Transforming Tommy Hilfiger Harvard Case Solution & Analysis

Introduction

Tommy Hilfiger started off his fashion career in the year 1969 with a total of $150 where he purchased 20 pairs of jeans. With the instant success of his career, Hilfiger grew to 10 stores where he also served the local university Cornell students also. Since Hilfiger was a die-hard fan of British rock scene, therefore, he offered clothing accordingly also.

Soon he had a number of young musicians coming over to his outlet to purchase jeans. With his initial success, Hilfiger became complacent and eventual lost his focus on the company. He was only 25 years old when his company faced financial trouble; soon he declared bankruptcy and left the business. Soon he became a full time fashion designer who was approached by various companies and received quite a few job offers.

In New York, Tommy met Mohan Murjani who wanted to start off a men’s fashion line, where he offered Hilfiger the role of a designer. The company became successful and grew rapidly, however the financial struggle remained the same.

Later Tommy Hilfiger spun off and it became Tommy Hilfiger Co. Inc. where it went on to become an IPO in 1992. The sales posted by the company in that year were $107. By the end of 2005, Tommy Hilfiger expanded itself and had introduced Flag collection, Denim collection, Crest collection, H Hilfiger, Hilfiger Athletics, Tommy Jeans, etc.

Evaluation of alternative strategic options

As the case states, since the company Tommy Hilfiger has been unable to generate the sales that are expected off the United States market for the past five years, therefore, the management is planning to acquire the company. Moreover, several private equity and financial institutions have been interested in acquiring Tommy Hilfiger. The option of raising equity financing was from Apax Funds, whereas the debt financing was offered by Citibank. Moreover, the third option that has been presented in the case is of Wal-Mart which is also interested in acquiring Tommy Hilfiger.

Apax Funds:

            As the case states, Apax Funds have been a renowned name in financing companies. Apax has a long standing record of investing in fashion industry in the past also. The company has financed Phillips-Van Huesen acquisition of Calvin Klein. Moreover, the company has been into quite a few acquisitions where the different companies that offer similar products in the fashion industry have been financed by Apax Funds. The ideal opportunity which is offered by Apax Funds is that it has offered a share price of $16.80 Moreover; the company has offered a 5% premium over the closing price which is set at $16 with a premium of 36% over the trading price of share in the last three years or so.

Wal-Mart:

            The second alternative for Tommy Hilfiger is to offer its share to Wal-Mart and sell it to the management of Wal-Mart. However, the option is also a good one because it shall allow Wal-Mart to enter high end or the upper end fashion industry. The sales for the company can increase once people actually come to know about the acquisition of Tommy Hilfiger. However, a major issue of this acquisition is that Wal-Mart is perceived as a low cost brand. With the acquisition of Tommy Hilfiger, Wal-Mart will have to offer higher prices for Tommy products, which many of the costumers of Wal-Mart might not like. Therefore, the element of risk with the acquisition of Tommy Hilfiger does stand quite strongly which actually restricts the Wal-Mart to acquire Tommy Hilfiger.

Turnaround Strategy for the First 100 Days after the Acquisition

The major turnout strategy for the company after its acquisition by Apax Funds shall be to focus on the United States market by offering customized goods for the local market. Since Tommy Hilfiger has been mostly considered as a brand which is preferred by youngsters and teenagers, moving forward once the company are acquired, it should look to offer diverse range of goods for the customers from various age brackets Moreover, by adopting a strategy that focuses on mass audience shall bring in more revenues to the firm (Walshe, 2004).Transforming Tommy Hilfiger Case Solution

The company has to focus on strategic repositioning in the initial phase of the first 100 days of the acquisition. The company has to develop a focus and should identify the market which needs to be targeted by the company in the next 100 days because eventually it is necessary for the firm to identify the market that needs to be catered. Moreover, the company has to also focus on the improving the value chain also.....................

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