Mr.. Ajax is a professional/career woman’s dresses and suits designer and manufacturer in Canada during late ass’s. The Mr.. Ajax business level strategy is product design and quality. How did they do it? The following is a list of Distinctive Competencies that put Mr.. Ajax in the lead of professional/career woman’s fashion Mr.. Ajax hired Louis Seaman who was a well-known women’s fashion executive. At the time Mr.. Ajax didn’t focus on professional/career woman’s dresses and suits and Louis Seaman shifted the focus of the company into the professional/career woman’s market segment.
Quality of materials used. Mr.. Ajax purchased West Coast Woolen Mills Ltd. This acquisition, although it took time to be profitable, enabled Mr.. Ajax to take control of fabric production scheduling, design, and quality. At the time of market saturation in Canada most competitors used materials that were sub-par for the market segment. The quality and craftsmanship of the garments Mr.. Ajax made were seen as high quality garments produced from high quality materials.
The majority of the competition at the time was producing garments off-shore (in Asian) which lead to finished products which could be seen as inferior to those companies that produced finished product only using North American materials and production lines. Mr.. Ajax had also developed a reputation when it came to delivery of goods. Mr.. Ajax had seen delivery rates as high as 90% for (time and orders fulfilled), compared to the industry average of 75%. Mr..
Ajax financial reports (see chart below for fiscal years 1981 to 1988) show that there was steady growth in the business but the market has reached a saturation point as seen by the net profit line. (revenue, COGS, Gross Margin, Expenses, Net Profit). Porters Five Forces: Threat of New Entrants: High. Entry into the market can easily be done by any firms, rage or small, with very little startup costs to do so. Threat of Substitutes: High. In order to stay ahead of the threat of substitutes Mr.. Ajax needs, and has, stayed ahead of the competition by keeping tabs on what is happening in the European fashion industry.
Bargaining Power of Buyers is high. Distributes have the power, and authority, to turn away deliveries for a number of reasons – lack of quality, outdated styles, breach of contractual obligations, etc. Mr.. Ajax needs to keep up the standards they have set with their buyers. Bargaining Power of Suppliers is low. Since Mr.. Ajax currently manufactures the trials they use (30 to 40 percent) to make professional/career woman’s dresses and suits they have the option to negotiate with the other suppliers, current or new, for better prices.
The Free Trade Agreement (FAT) also makes it easier for Mr.. Ajax to purchase textiles from other North American firms as they can take advantage of lowered or removed tariffs. Seaman has studied two alternatives approaches for entering the U. S. Market: 1 . Establishing a retailing chain, or 2. A U. S. Based wholesale distribution subsidiary (regional or national) Given the amount of competition in the U. S. Establishing a retail chain would not be in the organization’s best interest (even though this is the option with the highest rewards).
I would suggest to Seaman that he move Mr.. Ajax into the U. S. Via a Regional Distribution Subsidiary, and the reasons for doing so are: Enough cash has been raised to support this entry move into the U. S. Without having to undertake drastic measures. Example: selling off less profitable companies (Surrey Classics or Olympic Pant and Sportswear) to raise more capital for a National Distribution Subsidiary Management for a National Distribution Subsidiary can be developed as the Regional Distribution Subsidiary grows. This will give Mr..
Ajax time to see if the entry into the U. S. Is successful, and if so, what is needed to move forward. A Regional Distribution Subsidiary would allow Mr.. Ajax to develop distribution channels in the U. S. , which would be needed for a National Distribution Subsidiary. Also, a Regional Distribution Subsidiary would allow the consumers in the newly entered market to see the high quality, up to date fashions, and quality of goods. This will allow the consumers in the market segment to become acquainted with the new Canadian product.