Tropical Leisure Limited Tropical Leisure Limited has been making high quality Caribbean leisure wears for over twenty-five years, in old rented premises located in the heart of the Barbadian capital of Bridgetown. The company has a flexible labour force of about twenty employees and three directors, only one of whom, namely Mr. Grant, the managing director, is fully active in the business. The company specializes in leisure and swim wear garments. Their current range consists of tee shirts, shorts, skirts and bath suits in rich vibrant Caribbean çolours and styles for men, women and children. The company capacity is 400-500 garments per week, depending on style and continuity of the production run, but additional floor space and machines could be brought in quickly to raise production levels to a maximum of 1000 garments weekly if required. Trade sources estimated that the Barbadian market was valued at US$ 1.5 billion in 2010 but since then inflation and recession has deflated the market, resulting in many smaller businesses having to cease operations. Census of production figures indicated some 15 leisure wear manufacturers, six of which accounted for 25 per cent of total industry output. Independent retail stores account for 25 per cent of tee shirts and 30 per cent of sales for shorts, shirts and swim wears; stores catering to tourists account for 15 per cent and 25 per cent while and department stores 15 handled another 15 per cent and 20 per cent respectively. Tropical Leisure's sales were traditionally distributed through an assortment of clothing store agents, who tended to change frequently throughout the years. However, in the period 2006 to 2012 Tropical Leisure's production was increasingly taken up by Modal Fashions, a successful regional clothing boutique chain store with outlets located throughout the Caribbean. In the 2011-2012 financial year, Modal Fashions accounted for over 80 per cent of gross sales of Tropical Leisure. By, then, Tropical Leisure had terminated most of their other distributor agreements leaving only the one it had with Modal Fashions. In 2012, owing to market depression, Modal Fashions drastically reduced their contract quantity to 25 per cent of the previous year and Tropical Leisure was forced into two-days-a-week production. Although quantities have gradually increased since late 2012, negotiations with Modal Fashions have become more and more difficult, such that the agreed price gives Tropical Leisure a net profit per garment as low as 10% on some styles. Mr. Grant believes level of profit is too low to sustain the company and suspects that Modal Fashions is using Tropical Leisure only as a back-up supplier to complement the much cheaper garments it imports directly from China. It is currently Twmoured in the market that customers are turning away from Chinese made garments due to their unattractive styles and tendency to quickly fade in çolgur, after the first or second wash An attempt was made in 2012 by Tropical Leisure to export through a large international department chain store that has locations in Canada and America. However, the deal did not last long as the chain opted instead to import cheaper made garments from Asia. Although Modal Fashions ordered Tropical Leisure garments for sale through their outlets located in Trinidad, Jamaica and Guyana in 2012, the quantities were embarrassing low and the orders suddenly dried up without any explanation, although no complaints had been received by Mr. Grant. Since 2012 Tropical Leisure had traded around breakeven levels and is working within a bank overdraft of US$50,000 along with reduced credit levels from suppliers. Tropical Leisure's bankers have recently asked for a meeting with Mr. Grant to discuss both the overdraft and the future prospects of the company. The lease on Tropical Leisure's premises is due for renewal at the end of this year. Mr. Grant, in some desperation, has called in the services of a marketing consultancy for advice.
Tropical Leisure Limited Tropical Leisure Limited has been making high quality Caribbean leisure wears for over twenty-five years, in old rented premises located in the heart of the Barbadian capital of Bridgetown. The company has a flexible labour force of about twenty employees and three directors, only one of whom, namely Mr. Grant, the managing director, is fully active in the business. The company specializes in leisure and swim wear garments. Their current range consists of tee shirts, shorts, skirts and bath suits in rich vibrant Caribbean çolours and styles for men, women and children. The company capacity is 400-500 garments per week, depending on style and continuity of the production run, but additional floor space and machines could be brought in quickly to raise production levels to a maximum of 1000 garments weekly if required. Trade sources estimated that the Barbadian market was valued at US$ 1.5 billion in 2010 but since then inflation and recession has deflated the market, resulting in many smaller businesses having to cease operations. Census of production figures indicated some 15 leisure wear manufacturers, six of which accounted for 25 per cent of total industry output. Independent retail stores account for 25 per cent of tee shirts and 30 per cent of sales for shorts, shirts and swim wears; stores catering to tourists account for 15 per cent and 25 per cent while and department stores 15 handled another 15 per cent and 20 per cent respectively. Tropical Leisure's sales were traditionally distributed through an assortment of clothing store agents, who tended to change frequently throughout the years. However, in the period 2006 to 2012 Tropical Leisure's production was increasingly taken up by Modal Fashions, a successful regional clothing boutique chain store with outlets located throughout the Caribbean. In the 2011-2012 financial year, Modal Fashions accounted for over 80 per cent of gross sales of Tropical Leisure. By, then, Tropical Leisure had terminated most of their other distributor agreements leaving only the one it had with Modal Fashions. In 2012, owing to market depression, Modal Fashions drastically reduced their contract quantity to 25 per cent of the previous year and Tropical Leisure was forced into two-days-a-week production. Although quantities have gradually increased since late 2012, negotiations with Modal Fashions have become more and more difficult, such that the agreed price gives Tropical Leisure a net profit per garment as low as 10% on some styles. Mr. Grant believes level of profit is too low to sustain the company and suspects that Modal Fashions is using Tropical Leisure only as a back-up supplier to complement the much cheaper garments it imports directly from China. It is currently Twmoured in the market that customers are turning away from Chinese made garments due to their unattractive styles and tendency to quickly fade in çolgur, after the first or second wash An attempt was made in 2012 by Tropical Leisure to export through a large international department chain store that has locations in Canada and America. However, the deal did not last long as the chain opted instead to import cheaper made garments from Asia. Although Modal Fashions ordered Tropical Leisure garments for sale through their outlets located in Trinidad, Jamaica and Guyana in 2012, the quantities were embarrassing low and the orders suddenly dried up without any explanation, although no complaints had been received by Mr. Grant. Since 2012 Tropical Leisure had traded around breakeven levels and is working within a bank overdraft of US$50,000 along with reduced credit levels from suppliers. Tropical Leisure's bankers have recently asked for a meeting with Mr. Grant to discuss both the overdraft and the future prospects of the company. The lease on Tropical Leisure's premises is due for renewal at the end of this year. Mr. Grant, in some desperation, has called in the services of a marketing consultancy for advice.
