Combining differentiation with low cost Since apparel industry is fairly fragmented allowing customers to choose from variety of products it is important for companies to differentiate their offer and make their products be superior in some way to those offered by competitors (MarketLine 2013a, Bordean et al. 2010). However, in order to be successful, companies have to combine differentiation with low cost employing different factors like economies of scale, technological advantages, outsourcing or learning effects that will enable them to save cost where possible and thereby make their price be competitive at the end (Bordean et al. 2010, Grant 2010).
Responsiveness to customers taste preferences
Since Norwegian customers use apparel as a way of expressing their personality it is important for companies to adjust their products to the changing trends and specific Scandinavian taste which is a combination of classic style and latest fashion trends as well as comfort and innovation. Fashion can be seen everywhere in Norway, also in gyms where people like to wear trendy clothes as they want to look good while working out. (Euromonitor 2013d).
Fast response to changing fashion trends fashion trends change rapidly, so do customers demands, it is important for companies to react quickly to those changes. It not only allows companies to cut some costs but also to gain competitive advantage since the faster the response is, the more customers can be gained (Crofton and Dopico 2007). Rapid reactions allow also to reduce the amount of inventories left since those quick reactions enable companies to quickly cancel further production if particular product turns out to be unsuccessful «thus avoiding further accumulations that prompt the profit-draining clearance sales» (Crofton and Dopico 2007, p. 44).
Company overview
Bershka is one of the eight concepts belonging to the Inditex Group created in April 1998 and addressed to the youngest target segment aged 13-23 in retail and fashion (Inditex, 2013a). Its offer is composed of the following product lines: Bershka, BSK and Men (bershka).
Bershka s buisness modelintegration
Bershka s business model is based on a high degree of vertical integration with a focus on customer orientation. The company is involved in each stage of the fashion process (design, manufacture, logistics and distribution) (Appendix 24). Due to vertical integration, the company is able to openly and quickly communicate within and between different teams during the process of design the products (Eriksson and Jonsson 2011). Vertical integration allows the company to control a high part of its activities without being depended on external firms what also shortens the production cycle and allows quicker response to customers demands (Vincent et al. +2013; Heres 2007).
Entering new markets
There are many strategies to enter new market, but not each one suits the company s business model. Brand image is an important asset of Bershka since it does not cut down its activities to apparel production but also provides service in its stores. Therefore, both exporting and licensing forms of market entry would not completely match the company s business model. For Bershka the most important factor when entering a new market is the control that the company always tries to have over its operations. That is why, the main strategy for the company is wholly owned subsidiary «using greenfields over acquisitions» (Heres 2007, p. 101). However, within last years, the company has developed other alternative forms of entry like joint ventures and franchising agreements but always trying to maintain as high level of control as possible. Nevertheless, FDI is treated as the best way and alternatives are used only when there occur some obstacles which make it difficult for FDI to be used (Heres 2007).
Porter s generic strategies framework
Michael E. Porter proposed generic strategies as ways of gaining competitive advantage (mindtools 2013) .order to be competitive Bershka concentrates on each of Porter s generic strategies, however it pursues more of differentiation focus strategy than cost leadership strategy since customers constitute an important part of company s business model and are the main focus of each of company s actions. It is important for the company to be highly responsive to customers taste preferences and to satisfy not only their fashion desires but also those desires connected with shopping experience (Eriksson and Jonsson 2011).
