Report on Business Environment Amani AMANI FASHION DESIGER COMPANY EMMA ZOE
Introduction Giorgio Amani Spa (Armani) is an Italian fashion company, known for its fashionable design for men and women cloths. The company was founded in 1975 as small fashion company was named after its founder and CEO, Giorgio Amani. The Unit 1 Business Environment Assignment Armani will throw the light on the allocation of resources through economic system. The study will assess the respond of competition, monetary and fiscal policy on the Armani. Armani has achieved global fashion status in during the company’s 40 year history. Armani operates in 46 countries and in 2011, achieved revenue to almost £1.8 billion and operating profit of $282m. The company head office is in Milan, Italy.
Task 1 1.1 Provide a brief background of Armani. This should include a description of its mission, vision, short and long-term objectives, type of sector it belongs (private or public sector. Discuss how this organisation has been impacted by changes in its industry. In this part, focus on the constraints within which Armani has to operate in its sector. Provide evidence and reference the sources. Identify the purposes of different types of organisations behaviour and compare them with purpose of Armani. Armani’s brands or labels include: Copyright by www.hndassignments.co.uk
Emporio Armani Armani jeans Armani exchange Armani junior Armani casa Giorgio Armani spa Mission To provide prestigious and high quality products To add style and pleasure to our customers' lives To commit to excellence To provide a unique shopping experience To accomplish the highest service standards Vision To be the regional leading company in the management of a prestigious portfolio of luxurious, fashionable and lifestyle brands. Despite its global brands and large market operations in 46 countries, Armani is private company and its nature of business or industry is fashion, hotel and leisure. There are a number of organisational changes that are having impact every industry including the fashion industry. These changes include for example, competition, consumers buying behaviour, regulations, social attitudes, social corporate responsibilities, ethical issues. Competition from the market will have impact on sales revenue, market share, growth and expansion, profitability. Consumers’ buying behaviour will affect profitability, sales, growth and its global strategy. Social attitudes and changes in consumers’ buying behaviour will have impact on the way Armani design its product and this may also have cost implications (Botha, Kourie & Snyman, 2014). There are also constraints within which Armani has to operate. These include for example, financial constraints, technological, market, social and cultural, Copyright by www.hndassignments.co.uk
economic and legal constraints. As a private seeking global market expansion, the financial resources require would have huge financial implications. Unlike public company, access to financial resources would be unlimited. Armani needs to funds it new market with perhaps, debts or long-term loans, and this will expose the company to financial risks. Apart from the above, high operating costs will mean high prices for its function products especially those design and stylish fashion products at the high-market end (Chavis, Klapper & Love, 2011). Social and cultural attitudes will be major constraints. For example, each country product marketing strategy needs changing and also designing product that meets local taste and needs. This constraint means changing its market structure and segmenting the market in each country of operations. Legal constraints and ethical issues would be a huge challenge for Armani as each market overseas needs to comply with its customs and legal practices There are different types of business organisation. These include for example, sole trader, partnership, private company, and public company, co-operative, voluntary or charitable sector. Each of this type of organisations has one or multiple objectives. The private and public companies primary goals and objectives are to make profit or maximise the value of the company, achieve higher return capital employed, growth, high market share and satisfy the needs of other stakeholders, e and improve customer satisfaction. The sole trader aims to make profit for him/herself and grow the business whilst the partnership organisation have the same aims and objectives, but for the interest of partners and close stakeholders. The voluntary or charitable organisations purpose and objectives are to provide charitable activities for the interest of general public or specific group stakeholders. The co-operative society aims and objectives are to provide goods and services to its members. Armani is not a charity organisation. It is a private company, and like all private organisations, its primary business objective is to increase the value of the company. Apart from this objective, it has other secondary objectives, for example, to provide prestigious and high quality products add style and pleasure, to our customers' lives, provide a unique shopping experience and to commit to excellence. It is to be noted that Armani is one of the few organisations who are still completely privately owned and because of this; the purpose of the organisation is always affected by the thinking of one man Mr. Armani, the founder and owner of the organisation. The main purpose behind opening the organisation was to bring a change in the fashion industry and Mr. Armani has done it. The purpose of the organisation is to fulfil the dreams of Mr. Armani to become the world leader in the fashion industry and make sure that all the stakeholders of Copyright by www.hndassignments.co.uk
