Noor Ul Ann Zaid

 Table of Contents Introduction2 2. Competitive Advantage of GUCCI2 3. Analysis of external environment4 3. 1. PESTEL Analysis4 3. 2. Porter's Five Forces Analysis6 3.3 SWOT Analysis8 4. Strategic Change Management Process8 4.1 Change Management Theories9 5. Recommendations9 6. Conclusion10 MANAGING CHANGE IN COMPETITIVE ENVIRONMENT: ANALYSIS OF GUCCI Introduction Luxury fashion is a promising and intense industry where consumer trends, technology, and markets rapidly evolve (Seo, & Buchanan-Oliver, 2015). In this context, GUCCI has emerged as one of the world’s most famous luxury brands specialising in distinctive designs, high-end quality and unique selling proposition, marketing and commercial solutions. The brand was originally a leather goods company that was started in Florence, Italy in 1921, but it has gradually grown into an UMG company that captures the modern and sophisticated lifestyle of today’s consumer (DeFanti, Bird, & Caldwell, 2014). The aim of this report is to evaluate and compare GUCCI’s competitive position and the external environment in which it operates besides examining the strategic change processes that the firm has embraced to sustain its competitiveness in the era of competitive forces. The approach will see it assess GUCCI’s strengths with an aim of identifying main factors that have enabled GUCCI to succeed in the fashion industry. Also, the report will discuss the external pressures affecting the firm, which entails use of tools like PESTEL analysis and Porter’s forces. In addition, the report will discuss GUCCI’s tactical actions that it has taken in response to changes in the market; the organisation will also outline new measures; and will apply two concepts of change management that are Lewin’s Change Management Model and Kotter’s 8-Step Change Model. 2. Competitive Advantage of GUCCI This report brings out the strategic position of GUCCI in the luxury fashion industry, looking at competitive factors that put the company in a privileged position relative to its competitors. These are; the depth of brand history, rationally and emotionally appealing products, distribution and retailing models, unique marketing communications, as well as a proper integration of technology and data. 2. 1 Brand Heritage and Reputation: GUCCI’s brand history could be one of the most important strengths of the company. The brand was earlier established in 1921 by Guccio Gucci and from then it gained a position in the society which could be referred to as a luxury brand (Pastore, 2018). Since its inception, GUCCI has established itself as a company that produces quality and unique products to which the company adheres too by employing the best techniques and using quality materials in the production of their products. 2. 2 Product Innovation and Quality Originality seems to be at the heart of GUCCI as a business organization’s key product agenda. The brand never stops innovating and always explores the intersection of the classic traditional approach to the clothing manufacturing and the modern popular trends. Formerly in 2015, under the direction of Alessandro Michele, GUCCI adopted and took on what we might call a ‘more is more’ style which will attract a younger demographic of fashion-conscious consumers. Thus, innovation and quality create a synergy that supports the outbound brand image of positioning the brand as a luxury fashion house (Ozuem & Ranfagni, 2021). 2. 3 Distribution and Retail Strategy It also becomes significant that distribution and retail strategy contributes to achieving GUCCI’s competitive edge. The brand has a great global infrastructure with large flagship stores in major fashion cities, large coverage on luxury department stores, and rapidly growing e-commerce stores (Cabigiosu, A. 2020). A store is not simply a store for GUCCI – these are major premises where buyers navigate the brand’s positioning and where GUCCI itself is unmasked. These stores are considered as contact points for the customers who get an opportunity to experience a luxurious setting and image of the brand. 2. 4 Marketing and Customer Experience It is evident that creativity and boldness are the distinctive features of GUCCI’s marketing strategy. This is a brand that seeks to create and implement new and striking campaigns that hit the hearts of the target customers. Starting with the examples of using social media to the cases of working with celebrity collaborations or artists, all the marketing campaigns are made with the purpose of engaging GUCCI’s target consumers and getting them emotionally involved. Further, GUCCI attaches great importance to the service aspect which includes individual approach to the clients, as well as the organization of the relevant services for the elite buyers. 2. 5 Use of Technology & Data Analytics. As a modern company GUCCI actively operates in the digital environment and actively uses technologies and data analysis in its operations (Armitage, Roberts & Sekhon, 2017). The business leverages technological tools for the analysis of consumer behavior, taste, and trends hence enabling the brand to better appeal to its target clients. Technological advancement is also embraced in GUCCI, in terms of virtual fitting and use of augmented reality, and a very efficient online procurement method. Use of technology makes the operations efficient and at the same time the brand is able to adapt and be relevant in the market (Porter & Heppelmann, 2015). 3. Analysis of external environment This particular organisation, GUCCI ,finds itself in a competitively capable and volatile luxury fashion market. Before looking at the factors that impinge upon the business environment of this organisation, PESTEL business analysis and Porter’s Five Force business model are required. Such an analysis will give an understanding of the external environment that influences strategic choices and GUCCI’s place in it. 3. 1. PESTEL Analysis 3.1.1 Political Factors Political factors; stability of the political system and regulations affect GUCCI. The brand is a global luxury giant, which implies that it runs into different regulatory structures in different locations. Trade policies, tariffs, and this customs regulations are some of the influences on the cost and pricing of the products. For instance, the existing trade war of America with china or the role of Brexit on export and import between the United Kingdom and the rest of the European Union can disrupt the supply chain networks and market access (Moradlou, Reefke, Skipworth, & Roscoe, 2021). In addition, it impossible for GUCCI to violate intellectual properties since fakes are rife in the fashion industry. The brand is also vulnerable to issues of labor relations and supply-chain ethics since these issues affect the brand and its cost structures. 