Vera Bradley Assignment Paper

Vera Bradley

Assignment Paper

Business Strategy and strategic

controlling

Assignment Questions

1. Does Vera Bradley have a well-defined strategy? How can the strategy be best

characterized?

Starting with a look at the current situation of the company and the problems before

describing and analyzing the strategy. One of Vera Bradley’s biggest challenges is that

its conventional product portfolio does not draw enough new clients to the company.

The competition in this segment is strong, with major players like Louis Vuitton, Hermes,

Gucci, Prada, Michael Kors, Coach and Kate Spade operating in the segment. The

current strategy of Vera Bradley is to imitate the approaches of other competitors in the

field to sustain their company. Since the rivalry is heavy, it won’t be enough to simply

copy others to attain customer mindshare. Vera Bradley fails to innovate and separate

its product line. It is clearly not attending to the needs of its clients. Since 2010, Vera

Bradley’s net income has also decreased year after year. On the other side, net income

increased until 2013, then fell by 15 percent the following year. Overall, the brand has

trouble standing out from the audience and is struggling to create market interest. In

early 2014, Vera Bradley proposed a new business strategy that would center the

organization on a product range with a small range of handbags and accessories of the

highest quality, extended sales platforms including a center on retailers and e-

commerce, and an improved marketing approach. Vera Bradley has a diluted brand

profile. It has a very large variety of product lines that do not adequately satisfy the

demands of the consumer. But with the new approach they would place the greater

emphasis on the product segments of the business, such as travel, backpacks, bags

and accessories. Another issue includes not providing men with products. In North

America and Asia, men’s goods are growing and could provide Vera Bradley with a

specific growth opportunity. It has a large range in terms of delivery networks. It does

not, however, sell items by luxury department stores such as Michael Kors. In

comparison, as opposed to its rivals, Vera Bradley lacks a worldwide footprint. They

concentrate only on the United States and Japan, while rivals exist in a variety of

nations. Sales in China and other developing markets are expected to develop from

2015 through 2018. Vera Bradley is, however, losing a significant potential to compete

in these countries internationally.

Starting with the characterization or the current strategy, the business objectives,

functional strategies, business strategies and the key performance indicators.

Vera Bradley’s present strategy involves offering distinctive line of colorful, patterned

women’s luggage, handbags, and accessories through department stores, company

owned full priced retail stores, factory outlet stores and over the internet. Product line

includes luggage, purses, wallets, cell phone and computer covers, jewelry, lunch

sacks, bags, scarves, beach accessories, and baby clothing. Main revenue generator

(40%) was its handbag line and accessories (30.1%). Vera Bradley’s present strategies

are not working as it is unable to attract new customers to the retail stores.

Business Objectives:

▪ Open 300 full price retail stores and 100 factory outlet stores

▪ Add 13 new full-line stores

▪ Open approximately 20-25 new outlet stores per year

▪ Made-for-outlet (MFO) strategy: Sell approximately 40% of the products sold in

factory outlet stores designed specifically for outlet

▪ Match company strategies with the external environment

Functional Strategies:

▪ To establish Vera Bradley as an aspirational brand for consumers and generate

excitement around new product launches

▪ To provide great design to product development

▪ To provide product assortments based on consumer needs through continuous

product innovation

▪ E-commerce should mirror in-store shopping experience by separating full-line

and outlet products to different sites

▪ To place greater focus on department store (largest seller of handbags for career

professionals) relationships and continue to explore other expansion

opportunities

Business Strategies:

▪ To expand its customer base while strengthening its connections with loyal

customers through advertising and fresh, new products

▪ To keep costs down through strong infrastructure, IT and supply chain

▪ To differentiate in quality and design to become an industry leader

Key Performance Indicators:

▪ Vera Bradley is debt free

▪ It is very liquid in terms of liquidity ratio (increasing working capital, current and

quick ratio)

▪ Coverage ratio has increased by 88% from 2010-2014, meaning it has been

getting better at meeting its financial obligations

▪ Asset turnover has increased by 3.2% over the last year

2. Does Vera Bradley have any core competencies? Distinctive competencies? If

so, what are they?

One of Vera Bradley`s core competency is their patterns. Their patterns standout with

their colors and design. They are not afraid to step out of the box with the bright colors

and design. Their patterns are hard to copy, they are one of a kind. Another core

competency is that they offer so many different types of bags, luggage and accessories

from them. They have many different styles and they are available in most of their

patterns. The classic design of the handbags, which has been successful since the

company was founded, is an identification feature with the brand and promotes brand

awareness. You could see it as an advantage as well as a disadvantage that the brand

only specializes in women as customers. This means that you can say that they have

greater expertise than competitors who sell products to men and women. Another

advantage is the comparatively early entry into the e-commerce market with their

products, as well as the outlet stores for which extra collections are created in order to

be able to sell them there to a larger customer base, as they are cheaper here.

Competitors don’t do that, some like Louis Vuitton prefer to destroy the unsold goods

rather than to discount them. As the business expanded, the management of Vera

Bradley recognized the value of a solid infra-structure and began early on to improve its