Theories, Strategies and Organization’s Strategic Direction (Essay Sample)

Theories, Strategies and Organization’s Strategic Direction A Case Study of Shein Student’s Name Institutional Affiliation Course Name and Number Instructor Due Date Theories, Strategies and Organization’s Strategic Direction Introduction Strategy refers to the means by which an individual or organization achieves a desired output or objective. Strategic management entails developing plans and implementing them to achieve a set of goals or objectives. Strategic decisions involve the organization’s mission, resources, people, and the external environment. Strategic change is a critical component of strategic management. Strategic change entails realigning and adapting organizational strategies in response to changes in the environment, to ensure that the organization keeps on track to meet long-term objectives (Balogun et al., 2020). Strategic change enables organizations to respond to changes in the external environment, such as market shifts, regulatory changes, or technological advancements. As such, senior managers need to implement strategic change to ensure a strategic fit between the organization and the external environment (Balogun et al. 2020). This paper will delve into the strategic and change management processes at Shein, a Chinese fast fashion multinational. Shein and the Fast Fashion Industry Shein is a Chinese online fast fashion retailer established in October 2008 by entrepreneur Chris Xu (Shein, n.d.). Over the past one and half decades, Shein has grown to become the world’s largest fashion retailer. The company runs an online-only model, which involves selling products through its app and website (Zhang & Gou, 2021). Shein’s target is young generation consumers (Generation Z) in North America, Europe, and Asia. The company has a mission to “make the beauty of fashion accessible to all,” by giving consumers greater choice at affordable prices (Shein, n.d.). The fast fashion industry is highly dynamic with customer preferences changing on a daily basis (Gonçalves et al., 2022). Fashion consumers, particularly young female consumers are always on the look- out for new and trending styles. Fast fashion companies, such as H&M, Boohoo, Zara, and Pretty Little Thing adopted have adopted new supply chain strategies to keep pace with the ever-changing consumer preferences (Gonçalves et al., 2022). These strategies, such as shortened manufacturing cycles, manufacturing in small batches, and ultra-modern just-in-time logistics have enabled the industry players to quickly replicate fashion trends at low costs. As opposed to traditional retailers who took months to replicate fashion trends, fast fashion retailers are able to quickly adopt styles from runways and magazines and bring them to consumers in a matter of weeks or days (Bak & Sollwedel, 2023). As Bak and Sollwedel (2023) posit, Shein took the fast fashion model and perfected it into ultra-fast fashion. Shein’s small-batch on-demand production model entails manufacturing even smaller batches faster than other fast fashion brands. Its online model enables it to measure customer preferences more efficiently and accurately. It is able to forecast demand and respond quickly to demand signals, allowing it to produce exactly what customers desire at a given time. Shein is thus faster and trendier than its competitors. Shein’s Purpose, Vision, Mission Shein’s purpose, mission, and vision have been crucial in setting its strategic direction. The company’s mission is to make the beauty of fashion accessible to all while its vision is to provide every customer with exactly what they want. Thus, Shein exists (its purpose) to provide affordable and trendy items to a global base of fashion lovers. This purpose, vision, and mission are woven into the company’s strategy. To accomplish its vision and mission, the company has maintained a customer-centric focused since its establishment. To make the beauty of fashion accessible to all, it produces affordable fashion items that keep up with the latest trends. The sells its products exclusively online with products being shipped from China when customers make orders. This means that anybody, anywhere, can order the company’s products provided they have a computer (or smartphone) and an internet connection. It collects customer data and analyses it to predict what customers desire and enhance their shopping experience. As Zhang & Gou (2021) suggest, Shein is more of a technology company (like Amazon) rather than a fashion company. It is the “TikTok” of fashion, whereby much like the complex algorithms of TikTok analyze user behavior to determine what videos they may like, Shein uses technology to predict exactly what its customers want (Zhang & Gou, 2021). Having a clear purpose, vision, and mission enabled the company to articulate what it wanted to achieve from the beginning. It then