ANALYSIS OF CASE STUDY RITA DRESSES

BY: PRAKHAR KUMAR SHARMA MBA 4TH SEMESTER MONIRBA (A.U.)

CASE SUMMARY :

Ram Gupta and Rita Gupta had established a tailoring shop named Rita Designer wear. Two years old venture.

Ram worked as an accountant and Rita was a graduate in fashion designing before starting their business.
They used only the best materials and accessories including handmade cotton, silk, wool, or jute clothes instead of synthetic clothes.

Their shop reflected an image as spic and span. They became popular and known for their good quality.

Their initial orders included wedding dresses, dresses for kids and for some boutiques. They got an order from a top airline to supply uniforms for its air and ground crew.

Ram and Rita Gupta are examining the issue in depth whether to expand their business or limit, as the profit margin in the airline order is very less.
They called up their close friend Ramesh to help them solve the problem and to persuade him to either give them a loan or to join them as a partner in case of expansion.

ANSWERS FOR CASE STUDY

OPTIONS AVAILABLE FOR RITA DESIGNER DRESSES

A. Go for expansion without accepting Airline Orders. B. Go for expansion and accept airline orders. C. Continue to make custom-built dresses for chosen customers.

1.(A). GO FOR EXPANSION WITHOUT ACCEPTING AIRLINE ORDERS

Merits :

Growth and expansion. Enhancement in brand value. Bigger consumer exposure. Better margins of profit. Will help in withstanding international competition.

Demerits :
Advertising would eat into profits. Involved risks. Product uniqueness could be jeopardized. Danger of compromise in quality.

1.(B). GO FOR EXPANSION AND ACCEPT AIRLINE

ORDERS

Merits :

Airlines guaranteed sales. Enhancement in Brand Value. Bigger consumer exposure. Growth and expansion. Assured margins of profit in the long run.

Demerits :
Low or nil margins of profit in airline order. Risks involved in purchase of raw materials. Compromise in quality. Uncertainty in the recurrence of assignment.

1.(C). CONTINUE TO MAKE CUSTOM-BUILT

DRESSES FOR CHOSEN CUSTOMERS

Merits :
Retain their specialty. Better quality and design in dressings. They have started earning profit since last year so they should stabilize their present business first. No extra expense or economical burden.

Demerits :
No growth. Threat of competition to small venture. Limited exposure of customers and restricted product range.

CONCLUSION :
They should go for expansion and accept the airline order asThey will avail the benefit of

Growth and expansion. Enhancement in Brand Value. Bigger consumer exposure. Assured margins of profit in the long run. Will help in withstanding international competition. Opportunity of long-term association with the airline. Chances of getting publicity and advertisement for their business. Opportunity of getting orders from other airlines.

STRATEGIC PLAN

A STRATEGIC PLAN SHOULD INCLUDE FOLLOWING INFORMATION1. A clear statement of strategic intent covering the vision, mission, business definition and objectives. 2. Result of environmental appraisal , major opportunities and threats and critical success factors. 3. Result of organizational appraisal, major strengths and weaknesses.

A STRATEGIC PLAN SHOULD INCLUDE FOLLOWING INFORMATION4. Strategies chosen and the assumptions under which those strategies would be relevant. 5. Contingent strategies to be used under different conditions. 6. Proposed organizational structure and for strategic implementation.

A CLEAR STATEMENT OF STRATEGIC INTENT

Strategic intent of any organization defines what the organisation stands for.

VISION- To become the priority of customers looking for quality designs and dresses.
MISSION- To design, develop and provide best dressings and their matching clothes, with continuous creativity and innovation in apparels.

BUSINESS DEFINITION
CUSTOMER FUNCTIONS : Innovative and latest designed dresses. Best designs at reasonable prices. Best quality clothes in terms of materials and colours used. Comfortable in wearing, washing and handling. Long life. As a symbol of prestige in society.
1.

CUSTOMER GROUPS : Kids wear, teenage wears. Wedding dresses for brides and grooms. Mens suits and blazers. Uniforms and staff dresses for different organizations. 3. ALTERNATIVE TECHNOLOGY : Modern sewing machines. Machines for labelling and packaging.
2.

