Giordano International: Sustained Success Beyond 2005 Harvard Case Solution & Analysis

1.0.            Introduction

Giordano had experienced an enormous growth in last two decades. It has performed comparatively well even in the tough times like the Asian crisis but like any other company, it has seen a fair share of setbacks. The interim financial result of 2005 shows decline in growth rates and has been making it difficult for Giordano to sustain the historical growth. This report will focus on the current situation of Giordano by analyzing its strategies from different perspectives followed by recommendation to sustain the growth.

1.1.            About of Giordano

Giordano Limited was established in 1980 by a Hong Kong based entrepreneur, Jimmy Lai. The business was initially focused around the wholesale of high-end apparels and within three years, it had already stepped into retail industry while expanding rapidly into new markets. Soon enough, it had to change the strategy to be a value-for-money brand as it started making losses. In late 1980 s, it started developing a new strategy to gain a competitive advantage in the market. The founder hand-picked some best practices from retail industry in the west with a new management team to bring Giordano back on track.

Lai also started to transform customer services division and started vario4us campaigns. One of the popular campaigns was called “Giordano means service” whereby employees had to wear badges with the campaign title. The business started to recover and financial results improved; net profits significantly increased in 1990 and 1991 by 58% and 87% to reach HK$ 85.13 million, respectively. Giordano was subsequently listed on Hong Kong Stock Exchange in the mid of 1991 and later it was restructured in 1995 with Giordano Group as the new holding company. This led to massive expansion of its operations into other regional markets while attracting international investors to form joint-ventures and franchising opportunities.

The core corporate business value of Giordano focused on:

  • Quality
  • Knowledge
  • Innovation
  • Services
  • Simplicity

Giordano saw a massive growth in over a decade to reach HK$ 497m in 2004. The same year Giordano saw major increase in operating costs particularly related rentals, staff costs and distribution expenses. The interim reports from 2005 show a decrease of operating profit margin as well. This has started to worry the senior management in Giordano.

2.0.            Analysis

A thorough analysis needs to be conducted to establish some recommendations on the current situation of Giordano. The analysis will include situation analysis based on five (5) C’s model,

2.1.            Five C’s Situation Analysis

The five Cs situation analysis is used for internal and external analysis of the company. The five Cs represent company, collaborator, customer, competitor and context. They are subdivided to focus on individuals aspects of the environment.

2.1.1.      Company

  • Products

The products of Giordano are known to be uniquely classic and colorful as compared to competitive high end products. During the economic downturn of Asian Financial crisis, it kept the focus on customer needs and provided products at reasonable price while maintaining quality. The main products were jeans, polo-shirts and T-shirts, while complementary products included bags, belts and socks.

Its products are categorized in four major brands to focus on individual market segment. Following table briefly describes each brand:

Brands

Description

Giordano
  • Simple and modern
Giordano Ladies
  • For Fashion conscious Women
  • Mid-priced
Giordano Junior
  • Children apparels
Bluestar
  • Casual Clothes & accessories
  • Budget brand
  • Image in market

Giordano has a reputation for quality, value for money, easy styles, outstanding service, understanding customer needs, differentiated products, choice (options) and availability. It strongly recognized for its customer service and has won a few awards for it as well, including one from Hong Kong Retail Management Association on Outstanding Service and Courtesy Award.

  • Technology and manufacturing.

Technology has been one of the major focus points of Giordano in recent years with installation of advanced point-of-sales systems. An advanced information system across the organization was put in place with a common data base to alert employees of low inventory and real-time sales information. Giordano is also considered as a leader in Asian retail market to include online sales.Giordano International Sustained Success Beyond 2005 Case Solution

Giordano started operations with two factories in China and later added one more factory in 1992. These factories supplied two-third of the output to the retail network. It kept on adding for manufacturing capacity however,the operations were disrupted by Chinese authorities and Giordano was penalized for HK$ 8.5 million. It only had two (2) operational by 1997....................

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