3.1.2 Economic Factors The business environment is still another critical element specific to the luxury fashion business. Elements like, disposable income, consumers’ confidence, currency values influence the total sales and commercial profitability (Olatubosun, Charles & Omoyele, 2021). Nonetheless, these kinds of companies experience reduced sales during periods of recession because people are unlikely to spend money on luxuries during a recession. For instance, worldwide financial upheaval in late 2008 and the subsequent COVID-19 pandemic affected consumers’ tendency to spend on luxury products. Also, the relative value of the Euro, their operational base being Italy, affects their revenue when brought as converted from other currencies. It also has to contemplate the strategic position in the emergent area, particularly in the Chinese and Indian markets that are characterized by the growth of middle-class consumers’ demand for high-quality goods. 3.1.3 Social Factors The population and their preferences have a major impact on the products that GUCCI needs to provide to the market as well as the methods it uses to market them. The changing attitude to social responsibility, people’s preference for sustainable and ethical products makes them choose brands that take care of the latter (Green & Peloza, 2011). As a result, GUCCI has shifted its attention into sustainable factors like production of natural products and also supply chain which is open. Another proof of appropriateness of the brand’s activities is its tolerance and diversity which are significant values of most purchasers especially if they are young (Ailawadi, Neslin, & Gedenk, 2001). Furthermore, the establishment of social networks and influencer-managed production has changed the way that luxury brands interact with the audience, thus GUCCI also needs to change the approach to this work. 3.1.4 Technological Factors The use of technology has integrated itself into various aspects of fashion with effect on the product as well as customer relations. Yes, the case illustrates that GUCCI has taken a digital drive and the effective use of the internet in supporting the improvement of the customer experience (Chevalier & Gutsatz, 2020). Some of the trends include; virtual try-on services, AR, and AI integrated into its digital media platforms. In addition, use of data analytics in determining the consumer behaviour as well as the stock control and procurement is very vital. 3.1.5 Environmental Factors This report relates environmental sustainability as a key factor that is of significance to luxury fashion brands. GUCCI is seriously working to mitigate through such mechanisms that aim at cutting down on the environmental impacts and encouraging for sustainable practices (Yang, Han & Lee, 2017). It has adopted green disciplines, environmentally conscious raw materials, carbon footprint control, and environmental management systems in supply and distribution channels. These measures are significant not just to sustain corporate and legal requirements but also to preserve the reputation of the brand towards the consumers with high environmental literacy. 3.1.6 Legal Factors The legal climate is diverse and includes such things as patents, trademarks, trade secrets, and employee protection. In this case, there are many dangerous interconnections of international laws that GUCCI has to come across to protect itself from counterfeit products (Neuwirth, 2017). The brand also has to abide by other country’s laws and standards pertaining to workers’ rights adequately in its supply chain. Also, laws concerning advertising and marketing have individual requirements depending on the country of operation; as a result, impact GUCCIs mode of advertising its products. 3. 2. Porter's Five Forces Analysis 3.2.1 Threat of New Entrants Luxury fashion sector has quite strong issues that almost control the entry of new companies such as capital intensity, brand image and experience in the craft. New entrepreneurs may likely face difficulties in matching the giants like GUCCI but the emergence of the digital platforms makes it easier for the market niches entry. Nevertheless, GUCCI has better brand image, and stable customer following which can act as a barrier against new competitors (Pastore, 2018). 3.2.2 Bargaining Power of Suppliers This is the case of GUCCI which has a goal-oriented supply chain that incorporates the use of quality material and professional craftsmen. The bargaining power of suppliers is not a major threat for the brand; yet, it is significant as it depends on the level of absolute and relative supplier importance and the uniqueness and scarcity of the materials supplied (Rothaermel, 2008).. For example, some special type of leather or exotic skin would have limited sources and this puts the suppliers in a better position to bargain. Nevertheless, it can be said that at GUCCI the risk of dominance of suppliers is not very high mainly because of the company’s large size and great buying power. 3.2.3 Bargaining Power of Buyers Luxury consumers have a high level of purchasing power which emanates from the fact that consumers are presented with a variety of luxurious brands (Brun & Castelli, 2013). Internet has indeed made price transparency to be high which has made it easy for a consumer to compare products. However, the price sensitivity of GUCCI’s customers is quite limited due to its excellent brand identification, logo, and exclusive designs and high-quality work. This means that buyer bargaining power is also reduced by the brand’s capacity to make customers believe that accessories they produce are special and of high status. 3.2.4 Threat of Substitute Products Consumers are also flexible with the type of luxurious items they purchase and can decide to go for fashion, accessories or even events. Though there are competitors for the luxury brand and the company, GUCCI cannot be significantly threatened by substitutes as long as the company produces outstanding accessories with its peeking brand identity (Dahl, 2021). Also, the brand has the ability to control and develop processes in a bid to meet the changes in consumer preference which can greatly minimize possibilities of substitution. 