implemented, and continues to develop, strategies to achieve these objectives. Shein and Models of Strategy There are several models of strategy, including Mintzberg’s (1998), Johnson (2019), rationalistic view, adaptive strategy, and interpretive strategy. The most common model applied by business organizations is that proposed by Mintzberg. The model postulates that there are five factors that can be viewed in terms of strategy, referred to as the 5P’s of Strategy. These include: Plan, Ploy, Pattern, Position, and Perspective (Jofre, 2011). Each of these definitions of strategy can be applied to Shein: * Strategy as a Plan: A plan is set of intended actions designed to produce a desired output or goal. Strategy as a plan is made in advance and is followed by implementing it. Since its early days, Shein had a deliberate plan to dominate the global fast fashion market. It followed through the plan by entering into different international markets and developing a wide product range. It also created localized websites and marketing campaigns to meet its customers at their point of need. * Strategy as a Ploy: Ploy is a tactic to overcome the competition. Shein’s ploy to defeat competitors was to develop an online-only, customer-driven, and on-demand model, which other brands did not use. While brands like H&M and Zara have focused on physical locations, Shein sells its products exclusively online through its website and mobile apps. This has enabled to offer a greater variety of products at a low cost while the data collected from its customers have enabled it to forecast and meet the demands of customers more accurately. Shein’s business model has allowed it to expand quickly into new markets. Additionally, the business is less susceptible to shocks, such as the COVID-19 pandemic. While other brands closed down stores during the pandemic (for example, Zara closed 1,200 stores in 2020), Shein’s business was booming (Plé & Yacoub, 2024). * Strategy as a Pattern: Pattern results from repeated behavior overtime (Jofre, 2011). While strategies are planned, the outcomes of those strategies may be positive or negative. However, consistent behavior overtime establishes a pattern that the organization uses to achieve its objectives. Shein’s pattern is to rapidly respond to fashion trends by bringing new fashion offering to the market faster than competitors. It applies a data-driven business model to develop new products and update its inventory depending on the prevailing customer preferences. * Strategy as a Position: In terms of position, organizations seek to position themselves in a market niche or fill a gap in the market to meet new consumer needs. Shein has positioned itself as a company that provides trendy and affordable clothes to a global market or fashion-conscious and price-sensitive consumers through online channels. * Strategy as a Perspective: Perspective is the way the organization does things, that is, the organizational culture and values. Shein, for example, has a culture of innovation and agility. It has maintained responsive and agile supply chains and used technology to deliver products to customers and market itself. It also believes in meeting the exact needs of customers through customer feedback and data analytics. Theories of Strategy and Change Management at Shein’s Strategic Objectives Several theories of strategy exist, key among them Michael Porter’s Five Forces. Porter’s Five Forces are a tool for understanding the competitive forces in the firm’s environment. They include the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and industry rivalry. Analyzing these factors can help Shein better understand the competitive forces that shape its strategic direction. Porter’s Five Forces Analysis of Shein The threat new entrants in the fashion industry is high. Thanks to technological advancements, putting up an online clothing company is relatively inexpensive. However, Shein has managed to keep this threat in check by advancing its ultra-fast fashion business model by leveraging its e-commerce and digital marketing capabilities to deliver affordable and trendy items to a global audience (Zhang & Gou, 2021). Fast-fashion buyers have a high bargaining power due to the availability of alternative products and brands. In the UK alone, there are dozens of local and global fashion brands, each trying to win over consumers. Shein has focused on its mission of making fashion accessible to all to manage this force. It is one of the few global online-only fast-fashion retailers. To prevent customers switching to other brands, it uses data analytics to customize products to fit the unique needs of every customer. It has effectively utilized influencer marketing to ensure brand remarkability and familiarity among its customers (Bak & Sollwedel, 2023). As a company based in China, Shein’s bargaining power of suppliers is low due to the high numb...