Executive Summary
The new business venture, situated in Liberia, will be named Distinct Fashion Designers (DFD). It will deal with making designer clothes requiring less seaming. The clothes will also adapt African styles and will be of light materials and colors. The application of product differentiation strategy inspires the project’s name as a generic competitive advantage. DFD’s mission is to become the best producer of Haute couture clothing designs through innovative African styles to meet customers’ needs and promote African culture internationally. A high percentage of the Liberian population wears secondhand clothes, thus indicating the need to introduce affordable fashion designs.
The venture has a few competitors who, in terms of capital, do not pose a threat to the new business. The business’s internal and external environment indicates hope for future success. The venture will specialize in producing designer clothes with unique features that will differentiate it from those of the competitors. It will also succeed due to its competitive advantages of product differentiation and quality clothes.
Strategically, the business will operate from a physical store in Liberia to an online store where people can shop globally. The core team will involve the CEO, supervisors, IT personnel, HR, designers, and seamsters. The new venture will use $ 150,000 for the setup and running of its operations for the next three months.
Introduction
In the era of Instagram, everybody wants to shine by showing off their wealth through fashion. Social media users are now copying their celebrity idols who wear designer clothes. The trend of wearing designer clothing is associated with boosting individual confidence and showing wealth.
The new venture will be about designing clothes in African styles. The designer of African prints will require little seaming to allow the clothes to be breathable. Some of the clothes to be produced include women’s dresses, shorts, skirts, blouses, head scarves, men’s trousers, shirts, and shorts.
Designer clothing will have significant profits because the business targets the rich. Designers will draw various designs while the seamsters make the clothes using sewing machines. The clothes will be sold in physical and online shops in Liberia. This choice of venture is perfect because, as a growing economic country where people widely wear secondhand clothes, the Liberian market for cloth design is still untapped. Thus, starting a designer cloth line in the country will be a profitable opportunity.
Designer clothes are known to be expensive due to branding, among other things. Making a brand expensive will require producing products of high quality. Successful fashion clothes business owners move with customer tastes trends, especially for the market they produce (“This Liberian-American,” 2021). The Western style heavily inspires Liberia’s fashion, but recently, designers have adopted African style, especially prints (“This Liberian-American,” 2021).
In a growing economy, starting a designer clothing line is challenging due to the low population of high-class people. With a few existing clothes designers in a small market, Liberians are slowly learning to ditch secondhand clothes for customized ones. Therefore, investing in designer clothes has a positive future and potential for success.
Business Description
Distinct Fashion Designers (DFD) is the name of the new venture that is expected to deal with designing clothes. The Haute couture fashion design will focus on producing clothes for male and female adults. The venture will be based in Monrovia, Liberia, as a physical and online store. DFD will operate under a competitive advantage of less inflated prices and product differentiation.
The clothes produced from scratch will include dresses, skirts, tops, shirts, shorts, trousers, and scarves. The brand will focus on the African style by creating light-color prints. The target market will be celebrities and people of high societal class. With the main focus being African culture, the designer clothes will be of high quality, thus matching their high prices. The business will have a typical management structure with additional seamsters and designers to create the clothes.
Industry Background
The Liberian fashion industry primarily comprises secondhand clothes imported from the US and China. In the early 2000s, tailoring was not famous, as most people wore secondhand clothes (Sumo, 2022). When Liberia fell into civil war, most people sought refuge in Western African countries such as Ghana, Guinea, and Sierra Leone (Sumo, 2022). While living here, the Liberians’ fashion was highly influenced by the African fashion style, and when returning home in 2003, they brought the taste home (Sumo, 2022). Consequently, African designers started venturing into population-needs businesses to create clothes based on African culture.
Although secondhand clothes still occupy the most prominent fashion industry position, the designers are rising equally. Particularly in the Haute couture category, most of the giant designers are based abroad (“This Liberian-American,” 2021). These designers have factories where they produce clothes and export most of them, leaving some to be sold in local stores (“This Liberian-American,” 2021). The trend in the fashion industry is designing African prints through a model that requires less seaming.
The small designer industry’s competitors include Wax and Wonder, The Bombchel Factory, Korto Momolu, and Suakoko Betty (“This Liberian-American,” 2021). The significant barrier to entry into the fashion designing industry is vast capital. Haute couture requires designers to create wear from scratch, thus requiring a lot of resources (“This Liberian-American,” 2021).
The most expensive part of this industry is finding seamsters who can produce clothes that match the designed models. Another barrier to entry is reaching the high class of people and making them customers (“This Liberian-American,” 2021). To convince the high social class population to purchase expensive designs, one must produce high-quality products. Therefore, the industry is less competitive due to these barriers to entry.