3.2.5 Intensity of Competitive Rivalry The target market of the luxury fashion segment is saturated with competition involving giants in the field like Louis Vuitton, Chanel, or Prada. This rivalry is further compounded by the fact that they are operating in somewhat a saturated market of the finer customers and ever-evolving consumers’ tastes and preferences. GUCCI competes in ways which include development of new products, coming up with fashionable promotions and improving on the experiences of the customers. Hence, the role played by product differentiation to create new designs and the well narrated brand image assists in retaining the competitive position of the brand (Temporal, 2011). Hence, it is observed that a political, economic, social, technological, and environmental and legal analysis, GUCCI’s external operations environment is subject to certain constraints. It is therefore clear about the factors that has opportunities for GUCCI to make further strengths, threats that may affect it to turn weakness, and opportunities that may turn to threats if not well managed. 3.3 SWOT Analysis Strengths Weaknesses Opportunities Threats Strong brand image Innovative capacity Global digitalization Effective marketing strategies Dependendence on key markets Counterfeit risks Vulnerable to economic downfall Emerging market position Consumer demand Expansion of digital opportunnities Competition with rivalry brands Diverse consumer demands Economic and political instability 4. Strategic Change Management Process Luxury fashion brand GUCCI has been strategically modifying its course of operations to sustain its strategic position. The actions involve influencing the market trends, consumer attitudes, and the modification of associated elements in multiple business areas that belong to a particular brand. Therefore, it has become strategically significant for GUCCI to move towards and determine the right place (Nagasawa & Fukunaga, 2015). This marked change happened in 2015 with the appointment of Alessandro Michele as the new creative director which changed GUCCI’s creative course. Even though it was a brave and artistic direction away from the modest and elegant design policy before, it succeeded in attracting much younger and multicultural clientele. For this, CEO Marco Bizzarri provided a contrast that focused on innovation digital and sustainability (Marxen, 2023). Both together reshaped its’ branding strategies and its business model with GUCCI. GUCCI expanded its product range and shifted to the period of maximalism in terms of colors and patterns (Solomon & Mrad, 2022). Taking this change made the brand stand out of the many competitors in the market. In marketing, GUCCI preferrably used social media and other digital platforms; using various models and postmodern themes that would attract the global consumers. The brand has also developed strong governance over the digital realities such as e-commerce platforms and various other innovations including augmented reality (AR) improving the consumer relations while also collecting thorough consumer records. Therefore, GUCCI has been observing strategic change management strategies to enhance its brand equity and promote organizational success. 4.1 Change Management Theories Following Lewin’s Change Management Model, GUCCI acknowledged the necessity for change, proceeded with the “change” introducing new creative and digital approaches (Gupta, Rathore, Biswas, Jaiswal, & Singh, 2024). According to Argus, Samson, Argus, & Samson (2021), Kotter’s framework of change management is relevant for GUCCI since the company sets the need for change with Michele and Bizzarri as an initiative to launch innovation with a vision to achieve sustainable power for organizational success. 4.2 Impact of Strategic Changes These strategic shifts put the new life to GUCCI and changed the focus towards customers as well as improving the company’s promotion and brand image. It was also noted that such values as sustainability and inclusiveness have contributed to the development and reinforcement of the brand. There are most certainly obstacles with such a move, such as the issue of GUCCI pushing away its more conventional customers, but this success shows overall the fashion house’s competence in responding to a global market. 5. Recommendations To maintain and enhance its competitive advantage, GUCCI should consider the following recommendations:To maintain and enhance its competitive advantage, GUCCI should consider the following recommendations: 1. Secure Brand Legacy as well as Creativity The marketing slogan suggests that the company should keep on using the traditional branding strategies even when adopting to new creative directions. Mixing novelty with tradition tends to draw in both the old school and new school consumers. 2. Increase Degree of Digital and E-commerce In the case of GUCCI it is suggested that more investment should be made in the company’s e-commerce capabilities with additional emphasis in on the possibilities of improving the online shopping experience. 3. Sustainability and ethical practices. GUCCI should increase its efforts towards sustainable production. This involves; adopting environment friendly raw materials, good supply chain management policies and increased accountability on where its raw materials are sourced. 4. Diversify Market Presence Despite the fact that GUCCI has an extensive coverage of the well-developed countries it is now necessary for GUCCI to venture into the emerging markets because the clients’ purchasing power is increasingly becoming demanding and is elevating. 6. Conclusion Thus, it is possible to state that the main strategies of GUCCI: creative director who marked a risk-intensive brand image, digitalization of the brand, and focus on the sustainability concept have become key factors in the brand’s revival on the background of the competition in the luxury market. From the application of the change management theories it has been found that the change processes have been easy to implement enabling the brand to remain relevant. 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