Coach Case Analysis

Question 1
As of 2006, Coach Inc. operates in premium handbag and accessories industry. The following are Porter’s five forces analysis and PESTLE analysis of this industry:
Bargaining power of suppliers: medium risk
Coach has a rigorous process to select its manufacturing partners; this fact implies that the suppliers do not have strong bargaining power in this industry. However, it is crucial for luxury goods companies to keep the quality standard and maintain this consistency. Uncertainty in availability of raw materials, disruptions or delays in shipments, loss or impairment of manufacturing sites, product quality issues will all impact the product delivery standard in this industry (Coach, Inc. 2006). Therefore there is a trade-off on

The success was the result of reviving Coach’s brand image. As expressed by Franfort in 1999, “We’re in the midst of a transition from a leather goods brand to a lifestyle accessories brand” (Rewick, 1999). The two legendary people built a sustainable business model that allowed Coach to compete effectively in the coming years. Franfort had confidence in this business model; he said” We see unlimited longevity in being a model brand offering accessible luxury accessories”(Schack, 2005). The following is the VRIO analysis on whether these business results are sustainable in the

From a longer term perspective, online channel will gradually steal share from actual store sales, so this distribution channel could actually be an effective strategy to enter small markets as opening physical store in smaller markets would not be cost effective.

Risks:

Brand dilution
There is a reason why high end handbag and accessories companies historically stay away from small markets because the move can be interpreted as brand downgrading and people will begin to treat the brand as cheap.

Sluggish demand in smaller markets
The market dynamic could be quite different from that in metropolitans where people are more fashion conscious and products can turn around fast. So smaller markets might not fit into Coach’s business model that creates new products on a monthly basis.

Lack of understanding on smaller market consumer behavior
Since not many luxury brands have entered smaller markets, there will not be sufficient market information to be analyzed; some markets might be completely greenfield for luxury handbag and accessories