Please note! This essay has been submitted by a student.
Solid financial performance as well as growth (doubling in profit every year since 2012);
Clear competitive advantage specializing in efficiency and value creation through use of Kiva technology;
Good reputation within the mediumhigh end fashion industry;
Solid competitive basis/strategy (designer apparel fulfillment);
Ability to scale with growing companies and ability to be flexible with production in anticipation of differing production needs;
Excellent service reputation with great orderfulfillment rates and delivery.
Inability to integrate new product verticals and expand to certain clients’ changing needs (i.e. geographically, focus outside of apparel, Omnichannel delivery);
Labor supply challenges like tightening labor markets and high living costs/lower wages, especially relative to a growing need for larger labor forces;
Reliance on a few “large” clients.
Increasing demand from new clients due to unexpected large amount of positive wordofmouth;
Job Market in Massachusetts weakening leading to a stronger labor force;
Kiva increasing in popularity leading to new competition utilizing the same technology;
Shift of commerce focus away from ecommerce;
Apparel sales and demand declining due to economy Assumptions;
We will assume the executive team is correct when asserting that their quality of service is industry leading and that their customers have never been truly unhappy with their order fulfillment;
We will assume that the ecommerce order fulfillment industry will continue to grow in size and demand;
We will assume that there will be no direct substitute that utilizes Kiva in the next five years;
We will assume that the global economy will stay reasonably similar to 2016 levels.
Problem Definition Problem Statement: Quiet Logistics is growing every year and faces the challenge of having to devise a adjusted business strategy, amidst obstacles, on how to accommodate growing client needs while maintaining their competitive edge and stellar performance provided by Kiva.
Increasing client demand for vertical integration;
Reliance on a few “large” customers;
Increasing client demand for geographical expansion;
PriceSensitive Market that would be adversely affected by higher service charge;
Yearly revenue doubling since inception.
Alternative 1: Status Quo Approach. Maintain current business strategy and reject requests to expand vertically or offer additional services as well as any sort of geographical growth.
Alternative 2: Aggressive Approach: Specialize in a valuable company’s unique needs and consider investing in what they want and further specialize in these areas (i.e. geographical expansion)
Alternative 3: Research Approach: Invest in market research for a full year and carefully consider which areas of growth are viable and profitable and achievable while not trading off competitive edge as well as staying within the confines of original business goals/decisions.
Status Quo Approach: This approach confines Quiet Logistics to rejecting any sort of physical or strategic growth and sticking to what has worked and lead to doubling revenue since inception of the business. Quiet Logistics has grown steadily every year and shows no real sign of slowing down or failing outright. As such, the business still has time before coming to any rash decisions, while maintaining or even growing in revenue. This is made more possible by the fact that Quiet Logistics has been turning a profit since 2012 and can afford to keep things as it has been. This strategy would also allow the business to completely stay within the confines of their perceived business strategy. Specifically, the executive team mentions how they want to focus on medium/small sized apparel companies that are growing because they have the ability to scale with the company (to a certain point). This alternative would also solve concerns regarding increasing labor needs or having to considerably change service costs. The major downside of this alternative is that it potentially stunts growth opportunities because of the lack of risk taking. It can also alienate clients that were once “growing” or that are nearing their peak size as they will feel that Quiet Logistics no longer fits a sufficient amount of needs to maintain a client relationship with. Due to this one major downside, it is extremely hard to recommend this alternative. Doubling growth is expected for the next few years as per trend, while slowly decreasing as peak size is reached.
Aggressive Approach: This approach entails that Quiet Logistics chooses a select few valuable (and preferably large) companies in contract, like Zara, and conform and grow based on their specific needs/requests. Quiet Logistics initially grew along with other startups. Gilt Groupe helped the business identify its specializations/competitive advantage (high end apparel) and helped shape much of the strategic decisions. Growing in conjunction with other, strong companies is a viable option and Quiet Logistics is a prime example of it. If Quiet Logistics can successfully cater and grow to accommodate their most valuable clients they will not only higher the chances of lifelong partnerships with valuable clients, they will also have opportunity to grow their functionality and appeal to other clients with similar needs to the companies they chose to model their growth after. This would further specialize them (i.e. Zara and H&M, or Gucci and Chanel) and give them competitive edge to go after these large, similar clients. In addition, growing further can shape the company in ways that are unforeseeable but with a high potential for payoff. Who knows how wordofmouth might spread and what the true capability of Kiva warehouses are until you test them in various settings. Rapid growth and strategic change can help the executive team further fine tune their strategy in ways they couldn’t conceive qualitatively without experience. This aggressive approach has its downsides, however. This approach would make Quiet Logistics even more reliant on a “select few” large clients. In addition, potential areas for growth may not be of the best interest of Quiet Logistics more so than it’s in the best interest of their clients, making the growth less efficient than it should be.
The aggressive approach also requires Quiet Logistics to defer from an original strategic goal which was to focus on startups/growing companies to take advantage of their ability to scale to a small extent. In addition, due to Quiet Logistics not being as big as some of their clients (as it is still a growing company) it might not have the infrastructure to fully implement a client’s needs in the first place. Due to these reasons, this approach can not be recommended. Initial Capital Costs will be enormous, the first few years should result in loss of profit with it potentially paying off in a large way within five years. Research/Slow Approach. This approach entails that Quiet Logistics carefully approach the most viable and logical client requested areas of growth. Quiet Logistics would research for around a year for the most valuable areas of growth and implement these slowly, probably one by one depending on further research and performance. To illustrate, research may point to the conclusion that integrating a specific line of vertical product implementation (i.e. Zara Shopping Bags) is most likely to succeed with their Kiva technology. This functionality can be slowly rolled out and further analyzed and slowly conformed to. This process can repeat until no more strategic growth is necessary.
Although it is not very aggressive in growth, it is a nice middle ground due to the fact that sudden growth is not necessary as there is not a major influx of new clients or slowing revenue amounts. The biggest positive of this approach is that the original strategic/business goals will still be fully intact. Quiet Logistics will still maintain value advantage with Kiva by focusing on growing/medium/small business (it will just be able to scale a bit further than it currently can). Quiet Logistics will not have to heavily change and service cost in the pricesensitive market. It will also allow Quiet Logistics still maintain its position in the HighEnd Apparel area of competition while slowly implementing verticality as seen fit. In addition, slower more researched growth allow the business to focus on making their internal systems and processes more efficient.
Finally, it will not suddenly face increasing competition from substitutes due to the fact that it isn’t aggressively and blindly expanding into areas that have an abundance of substitutes. These reasons make this approach the most ideal and recommended. Growth should double for the next few years with potential for steady, fluctuating growth in the next decade.