Description SCENARIO Congratulations! You’ve been hired as a general manager and tasked with pro ...
Description SCENARIO Congratulations! You’ve been hired as a general manager and tasked with proposing a plan that will update the alignment of the organization’s business strategies to address the impact of the changing global environment. This plan will be presented to C-suite employees in a few weeks. The first step to proposing a plan like this is to review the organization’s annual report and other documents then develop an organizational analysis. PREPARATION Use the organization and SWOT analysis you selected in Week 1 for this summative assessment. Analyze your selected organization’s SWOT analysis and other available sources to evaluate the current business strategies and strategic needs of the organization within a changing global environment. Determine a competitive business initiative that will address the unmet needs of the organization, based on your analysis ASSESSMENT DELIVERABLE Write a proposal that analyzes the current business strategies and the needs of the organization. Include the following in your organizational analysis: Name of organization and industry: Bath and Body Works / Retail Mission and vision: We make the world a brighter, happier place through the power of fragrance. Current organizational initiatives and what’s being done to support these initiatives Internal and external factors from SWOT analysis Alignment evaluation 1 or more unmet needs that is not limited to product or service (e.g., can be new demographic, new mode of delivery) Competitive advantages based on SWOT analysis Proposal of global competitive business initiative to address the unmet need(s) High-level outline with timelines and operational steps necessary to implement competitive business initiative 1 attachments Slide 1 of 1 attachment_1 attachment_1 UNFORMATTED ATTACHMENT PREVIEW A Progressive Digital Media business COMPANY PROFILE Bath & Body Works Inc REFERENCE CODE: 33366922-5678-4D01-A6C6-99E3DC2AE81E PUBLICATION DATE: 28 Aug 2023 www.marketline.com COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED Bath & Body Works Inc TABLE OF CONTENTS TABLE OF CONTENTS Company Overview ........................................................................................................3 Key Facts ......................................................................................................................... 3 SWOT Analysis ...............................................................................................................4 Bath & Body Works Inc © MarketLine Page 2 Bath & Body Works Inc Company Overview Company Overview COMPANY OVERVIEW Bath & Body Works Inc ((Bath & Body), formerly L Brands Inc, is a specialty retailer that operates both physical and online stores. The company’s product portfolio comprises women’s intimate and other apparel, body and bath products, personal care, and beauty products. It also offers fragrances, lotions, shower gels, sanitizers, candles, room sprays, deodorant accessories, men’s grooming products and soaps. The company markets products under the Bath and Body Works and White Barn brands name. It merchandises products through company-operated retail stores, international franchises, licenses, websites, and wholesale partners. The company has business operations in the US, Canada, China, Hong Kong and various international locations. Bath & Body is headquartered in Columbus, Ohio, the US. The company reported revenues of (US Dollars) US$7,560 million for the fiscal year ended January 2023 (FY2023), a decrease of 4.1% over FY2022. In FY2023, the company’s operating margin was 18.2%, compared to an operating margin of 23% in FY2022. In FY2023, the company recorded a net margin of 10.6%, compared to a net margin of 16.9% in FY2022. Key Facts KEY FACTS Head Office Bath & Body Works Inc Three Limited Pkwy, P O Box 16000 Columbus Ohio Columbus Ohio USA Phone 1 614 4157000 Fax 1 302 6555049 Web Address www.bbwinc.com Revenue / turnover (USD Mn) 7,560.0 Financial Year End January Employees 8,800 New York Stock Exchange Ticker BBWI Bath & Body Works Inc © MarketLine Page 3 Bath & Body Works Inc SWOT Analysis SWOT Analysis SWOT ANALYSIS Bath & Body Works Inc (Bath & Body) is a retailer of women’s lingerie, beauty and personal care products and accessories. Multi-channel retailing, product portfolio and inventory turnover ratio are the company’s major strengths, whereas financial performance and increase in liabilities remain causes for concern. The global online retail market, global apparel retail market, and global fragrances market are likely to offer growth opportunities to the company. However, labor cost in US, intense competition, foreign exchange risks and rely on third-party service providers could affect its business operations. Strength Weakness Product Portfolio Inventory Turnover Ratio Multi-Channel Retailing Increase in Liabilities Financial Performance Opportunity Threat Global Fragrances Market Global Online Retail Market Global Apparel Retail Market Labor Costs in US Intense Competition Foreign Exchange Risks Rely on Third-Party Service Providers Strength Product Portfolio Bath & Body offers a comprehensive portfolio of fruit-based products and ingredients, which allows the company to cater to diverse customer needs. This comprehensive product portfolio also helps mitigate risks associated with relying heavily on a specific product segment. Bath & Body offers a wide range of products including body and bath products, women's intimate apparel, personal care products, and beauty products. The company also offers fragrances, lotions, shower gels, sanitizers, candles, room sprays, deodorant accessories, men's grooming products, and soaps. Inventory