Market Analysis and Company Mission
The available locally produced designer clothes in Liberia are mostly copycats. According to Osei (2019), customers complain about fake designs with inflated prices. The report shows that some designers purchase ready-made clothes and make a few changes to fit into their brands. Therefore, the available opportunity that meets customers’ needs is producing original and unique designs that do not imitate any other brand.
Like any other country, the high-class society in Liberia craves luxury (Rajkap, 2020). Most people now wear luxurious African fashion designs during weddings and other traditional events (Rajkap, 2020). Brides will pay high prices for elegant bridal gowns with African print touches. Primarily worn in traditional weddings, there is an increasing demand for such wear with unique designs (Osei, 2019).
Women are switching from jeans to open dresses, primarily in African styles, as a result of Liberia’s extreme heat (Rajkap, 2020). The upper class in Liberia’s and the rest of the world’s cities will be the focus of DFD. The goal of DFD is to become the leading manufacturer of Haute Couture apparel designs using cutting-edge African styles in order to satisfy consumer demands and advance African culture globally.
Internal Environment
SWOT Analysis
Strengths
One of DFD’s strengths is that it will produce unique designs without copying other designers. Since most Liberian designers replicate already selling designs, DFD will make designs that have not been seen in the market, thus giving the market a new taste. The venture will also produce high-quality products, which will be charged high prices. The quality of the designs and fabrics used will be formulated to match the fees charged. Setting high prices for these luxurious designs will attract high-class customers to spend on purchases, increasing sales.
Another strength is that DFD development has ready capital of $150, 000 which is approximately 23 million Liberian dollars. This is enough money to purchase all the required machines and fabrics and hire seamsters for the first three months. DFD will hire top talents, especially designers and seamsters who work closely under supervisors. The last strength is that the venture will create employment opportunities for Liberian society, thus boosting economic growth.
Weaknesses
One of the primary weaknesses of this venture is the lack of a broad market. According to “This Liberian-American” (2021), the Liberian fashion industry is facing problems of stagnation and low return on investments. Although copycat designs contribute to such issues, customers might be reluctant to purchase DFD products. Therefore, refreshing the designers’ reputation and earning customers’ trust might take a while. The venture might experience less-than-expected sales and revenues at this time.
Another weakness could be poor management of underperforming employees (Hitt et al., 2019). If the administration does not employ performance management tools, it is easy for the employees to be underproductive.
Opportunities
DFD can promote its products in media advertising through an integrated marketing strategy. Integrated marketing communication strategy involves advertising across various marketing platforms such as social media, radio, newspapers, and television (Hitt et al., 2019). The marketing manager will formulate a strategy to ensure success in creating product awareness. It also helps in reaching as many potential customers as possible.
Another opportunity is to expand the business to a bigger one. Although it is early to think about the expansion of the venture during a startup, it is still an opportunity for growth.
Threats
There is an existing threat of competition from African designers and alternatives. Although most of the re-owned fashion designers are based in the US, they still produce in Liberia (Rajkap, 2020). The Liberians have also recognized their brands and may be reluctant to change tastes. There is also the threat of secondhand clothes being the design alternative. Although the venture targets a high-class audience, this population is increasingly becoming influenced by the Westernization culture of dressing (Sumo, 2022). Therefore, they may also wear high-quality secondhand clothes for influence.
External Environment
PESTEL Analysis
Political Factors
The nation’s political policy is business-friendly, with minimal trade barriers, especially for foreign investors. Liberian political stability is as weak as -2.5 and as strong as 2.5 in the report 2022 (“Liberia – Market Overview,” 2022). For local investors, investment is somewhat friendly due to the availability of natural resources and the low labor cost. Following the ongoing inflation, the nation is experiencing a fiscal deficit of 4.3% registered in the 2022 budget (“Liberia – Market Overview,” 2022). The government has, however, developed reforms to resolve the fiscal deficit and make it trade-friendly in Liberia.
Economic Factors
The Liberian economy has a few indicators of growth, thus making it attractive for new ventures. The economy is still underdeveloped, with a GDP of approximately $3 billion in 2022 (“Liberia – Market Overview,” 2022). The nation has an inflation rate of 8.66% and has weakened the Liberian dollar, valued at L$156.85 for $1 US (“Liberia – Market Overview,” 2022).
The cost of commodities and raw materials has equally increased, thus making the cost of production high. As of 2021, the unemployment rate was 4.10% and is expected to increase following the ongoing global economic recession (“Liberia,” 2022). Furthermore, the nation’s interest rate was 19.72% in 2022 but is expected to go down (“Liberia,” 2022). Based on this report, the Liberian state of the economy is promising for a new venture.
