Kreative Kasuals Inc. Harvard Case Solution & Analysis

Threat of New Entrants

Since the Canadian textile industry is already facing declining trend in growth of revenues, which has led to the high competition in the current producer of textile goods, therefore, there are less chances for the entry of new producers in a highly competitive market. Meanwhile, the establishment of textile production facility requires huge investment in machinery and building cost, which further discourages the entry of new textile producers into the Canadian textile market. Therefore, the threat of new entrants inthe Canadian textile market is low.

Threat of Substitutes

However, there is no similar alternative to the textile that will fulfill the need of textile products; therefore, the threat of substitute products is not significant.

Competition

The Canadian textile market is full of competition, because the local market of textile is facing declining trends which has led to a reduction of 9.9% in the annual growth rate of the Canadian textile industry. Meanwhile, the export market is also depressed due to the recession in the United States, Additionally; the producers of textile who are based on weak economies are able to produce textile products at lower cost using the cheap labor and cheap raw materials. Therefore, the Canadian textile industry is hugely dependent on the local government tenders and in order to secure the government tenders each textile producer is trying to bid lower price and the increased competition has led Canadian textile producers to slice the share of other suppliers of textile goods. Therefore, the Canadian textile market is highly competitive and higher rivalry exists between the local producers of textile goods.

SWOT Analysis

Strength

In-house Functions

Since Kreative Kasuals performs all its production processes in his in-house developed production facilities which allow Kreative Kasuals to control the quality and full fill the demand in time. Further, the in-house facility allows Kreative Kasuals to control the cost of production through increasing control over its operations.

Use of Domestic Labor

Moreover, Kreative Kasuals uses domestic labor for the production of its output, which enables Kreative Kasuals in controlling production cost relating to the labor wages. Because the domestic labor is cheap, thathelps Kreative Kasuals in keeping its head above water (Faraday, 2012).

Quality, Service and Turnaround

Further, the quality of Kreative Kasuals output, its service and turnaround time leads to the increased demand in overseas countries. Because the other offshore companies take a turn around period of 90 days, which make the importer wait for a long time, meanwhile, Kreative Kasuals takes lower turnaround period that increases the demand for its products in overseas countries.

Higher Predictable Revenues

Kreative Kasuals sales revenues have been constantly increasing in the past and it is predicted that revenues will further increase in the future. Therefore, the higher revenues are a strength of Kreative Kasuals which has led it to move its production facility into a new production site with increased production facility.

Part-time Employment

The use of part-time employees enables Kreative Kasuals to be flexible in the production of textile goods, because the part-time employees will only be paid when they are needed to work in times of increase demand and once the demand will be fulfilled no additionally payment will be made to the part-time employees. Therefore, the use of part-time workers gives Kreative Kasuals flexibility to produce different level of output without affecting its marginal labor cost.

Expertise in polyester/rayon and polyester/cotton-based garments

Further, the owner and president of Kreative Kasuals have the expertise in the procurement of raw material of polyester/rayon and polyester/cotton-based garments, which allows Kreative Kasuals to acquire the highest quality and less expensive raw material.

Weaknesses

Part-time Employment

However, where the use of part-time employees gives flexibility of production during different times meanwhile, it is also a weakness of Kreative Kasuals. Kreative Kasuals heir most of its staff on a part time basis so that they can be easily separated from the employment without any redundancy payment when they are not required. However, due to the part-time employment, the employees of Kreative Kasuals are facing job insecurity, which leads to the de-motivation. However, the part time employment reduces the cost but, meanwhile; it discourages employees’ long term association with the company.

Hourly Payment to Labors

Further, Kreative Kasuals pays the labor force on an hourly basis, whereas the competitors are paying their work force on per piece basis. Therefore, the wages of Kreative Kasuals work force are limited to the number of hours available during the shift, whereas, the labor force of other competitors enjoys higher wages due to the efficient work and increased production per hour. Therefore, the payment of hourly wages is a weak point of Kreative Kasuals........................................

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