effect on its share price. A journalist from the Eastern Economist Review suggested recently that the company could become the target of a takeover if it didn't sort out its problems soon. Current Prominent Corporate Considerations Quality control Many subsidiaries make clothing from materials supplied by several of the company's plants. Although this helps to lower costs, the materials manufactured in the last year have been of poor quality. This has resulted in canceled orders. Recently, a German distributor refused a consignment of 50,000 blouses. The goods simply did not meet its quality standards. Cancellation of the order cost Fortune Garments half a million dollars in lost sales. Responding to customer needs Orders have also been canceled because Fortune Garments' subsidiaries are not responding quickly to customers' needs. When customers want last- minute changes to clothing, the plants cannot meet customers' tight deadlines. For example, an Australian fashion chain canceled an order because the factory in Vietnam was not able to make minor changes to some silk jackets in time for their summer sale. The lost sale cost Fortune Garments over $US 400,000. Design When the company was smaller, it had the same low-pricing strategy, but the design of its clothing was outstanding. However, nowadays, the company seems to have lost its creative energy. Its latest collections were described by a famous fashion expert as 'boring, behind the times and with no appeal to a fashion-conscious buyer'. Other experts agreed with this opinion. The problem is that ideas are not shared between the company's designers. According to one designer, "There's not enough contact between designers at the different production centers. The designers never meet or phone each other, and they rarely travel abroad." Brexit considerations The UK has a prominent position in international finance. Because of Brexit, the political uncertainty may lead to a change in the future business dynamic. The cost of doing business in Britain might increase substantially. The UK only accounted for 1.5% of Fortune Garments total merchandise exports in 2015. Some analysts question London's role because the UK can no longer act as an effective gateway to free trade with Europe. Many experts recommend that companies evaluate distribution and supply chains within the UK. This could include possibly moving their locations to regulate possible tariffs that may be imposed in 2021. Consultant's report Michael Chau is aware that morale is low among managers and lower-level staff. He asked a business consultant to investigate the reason for this. Here are the consultant's main findings. Management Managers of subsidiaries say they are underpaid. They are demotivated and feel their contribution to the group's profits is undervalued. The majority of managers say they should have a share in the profits of their subsidiary (5%-10% was the figure most commonly mentioned). All managers reported that they did not have enough freedom of action. They want more autonomy and less control from head office over finance, pay, and sources of materials. Managers need more advice on quality control, and would like more contact with staff from other subsidiaries. Factory workers and administrative staff Staff turnover is high in most factories. Industrial accidents are common, mainly because health and safety regulations are not being properly observed. Factory workers complain about their wages. They are paid according to local rates, which in some countries are very low. They are often expected to work overtime without extra pay. Administrative staff said their offices are overcrowded and badly ventilated (e.g. too hot in summer, too cold in winter). Supervisors from head office are often of different nationality from their staff. This causes communication problems. Many factory workers said they did not always understand their supervisors' instructions. Instructions Write a SWOT analysis of the current situation of the Fortune Garment company. Write a heading for each section of the report: Strengths, Weaknesses, Opportunities and Threats
Fortune Garments, one of Hong Kong's oldest trading groups, makes high quality clothing which is sold to wholesale distributors. The headquarters is in Hong Kong and they have had a large office in London, England since 1971. It has become a global company. It has over 3000 suppliers in 17 countries, including many of the Western European countries of the EU. It employs staff from all over the world in its head office and factories. It has expanded rapidly in foreign markets with current sales of over $US 1.8bn
Fast delivery, innovative design, and reliable quality are essential for success in the fashion business. Fortune Garments' CEO, Michael Chau, is proud that his company can usually accept a major order and deliver the goods to a customer within four weeks. However, globalization has brought problems in the company's overseas plants, and this is having a bad effect on its share price. A journalist from the Eastern Economist Review suggested recently that the company could become the target of a takeover if it didn't sort out its problems soon.
Current Prominent Corporate Considerations
- Quality control
Many subsidiaries make clothing from materials supplied by several of the company's plants. Although this helps to lower costs, the materials manufactured in the last year have been of poor quality. This has resulted in canceled orders. Recently, a German distributor refused a consignment of 50,000 blouses. The goods simply did not meet its quality standards. Cancellation of the order cost Fortune Garments half a million dollars in lost sales.
- Responding to customer needs
Orders have also been canceled because Fortune Garments' subsidiaries are not responding quickly to customers' needs. When customers want last- minute changes to clothing, the plants cannot meet customers' tight deadlines. For example, an Australian fashion chain canceled an order because the factory in Vietnam was not able to make minor changes to some silk jackets in time for their summer sale. The lost sale cost Fortune Garments over $US 400,000.
- Design
When the company was smaller, it had the same low-pricing strategy, but the design of its clothing was outstanding. However, nowadays, the company seems to have lost its creative energy. Its latest collections were described by a famous fashion expert as 'boring, behind the times and with no appeal to a fashion-conscious buyer'. Other experts agreed with this opinion. The problem is that ideas are not shared between the company's designers. According to one designer, "There's not enough contact between designers at the different production centers. The designers never meet or phone each other, and they rarely travel abroad."
- Brexit considerations
The UK has a prominent position in international finance. Because of Brexit, the political uncertainty may lead to a change in the future business dynamic. The cost of doing business in Britain might increase substantially. The UK only accounted for 1.5% of Fortune Garments total merchandise exports in 2015. Some analysts question London's role because the UK can no longer act as an effective gateway to free trade with Europe. Many experts recommend that companies evaluate distribution and supply chains within the UK. This could include possibly moving their locations to regulate possible tariffs that may be imposed in 2021.
Consultant's report
Michael Chau is aware that morale is low among managers and lower-level staff. He asked a business consultant to investigate the reason for this. Here are the consultant's main findings.
Management
- Managers of subsidiaries say they are underpaid. They are demotivated and feel their contribution to the group's profits is undervalued.
- The majority of managers say they should have a share in the profits of their subsidiary (5%-10% was the figure most commonly mentioned).
- All managers reported that they did not have enough freedom of action. They want more autonomy and less control from head office over finance, pay, and sources of materials.
- Managers need more advice on quality control, and would like more contact with staff from other subsidiaries.
Factory workers and administrative staff
- Staff turnover is high in most factories. Industrial accidents are common, mainly because health and safety regulations are not being properly observed.
- Factory workers complain about their wages. They are paid according to local rates, which in some countries are very low. They are often expected to work overtime without extra pay.
- Administrative staff said their offices are overcrowded and badly ventilated (e.g. too hot in summer, too cold in winter).
- Supervisors from head office are often of different nationality from their staff. This causes communication problems. Many factory workers said they did not always understand their supervisors' instructions.
Instructions
Write a SWOT analysis of the current situation of the Fortune Garment company. Write a heading for each section of the report: Strengths, Weaknesses, Opportunities and Threats
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