Social Factors
Liberians who fled the country due to war recently influenced West African fashion style to replace the nation’s Westernization. Both middle- and high-class societies seek to wear locally made clothes rather than secondhand ones. As of 2022, the Liberian population was over five million, with a reduced migration rate of 2.74 per 1000 migrants (“Liberia – Market Overview,” 2022). Liberian average household size is four persons, with a 5.36% education rate of the general population (“Liberia – Market Overview,” 2022). Wealthy Liberians are adopting luxurious lifestyles, thus increasing their daily expenditures.
Technological Factors
Liberia is experiencing rapid technological growth spreading across Africa. Businesses are adopting digital management and marketing to increase sales and revenues (“Liberia – Market Overview,” 2022). Advertising in social media has been successful due to the introduction of affordable smartphones that allows the buyer and seller to meet online. People slowly adapt to online orders and delivery through motorbikes and vehicles in urban areas. Investors are also adopting shipping methods in logistics and transportation.
Environmental Factors
Like the rest of the world, Liberia is experiencing severe effects of climate change. The nation’s humid climate has significantly worsened in recent years (“Liberia – Market Overview,” 2022). Consequently, businesses are required to practice sustainability by becoming carbon neutral.
DFD will take corporate sustainability responsibility by emitting as little carbon as possible. DFD will create breathable designs to respond to the high humidity in the nation and encourage people to wear them. The venture management will also focus on recycling reusable products and containers to conserve the environment.
Legal Factors
Liberia’s law stands against the practice or involvement in illegal businesses. All businesses must also exercise various laws, including consumer, employment, international, health, and safety (Jackson, 2019). Business owners must observe trade regulations and restrictions as informed by laws and reforms. Although labor costs are low in Liberia, employers are expected to provide a conducive working environment, avoid discrimination during hiring and firing, and provide $0.43 per hour as the minimum wage for casual and domestic workers (“Liberia,” 2022). DFD must adhere to all these laws and regulations to avoid lawsuits from the government.
Competitive Analysis
DFD competitors are fellow fashion designing businesses in Liberia. One of the strongest competitors is Wax and Wonder, which produces clothes in Liberia, selling some in local shops and the rest in Georgia, US (“This Liberian-American,” 2021). The strength of this business is that it has an online shop that sells globally. The company has a significant global market share (“This Liberian-American,” 2021). Its management is also focused on gauging its operations with those of American businesses. Its weakness is that its focus is abroad and not on the Liberian market.
Other competitors are Bombchel Factory and Suakoko Betty (Osei, 2019). Although these businesses do not necessarily have high revenues, their brands are well-established and renowned (Osei, 2019). They also have a positive reputation for their online shops. Their weakness, however, is a lack of creativity and innovation in production. These brands copy their designs from those of others (Osei, 2019).
Product differentiation and high quality will distinguish DFD from the rest of these brands. From the available information on the Liberian fashion design industry, DFD will have a top competitive position. Indeed, it might take a few months to get to the top of the industry.
Strategic Analysis and Choice
Long-Term Objectives
Long-term objectives are significant in directing an organization toward its goals within five or more years. Setting profitability objectives is critical because it indicates whether a business can grow, attract investors, or secure financing from lenders (Hitt et al., 2019). Return on investment objectives is essential in evaluating the growth of the business and detecting needed improvements.
Setting competitive goals is crucial in increasing sales by improving customer value (Hitt et al., 2019). The objectives seek to find a niche in the firm’s products to meet customer needs. Technological leadership objectives help the business to improve work operations by increasing value in business processes (Hitt et al., 2019). They involve adopting advanced technologies to optimize work functions and increase value and revenues.
Productivity objectives are set to guide employees on the expected performance by exploiting all their potential to meet goals. Employee relations objectives are critical in forming trust between employers and employees (Hitt et al., 2019). Setting public responsibility objectives is vital in earning a public reputation, thus increasing customer loyalty and retention (Hitt et al., 2019). Employee management objectives help employees maximize their productivity, thus attaining satisfaction and overall organizational goals (Hitt et al., 2019). In other words, planning to manage employees yields benefits for the management, employees, and the organization in general.
Generic and Grand Strategies
Product Differentiation Strategy
Product differentiation is DFD’s generic strategy, which entails distinguishing products from others that are similar to those available in the market. DFD will differentiate its products by inventing and creating unique clothes designs. It will also highlight the special features and benefits of wearing the clothes (Islami et al., 2020). Product differentiation will help the venture earn a competitive advantage by attracting more customers. That way, DFD meets the objective of gaining a competitive position in the fashion industry.
