Gap Analysis, Benchmarking, and Competitive Advantage
Gap analysis can be defined as the process of identifying and analyzing the differences between the business’s current performances with its desired performance. Companies that do not utilize their current resources to the maximum or forego investing in technology or capital usually end up performing below their potential.
Our company, Levitz Jeans Company, has two major competitors in the California region. These competitors include Levi Strauss and Calvin Klein Jeans’ companies. The three companies target customers with high disposable income and have a taste for high-end fashion. The companies also target individuals who value the quality of the good above the cost of it. It is common knowledge that high-end jeans last longer and have superior quality compared to other jeans that can be bought at a cheaper price.
Both Levi Strauss and Calvin Klein suffered major drawbacks due to the high intensity of the competition. The barriers of entry into the high-end jeans market in California are relatively low because of the number of competitors, which stems from the high profits that the industry generates.
Levi Strauss has lost many customers or a significant amount of market share because of the entry of new competitors. The company no longer has monopoly power, and it has to offer more competitive prices leading to lower profits. The availability of substitutes also dented the company’s market share. The company did not aggressively use technology to strengthen its market position and that is why it ended up losing a huge chunk of its market share. In addition, the company failed to embrace the ‘premium jeans’ market that began in 2000. As a result, the company was forced to cut costs, lay-off workers, and closing down several factories. The company is trying to regain its customers by advocating for brand loyalty and brand image. Many of its advertisements are meant to stress the brand loyalty so as to retain existing customers. The company is also stressing the youthfulness of its jeans in order to attract a younger market group. On the other hand, Calvin Klein has successfully established itself in the market especially with the use of branding.
These findings will be used to help in developing strategies that can help the company take advantage of its competitors’ weaknesses.
Competitor benchmarking and Competitive benchmarking
Competitor benchmarking involves identifying the company’s main competitors and then comparing our company to the others in terms of key performance areas. Levitz Jeans has two main competitors in the high-end jeans’ market. These competitors are Calvin Klein and Levi Strauss. Competitive benchmarking involves identifying a competitor that is out-performing our company in an effort to understand our company’s key weaknesses in certain areas.
When looking at competitor and competitive benchmarking, most companies focus on key performance indicators that help in making the comparisons needed. The key performance indicators include management systems, production, workers & turnover, working conditions, and energy use.
Levi Strauss outperforms both Calvin Klein and Levitz Jeans when it comes to two performance indicators; the workers and turnover measure and the working conditions. The company discovered that the changing labor landscape internationally is an opportunity. It also discovered that its workers can provide competitive edge if they are treated correctly. The company also recognized that consumers are now purchasing products from companies that uphold workers’ rights.
To this end, the company has endeavored to promote worker well-being in its supply chain management. The company is striving to improve worker well-being in five main areas: access to a safe and healthy working environment, equality, and freedom from discrimination in the workplace, economic empowerment, access to educational and professional development as well as promoting the worker’s health and the health and well-being of his family members. The company’s efforts on improving workers’ well-being have led to a significant reduction in worker turnover rates, and an increase in permanent workers.
The Levi Strauss Company, under the umbrella of Levi Strauss Foundation, was the first apparel company to develop a code of conduct for all of its suppliers, and workers to maintain a safe and healthy working environment. The company continues its efforts to uphold the dignity, health, and well-being of workers globally by collaborating with NGOs, suppliers, governments, and trade unionists (Levi Strauss Foundation, 2009).
Management systems are a performance indicator that aims to see if the companies under analysis have established sustainable mechanisms and sustainable practices. The measures used under this category include the sustainability policy, progress reporting, and supplier policies. The Production indicator measures the improvement in productivity, while the energy usage measures the energy efficiency of a company whether the company has adopted sustainable practices or not.
Calvin Klein has become a household name through vigorous brand advertising and diversifying its products. The company has diversified its portfolio to include fragrances, a golf apparel line, watches, jewelry, underwear, jeans, and a khaki collection. These products are offered at various prices from high-end to affordable making them very popular in the U.S. and beyond. In addition, the brand advertising carried out by the company usually has celebrities as the face of the company. This has helped to improve the company’s market position tremendously.
Through this analysis, it is imperative that Levitz Jeans begins to develop sustainable business practices, focus on promoting the well-being of all of its workers, as well as identifying ways of diversifying the products that the company sells to the public.
Levi Strauss Foundation (2009). Moving the needle: protecting the rights of garment factory workers. Retrieved on 23/11/2015 from http://www.bsr.org/reports/BSR_LeviStraussFoundation2009.pdf
Moffat, A. (2013, Mar 29). How Levi’s includes worker well-being in supply chain management. Retrieved on 23/11/2015 from http://www.greenbiz.com/blog/2013/03/29/how-levis-includes-worker-well-being-supply-chain-management