Turnover Ratio The company’s inventory turnover ratio improved in FY2023, leading to fewer inventory turnover days, which signify that the company incurs low inventory carrying costs, enabling it to improve its operating performance. In FY2023, Bath & Body reported an inventory turnover ratio of 6.1, compared to 4.1 in FY2022. It was higher than that of its major competitors, Nordstrom Inc (Nordstrom) and The Gap, Inc. (Gap), which reported inventory turnover ratios of 4.7 and 3.8, respectively. Its turnover ratio indicates that the company takes 59 days to sell its inventory as compared to 77 days taken by Nordstrom and 96 days taken by Gap. Bath & Body Works Inc © MarketLine Page 4 Bath & Body Works Inc SWOT Analysis Multi-Channel Retailing Diverse retail and marketing channels help the company to increase its brand awareness, store traffic and sales. Bath & Body offers a broad array of products ranging from personal care and apparel to home fragrance products. It merchandises products through company-operated retail stores, international franchises, licenses, websites, and wholesale partners. As of January 2023, Bath & Body sells its products through a total of 1,802 company-operated stores. Out of these, 1,693 stores are located in the United States, 109 stores are in Canada, out of these, 1,693 stores are located in the United States, and 109 stores are in Canada. The company also operates 427 international retail stores and 31 e-commerce sites in over 45 other countries. In 2022, the company's franchise partners opened 89 net new stores, contributing to the growth of the brand. It markets its products through e-commerce website, bathandbodyworks.com. Weakness Increase in Liabilities Increasing liabilities might prevent the company from meeting its short-term obligations. In FY2023, Bath & Body reported current liabilities of US$1,379 million, compared to US$1,290 million in FY2022, which shows an increase of 6.9%. The current ratio was 1.6 in FY2023 as compared to 2.3 in FY2022. Such significant increase in liabilities could affect the company’s credibility in the market and pose operational risk when it strives to raise money for investment. Financial Performance Declined financial performance reduces Wayfair’s ability to allocate adequate funds for growth and expansion. In FY2023, Bath & Body generated revenue of US$7,560 million, which decreased from US$7,882 million in FY2022, with an annual decline of 4.1%. The decline in revenue was due to a decrease in sales in stores and direct channels and in orders. The company also reported a decrease of 24.1% in operating income, which fell from US$1,814 million in FY2022 to US$1,376 million in FY2023. The company also reported a decline of 40% in net income, which decreased from US$1,333 million in FY2022 to US$800 million in FY2023. Opportunity Global Fragrances Market Changing global trends and increasing brand consciousness are leading to growth in the market for companies offering fragrances. Increase in travel, the need to attend meetings, and growing concerns about social status are resulting in growth in the market for fragrances. Economic stability in majority of the countries is also aiding growth in the market for fragrances. The rapidly growing middle class population and increasing income also contributed to growth in the market. According to in-house research, the global fragrances market is forecast to reach 1,468.8 million units at a value of US$55,930.8 million in 2024. Category wise, female fragrances were the largest segment, accounting for Bath & Body Works Inc © MarketLine Page 5 Bath & Body Works Inc SWOT Analysis 58.1% of the market, followed by male fragrances (34.3%) and unisex fragrances (7.6%). In terms of geography, Europe accounted for 39.2% of the global fragrance market value, followed by the US (16%), Asia-Pacific (10.4%), the Middle East (9.1%) and Rest of the World (25.3%). Global Online Retail Market Bath & Body is a retailer of women’s intimate and other apparel, body and bath products, personal care and beauty products, and accessories. The company offers its products through e-commerce websites under the banners Bath and Body Works. It markets products under franchise, license, and wholesale arrangements through online portal, including bathandbodyworks.com According to in-house research, the global online retail market is expected to reach a value US$2,796.4 billion by 2025 at a CAGR of 10.5% from US$2,419 billion in 2020. The global online retail business is expanding as a result of consumers' increasing online involvement and rising acceptance of mobile internet. Category wise, electrical and electronics accounted for 29.8% of the global e-retail market’s total value in 2020, followed by food and grocery retail (21.3%), apparel retail (19.5%), home and garden products (11.2%), furniture and floor coverings (5.6%), jewelry, watches and accessories (4%) and others (8.6%). Region wise, AsiaPacific accounted for 42.8% of the global online sales in 2020, followed by the US (31.2%), Europe (21.7%), the Middle East (0.7%) and Rest of the World (3.6%). The growth is essentially the result of increase in internet and smartphone penetration, unending innovation in payment systems, and the consistent streamlining of logistic services, along with exclusive deals and discounts being offered by eretailers. Global Apparel Retail Market The global apparel retail market is expected to register growth owing to the increasing purchasing power of the young middle-class people, technological advancements and increasing popularity of online shopping. According to in-house research report published in November 2022, the global apparel retail industry is expected to reach US$1,922,473.6 billion by 2026. Womenswear accounts for 52.7% of the