Expansion Strategy
DFD will adopt the expansion strategy as it begins business operations. Expansion strategy entails growth in a competitive environment where businesses must grow for sustainability (Hitt et al., 2019). Also known as the growth strategy, expansion is the most suitable and common strategy for a new venture’s survival in an industry (Hitt et al., 2019).
The design provides a range of opportunities for organizations to exist and expand. DFD will achieve this strategy by ensuring that expansion considerations are met. These considerations include increased sales, market share, profits, and entry into new markets (Hitt et al., 2019). The expansion strategy will ensure a positive return on investment and profitability in the long-term objectives.
Combination Strategy
DFD will also apply a combination strategy to grow its operations. A combination strategy is used by businesses when they try to achieve more than one objective using a single approach (Hitt et al., 2019). The process helps improve a firm’s competitive position in the industry.
DFD will use a combination strategy alongside an expansion to meet all the set long-term objectives (Hitt et al., 2019). The strategy will be used in product differentiation, thus putting the company at the top of the industry. A combination strategy will play the role of improving operations to meet the competitive position objective in the firm.
Short-Term Objectives
One short-term objective entails marketing through social media campaigns and Google ads. The ads will highlight the product’s key features that differentiate it from the rest of the market (Jackson, 2019). Marketing will also support the grand strategies through increasing sales and profits.
DFD will prevent employee turnover by implementing learning and development for the employees. Empowering employees helps to keep a generic strategy through a positive product reputation (Hitt et al., 2019). It supports the grand scheme by meeting employee management objectives.
DFD’s sales objectives will increase sales through marketing and promoting products (Jackson, 2019). These objectives will help to meet the generic strategy by earning public trust through the product’s uniqueness (Jackson, 2019). It will support grand strategies by ensuring productivity objectives are met.
Functional Tactics
One of the functional tactics will be running an integrated media campaign. The campaign will reach a big audience, thus creating product awareness. It will help customers decide to buy a unique product instead of competitors’ copycats (Jackson, 2019).
The second tactic, learning and development, will allow employees to advance and emulate new work skills. These skills play the role of preventing employee turnover and increasing productivity (Jackson, 2019). Increased productivity ensures increased sales and profits, hence outgrowing the competitors’ advantages (Jackson, 2019). DFD will also apply discounts to increase sales and meet sales objectives. Increasing sales improves the general performance of the organization.
Strategic Control and Continuous Improvement
The most significant recommendation for strategic control and continuous improvement is performance management. Performance management entails the managers working closely with employees to monitor and align business functions with set objectives (Jackson, 2019). This model involves identifying areas needing improvement and applying solutions to improve performance.
Another suggestion is improving employee relations (Jackson, 2019). Employees are critical to a well-performing business; if they are not well, they underperform. Positive employee-employer relationships increase retention and productivity (Jackson, 2019).
The other recommendation is to develop and maintain a positive public reputation. Customers are influenced by the public’s opinion about a firm (Jackson, 2019). Therefore, customer loyalty and retention are earned through having a good reputation.
Management Summary
The organization’s executive leadership will be the chief executive officer (CEO), who, in this case, will be me. The second category of leaders will be supervisors who directly report to the CEO. The supervisors will work closely with designers and seamsters, who will be the junior employees.
To start, there will be five supervisors, each supervising one designer and four seamsters. The human resource department will be headed by one person who will be responsible for hiring all employees. Two information technology personnel will also be responsible for marketing the business in the media. The organizational structure is expected to expand with the company.
Conclusion
Liberia has an unexploited fashion design market; thus, starting a clothing line will be advantageous. Liberians and the general public have recognized the need to wear designer clothes. It is a way of showing confidence and class for the wealthy.
The Liberian fashion industry heavily relies on imported products; hence, investing in this market is promising. The SWOT and PESTEL analysis shows the possibility of the new venture’s success. The project will be guided by its mission to operate within generic and grand strategies to meet the set objectives. A small organizational structure will work towards improving the performance of the organization to meet success.
References
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Liberia. (2022). The Global Economy. Web.
Osei, A. (2019). Archel Bernard kickstarts her Liberian ethical fashion factory. She Leads Africa. Web.
Rajkap, R. (2020). Liberia. Textile Value Chain. Web.
Sumo, P. D. (2022). The retail second-hand clothing sector in developing economy: Case study of Liberia. Croatian Regional Development Journal, 3(2), 139-160. Web.
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