Chapter14: Marketing Channels And Supply Chain Management
Section14.1: Taza Cultivates Channel Relationships With Chocolate
Problem 1VC
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1. Conduct a SWOT Analysis of Tropical Leisure
Transcribed Image Text:Tropical Leisure Limited
Tropical Leisure Limited has been making high quality Caribbean leisure wears for over twenty-five years, in old
rented premises located in the heart of the Barbadian capital of Bridgetown. The company has a flexible labour
force of about twenty employees and three directors, only one of whom, namely Mr. Grant, the managing
director, is fully active in the business.
The company specializes in leisure and swim wear garments. Their current range consists of tee shirts, shorts,
skirts and bath suits in rich vibrant Caribbean çolours and styles for men, women and children. The company
capacity is 400-500 garments per week, depending on style and continuity of the production run, but additional
floor space and machines could be brought in quickly to raise production levels to a maximum of 1000 garments
weekly if required.
Trade sources estimated that the Barbadian market was valued at US$ 1.5 billion in 2010 but since then inflation
and recession has deflated the market, resulting in many smaller businesses having to cease operations. Census of
production figures indicated some 15 leisure wear manufacturers, six of which accounted for 25 per cent of total
industry output.
Independent retail stores account for 25 per cent of tee shirts and 30 per cent of sales for shorts, shirts and swim
wears; stores catering to tourists account for 15 per cent and 25 per cent while and department stores 15 handled
another 15 per cent and 20 per cent respectively.
Tropical Leisure's sales were traditionally distributed through an assortment of clothing store agents, who tended
to change frequently throughout the years. However, in the period 2006 to 2012 Tropical Leisure's production was
increasingly taken up by Modal Fashions, a successful regional clothing boutique chain store with outlets located
throughout the Caribbean. In the 2011-2012 financial year, Modal Fashions accounted for over 80 per cent of gross
sales of Tropical Leisure. By, then, Tropical Leisure had terminated most of their other distributor agreements
leaving only the one it had with Modal Fashions.
In 2012, owing to market depression, Modal Fashions drastically reduced their contract quantity to 25 per cent of
the previous year and Tropical Leisure was forced into two-days-a-week production. Although quantities have
gradually increased since late 2012, negotiations with Modal Fashions have become more and more difficult, such
that the agreed price gives Tropical Leisure a net profit per garment as low as 10% on some styles. Mr. Grant
believes level of profit is too low to sustain the company and suspects that Modal Fashions is using Tropical Leisure
only as a back-up supplier to complement the much cheaper garments it imports directly from China. It is currently
Twmoured in the market that customers are turning away from Chinese made garments due to their unattractive
styles and tendency to quickly fade in çolgur, after the first or second wash
An attempt was made in 2012 by Tropical Leisure to export through a large international department chain store
that has locations in Canada and America. However, the deal did not last long as the chain opted instead to import
cheaper made garments from Asia.
Although Modal Fashions ordered Tropical Leisure garments for sale through their outlets located in Trinidad,
Jamaica and Guyana in 2012, the quantities were embarrassing low and the orders suddenly dried up without any
explanation, although no complaints had been received by Mr. Grant.
Since 2012 Tropical Leisure had traded around breakeven levels and is working within a bank overdraft of
US$50,000 along with reduced credit levels from suppliers. Tropical Leisure's bankers have recently asked for a
meeting with Mr. Grant to discuss both the overdraft and the future prospects of the company. The lease on
Tropical Leisure's premises is due for renewal at the end of this year. Mr. Grant, in some desperation, has called in
the services of a marketing consultancy for advice.
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