industry's value, followed by menswear (33.9%), and childrenswear (13.4%). Asia-Pacific accounts for 40.5% of the global apparel retail industry, followed by Europe (25.9%), the US (24.1%), the Middle East (2.4%), and Rest of the World (7.1%). The company offers panties, bras, lingerie, athletic attire, sportswear, swimwear, loungewear, activewear, and casual sleepwear under Victoria's Secret, Adore Me and Pink brand names. The company could be benefitted from growing apparel retail market as it offers women’s intimate and other apparel, knitted clothes and active wear. Threat Labor Costs in US Labor costs in the US have been rising, particularly due to the increasing minimum wages. This increase in minimum wages directly impacts the company's operating costs, which can have an effect on its profit margins. The tight labor markets, along with government-mandated minimum wage increases and a higher proportion of full-time employees, contribute to the overall increase in labor costs. It is worth noting that labor costs are significantly increasing across the country. As of January 2023, the minimum wage rate in the US was US$7.25 per hour. The minimum wage rate in 29 states and the District of Columbia is Bath & Body Works Inc © MarketLine Page 6 Bath & Body Works Inc SWOT Analysis more than the federal rate. The hourly wages range from US$15 in Massachusetts, US$11 in Florida, US$13 in Illinois, US$10.1 in Michigan, US$13.2 in Maryland, US$12 in Hawaii, US$14 in Connecticut and US$15.5 in California. The minimum hourly wage in the District of Columbia reached US$16.1. Intense Competition Bath & Body operates in a highly competitive retail market. The company competes with numerous competitors, including individual and chain specialty stores, online retailers, department stores, and discount retailers. The factors that determine the level of competition within the industry include a brand image, marketing, presentation, design, service, price, fulfillment, quality, and assortment. The company faces competition from Belk Inc, Chico's FAS Inc, Express Inc, H & M Hennes & Mauritz AB, Hanesbrands Inc, J Crew Group Inc, JC Penney Company Inc, and Nordstrom Inc. Apart from established players in developed countries, players from emerging countries are also competing hard to garner greater market share. Many of its competitors have a longer operating history, greater brand recognition, established customer and supplier relationships, and greater financial resources, which could lead to the creation of innovative products and business expansion through acquisitions. Some of its competitors have taken several initiatives that could create competitive risk for the company. In May 2023, Nordstrom Inc planned to open five new Nordstrom Rack stores in California, the US. In March 2023, The Gap Inc opened a new outlet in Hyderabad, India. Foreign Exchange Risks The company operates in many parts of the world and is exposed to fluctuations in foreign exchange rates. The company reports financials in the US dollar and therefore its revenue is exposed to the volatility of the US dollar against other functional currencies such as the Canadian dollar, Hong Kong dollar, Euro, Chinese yuan, and British pound. The major elements subject to exchange rate risks include the company's investments in overseas subsidiaries and affiliates and monetary assets and liabilities arising from business transactions in foreign currencies. In FY2023, the company reported a loss of US$2 million from foreign currency translation adjustments as compared to a gain of US$2 million in FY2022. To minimize risks from currency fluctuations, the company could involve in foreign exchange hedging by entering into foreign exchange forward contracts. However, there could be no assurance that such hedging would limit the impact of movements in exchange rates on the company’s results of operations. Rely on Third-Party Service Providers The company relies on Victoria's Secret & Co., a third-party service provider, for implementing and maintaining information technology systems and protecting associated data and system availability. It depends on the secure and uninterrupted performance of its own and its third-party service providers' and vendors' information technology systems. These systems are vulnerable to damage, interruption, or breach from various sources such as cyberattacks, ransomware attacks, telecommunication failures, malicious human acts, and natural disasters. Despite comprehensive measures, the company's systems, e-commerce environments, servers, and those of its service providers and vendors can potentially be vulnerable to physical or electronic break-ins, computer viruses, and similar disruptions. Such incidents could disrupt the company's operations, including the timely shipment and tracking of product orders and inventory management. This may lead to interruptions or delays in the company's supply chain. These issues could result in actual or perceived breaches of confidential customer, merchandise, financial, Bath & Body Works Inc © MarketLine Page 7 Bath & Body Works Inc SWOT Analysis associate, or other important information. Consequently, this could damage the company's reputation, lead to costly litigation, customer complaints, negative publicity, breach notification obligations, regulatory or administrative sanctions, inquiries, orders, or investigations, indemnity obligations, damages for contract breaches, or penalties for violations of applicable laws or regulations. Bath & Body Works Inc © MarketLine Page 8 Copyright of Bath & Body Works, Inc. SWOT Analysis is the property of MarketLine, a Progressive Digital Media business and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. 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