OBJECTIVES
To serve the customers by providing them quality product. To continuously try to reduce cost of production by mass purchasing of raw materials. To strive for quality improvement. To maximize the utilization of machines to increase productivity. To strive for market expansion. To increase customer loyalty by establishing their brand and search for guaranteed buyers. To stick to the time dimension.

OPPORTUNITIES :

Large order from top airline. Can enter into large retail trade sector. Demand for Rita dresses from retailers and boutiques. Products of Rita Dresses are not available in the nearby towns, even though the need is there. Orders for wedding ceremony dresses.

THREATS

Probability of not getting repeat orders from airline. Competition from International players is increasing in the local market and it may sweep the Rita Dresses away with their established and respected brands. Demands from the customers is sporadic and not uniform.

STRENGTHS :
Both husband and wife being professionals as accountant, and graduate in fashion designing respectively are most suitable for the business. Quality design and best quality materials and accessories used in dresses made them supplier of unique products. Profit margins of wedding dresses and kids girls are higher.

WEAKNESSES

Lack of experience. The company has beard a loss of Rs 1,00,000 in first financial year. Availability of funds is a problem before the business, it can be taken either from Ramesh or financial institutions. Scarcity of labor / HR for full utilization of machinery for production in the idle time. Lack of infrastructure including outlay in case of expansion. Publicity only through word of mouth and lack of other means of advertizing.

CRITICAL SUCCESS FACTORS :

Continuous improvement in quality of their design by creativity and innovation to cater latest and new fashion. Reducing cost of production through bulk purchase of raw materials. No compromise in the quality of raw materials and accessories used in production to remain unique in market. Targeting and tapping customer groups and markets on basis of their prior profits i.e. high profit in wedding and kids dresses. Flexible product mix including Customized products and different sub-brands for mass production.

STRATEGIES CHOSEN AND THE ASSUMPTIONS UNDER WHICH THOSE STRATEGIES WOULD BE RELEVANT.

Go for expansion and accept air line order. And at the same time search for other ready buyers to ensure smooth cash inflow and smooth operations. Machinery and manpower should taken on lease/outsourcing for the airline project. After completion of airline order on the basis of its result , they should go for permanent machinery and manpower. After fulfilling the airline order they should go for increase in their product range by capitalizing on profit. They should make separate division for mass and custom production. They should increase their product range by adding Mens suits and blazers with the present range of wedding, teens and kids dresses. They should heavily advertise the airline contract to attract big customers and also look for franchising the brand .

STRATEGIES CHOSEN AND THE ASSUMPTIONS UNDER WHICH THOSE STRATEGIES WOULD BE RELEVANT.

They should produce both type of products customized and mass products with different sub-brands.
1.

Rita dresses CUSTOMISEDTo avail the benefit of the better profit margins. To retain the old and loyal customers. To capitalize on the strength of Rita dresses, i.e. Better quality, customized and designer products. To intact the products uniqueness.

STRATEGIES CHOSEN AND THE ASSUMPTIONS UNDER WHICH THOSE STRATEGIES WOULD BE RELEVANT.
2.

Rita dresses FASHION APPARELS (sub- brand for mass production)To avail the benefit of the wider distribution. For better consumer exposure. To establish the brand name. To get the benefit of the different guaranteed sales like airline order. To compete with international brands.

SOURCES OF MONEY:
Taking monetary help from Mr. Ramesh by adding as share holder. Taking advance from Airline Line Company. Taking loans from Bank. Generating money from relatives and other personal sources. Taking government grants/assistance for development of SME in textile line.

CONTINGENT STRATEGIES :

1st If the Airline Company refuses to accept the product of Rita Designer Dresses after installation of machineries and other infrastructural facilities.
In this case the company will produce product to sell to schools as school uniforms and other official professionals. The company will produce in mass to sell to other towns.

CONTINGENT STRATEGIES :

2nd if the International competitors sweeps them away from the market.

The Rita dresses will work as only production unit and it will sale its products to the Bigger players in the industry.

PROPOSED ORGANIZATIONAL STRUCTURE FOR STRATEGIC IMPLEMENTATION :

Organizational structure should be changed from entrepreneurial structure to functional structure. Ram should be the MD or CEO and Rita should be the Main Designer. A number of employees should be hired and assigned the posts and responsibilities for various functional areas like finance (that should be in direct invigilation of Ram), marketing, production and HR. Ramesh may join them in partnership as an investor.

THANK YOU.