the company whether they are the employees, shareholders or the customers should receive the profit from the company operations. Armani in the current days not only dealing with the clothes but also in many other industries such as hotels and tries to make an impact on the people by not ever compromising with the quality. But in the end, the main purpose of the company is to make the company owners wealthy and expand the family business. On the other hand, there are public organisations which are under the control of the government tries to make the lives of the people of the country easy and comfortable by providing them the excellent services for their money which they pay in the form of different taxes. The NGOs or Charity Organisation do not work for the profit of the owners or the trust of the organisation but for the people of the society. Where Armani tries to provide a luxurious life to the wealthy people, the public organisations and NGOs try to provide the services to the people of the country which are necessary for their lives. 1.2 Identify the key stakeholders of Armani? Identify their interests in and how they influence and impact Armani. How the organisation is meeting the objectives towards their stakeholders. The following are the key Armani stakeholders: Customers Management Employees Suppliers Business Partners Stakeholders are individuals and groups of people or institutions that have interest in Armani businesses. Customers are interested are interested in the products and services that Armani produces and supply. They want to ensure the quality of the products; design and the price meet their expectation. Customers’ buying behaviour influences the design of the products in terms of specification and taste. This also influences the quantity to be purchased and quantities that need to be supplied, the cost of production and distribution channel chosen by Armani. In turn, Armani ensure the design of the products meets customers’ quality and price expectation or needs (Fanta, 2012). Copyright by www.hndassignments.co.uk
Management activities are critical to the success of Armani. Management is responsible for making and influencing investment decisions, technology, design, choice of market and pricing decision and all this have impact on Armani’s mission of providing prestigious and high quality products to its customers. Armani senior executives eg board of directors are always meetings management request to provide the necessary tools and resources for the company to achieve its objectives. Employees are resources for Armani. They are involved in the day operations, including designing, development, and production and selling of its product. They influence all these activities to ensure Armani strategy is successfully implemented. Armani is putting resources into staff development and training, providing generous staff incentives including good working condition of service, salary, and bonuses.
Suppliers want to ensure that Armani is profitable, have enough liquidity and reliability of good business relationship. Suppliers influence is the supply of good and services and contract term of those business for their interest as well as Armani interest. Armani’s responsibilities to ensure suppliers are paid on time and take necessary steps to ensure good supplier-customer relationship. The banks and other debt providers’ interests are the profitability, liquidity availability and growth of the company. They influence Armani by determining the level finance to be provided and the cost of the finance, and the terms. Armani ensure the company meets these debt providers by meeting its financial commitments to these stakeholders. 1.3 Using the Stakeholder Analysis matrix, plot where, in your opinion, each stakeholder might stand based on your research and analysis. Make sure your analysis is based on evidence and research and do NOT guess or make wild assumptions. Explain Armani responsibilities to its stakeholders and identify the strategies it adapts to meeting their needs and expectations. Stakeholder Analysis matrix is Engagement Plan, which helps organisations analyse and identify the key importance of stakeholders and their influence on the business.
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Box E, F & G are the key stakeholders of Armani. Box E stakeholders e.g., employees, suppliers, designers have a high degree of influence in the company and also high importance for Armani’s success. Box F stakeholdersgovernment are of high importance to Armani success but have low influence. Box G are stakeholders e.g. government with high influence and these stakeholders actions impact the Armani performance and long-term business sustainability. Box H stakeholders have low influence and importance to the fashion business. Armani responsibility is to ensure each stakeholders’ needs are met this include for example, improving quality of goods and services, improving working conditions for staff, meeting the financial obligations to finance providers and establishing long-term customer-supplier business relationship. How Armani tries to fulfil its responsibilities towards the stakeholders is explained below:  Customers: Customers are the most important stakeholders of Armani. Customers are the main decision maker of Armani because it is the customers who actually decide what has to be produced by the Copyright by www.hndassignments.co.uk
organisation. This is the reason Armani always pays attention to their needs and tries to fulfil these needs by its products and services. Armani has some customers who are well known in the fashion industry such as Hollywood starts and these celebrities create trends in the market which are followed by millions of fans. Hence, Armani has to design the cloths as per their requirements. Armani also satisfy the need of the quality products by providing them luxurious products (Engelen, 2010). Paul Simon, David Bowie and Eric Clapton are some of the famous musician who have enjoyed the luxury of the Armani Fashion Clothe and inspired many others to do the same. Employees: Armani has around 5,000 employees who have been working with in the different facilities, departments and across 500 retail stores in 46 countries. Armani always pays good money to the employees as they are the reason of the success of the company. Armani has world’s best designers and always takes care of them as per their performance. Owner: Mr. Armani is the sole owner of the company and he is the only shareholder who has the absolute power in the company. He is the person who has gained most from the success of the company Government: Armani is a completely private organisation and government does not have any share in the business. In that manner, the government does not have much say in the company decisions, but still the organisation has to follow the policies of the government of the countries where it operates. Armani also pays huge amount in the form of taxes to the governments and contributes in the GDP of the country Suppliers: Most of the suppliers of Armani are associated with the company for a long time and they are responsible for providing the raw material to the company. They hold the key to the business because of their power on providing the customised items and that is also on a reasonable price. Indirectly, suppliers affect the price of the products of the company and because of this they are very important for the business. Read more: https://goo.gl/sMWjR6
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