Strategic Management I
Framework Case Analysis
Organization Processes & Culture
• In 1997:
“Rosso” acquired a VP for the “Retail & Intl” dept.; with 10 years of experience within the FMCG multinational industry, the new VP was given the responsibility for heading the Italian market.
• In 2000:
Former VP from LEVI’S joined the company as the VP Marketing & Sales. A great contribution for the line development process which was much more structured after the VP’s arrival and helped the Company to further develop collections that were more in tune with the evolution of the market. The new arrivals of Professionals were acquired to define and implement existing, new and advanced (sales) strategies.
Managing 5 product lines in One Central Organization
Over time five different product lines proved to be too complex as smaller lines were dedicated less attention, therefore the concept didn’t result since potential to further develop growth was not being recognized/detected. (Problem No. 1). Good examples are the Diesel’s Kids- and Sports line which struggled to grow.
• In 1999:
The Company decided to spin off Diesel Kids and Diesel Sports however, Product Design and Communications were kept centralized in Molvena/IT, this to ensure Brand image.
• From 1999 to 2005:
The CEO of Diesel Kids decided to distribute through independent Distributors rather than through Diesel Subsidiaries, which increased total revenue from EUR 3.5 million to EUR 50 million.
• It is very common within the Luxury Goods industry, to open so-called “Flagship stores” without thinking about long-term planning or profitability. In this approach, it is not necessary to break-even, it is just aimed to promote the Brand hence these stores are used as Marketing expenditure tools which is the reasoning behind Diesel’s first store openings in respectively New York, London and Rome. (Problem No. 2).
• In 1999 / 2000:
The Central Retail dept. was created as a result, new openings of new Retail Outlets at high speed and because of Diesel’s continuous success; it established its own In-House Architecture Design Dept.
• From 2003 to 2005:
Diesel expanded from 105 stores in 2003 to 300 Retail shops by the end of 2005; 195 locations were Company-Owned, and 110 locations were franchised. The own Retail channel generated 23% of the total revenue and 77% was generated from wholesale- and third party Retail outlets. (Problem No. 3).
Had been restricted and limited actively (by Diesel) and naturally (by Wholesalers) as: a) Diesel (actively) reduced the number of multi-brand stores to differentiate and to redefine its sales strategy as where the Company focus was orientated in the higher segment of the value chain. b) A number of stores (naturally) stopped buying Diesel because its products were heading outside of their price range and the target clientele.
Reference; in the USA, Diesel reduced with 40% to 150 stores and dropped Macy’s. (Problem No. 4).
• In 2004:
Licenses were a natural way for the Company to expand by offering closely tied products to its end-consumers such as watches, sunglasses and shoes. The Company licensed the Diesel Brand e.g. to “Global Brand Marketing” for shoes, to “Safilo” for sunglasses and to “Fossil” for watches and jewelry.
• In 2000:
Diesel acquired “Staff Intl” bases near Vicenza/Italy, which is the owner of the New York industry and Gym brands and made licenses to e.g. Martin Margiela, Vivian Westwood, and Atsuro Tayama. It also produced Diesel’s Fashion forward Sports line “DieselStyleLab” under license to diversify as “Staff” to Rosso is all about new luxury. The Company focus is on people in their 20’s and 30’s.
Diesel planned to both add and subtract...
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