Country Road Analysis

Topics: Strategic management, Microeconomics, SWOT analysis Pages: 10 (2910 words) Published: March 30, 2008
Country road has always been one of Australia leading premium stockists of apparel and home wares. Country Road began as a small manufacturer but expanded and diversified to become a leading wholesaler/retailer of apparel and home wares in the Australian market. The great success of this fueled the company into an expansionary strategy into the lucrative yet highly competitive US markets and also further along the way into the Asian markets. The strategy of international expansion into Asia had involved alternative strategies instead of the aggressive strategy into US. Such strategies included strategic partnerships and franchising agreements. Country Road was successful at first with its defined higher quality products and diversification but later spiraled down due to not having clear focus of what the market wanted.

The current business strategy of Country Road can be analysed through a business system. A business system is the configuration of resources (inputs), activities (throughput) and product/service offerings (output) intended to create value for customers (De Wit & Meyer 2005). Competitive advantage can only be achieved if a business system creates superior value for buyers (De Wit & Meyer 2005).

Product Offering
The Australian apparel market was characterized by high-cost and low-quality products, leaving customers with limited choices. Country Road saw an opportunity to attack this niche sector of the retail market by providing high-quality women cotton shirts, which gave way to huge success. The chambray shirt was one of the successful shirts and characterized the essence of the company reflecting the Australian way of life. The fabrics, designs and colours of garments saw success for Country Road. Furthermore Country Road diversified its products into women’s wear, men’s wear, accessories and home wares and expanded into newer geographical markets such as New Zealand, US and Asian markets. This created value for customers through quality and variety.

Activity System
Country Road established a list of activities that help shape the company. Country Road developed comprehensive distribution channels associating itself with Myer. Through this they were able to obtain a new customer base and hence more capital to better the quality of the apparel. More customers meant they could target a wider range of the market and hence needed to diversify its product to meet this new market, which proved successful. Country Road developed the superstore concept, combining all product areas of women’s wear, men’s wear, accessories and home wares into the one retail outlet. More strategic alliances were formed to fuel distribution channels and these included Itochu Corporations, Inchcape BHD and

Resource Base
Country Road’s resource stems from its sales, generating the capital to expand globally. The capital gained comes from selling its high-quality products and this proved financially successful. New strategic alliances with companies brought about new knowledge and spurred a new intellect resource base. Customer loyalty is a hard resource to obtain but Country Road has managed to successfully obtain this as can be seen through sales.

Country Road has adopted a positioning strategy, which can be seen by positioning itself with higher quality apparel and its competitors in US. It was not very successful in the US but this strategy was adopted due to its popularity in the local market.

PEST Analysis
PEST analysis stands for Political, Economic, Social and Technological analysis (See Appendix). It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. Country Road had lost money due to a downturn in the Australian economy and lost money also due to expansionary strategy in the US. Also unable to forecast was the 9/11 attacks in America, which further drove...
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