ABSTRACT

Mr. Jax Fashion Inc. becomes one of the leading firms in the apparel industry in North America. It was formed after a venture between Joseph Segal and a Vancouver-based apparel manufacturer in 1979. Segal had hired Louis Eisman as womens fashion executive. The primary objective and strategy of both Segal and the shareholders had been to proceed towards the growth of the company. Eisman helped achieving that through aggressive penetration into the womens market segment. Several business strategies were used to maintain companys profitability like, womens clothing market as huge potential, use younger designer to inspire creativity, focus on high quality design and materials, build up strong distribution channels and retail chain, and diversified the company by acquiring related firms. Eisman wanted to work on the base strategy of its founder, growth. For this purpose he started off with small retailers. His strategy was to gain support of all these small retailers who were easily swayed in their purchasing decisions. It worked well for Mr. Jax as they made their reputation as high quality, classic design apparel with excellent service. This reputation caused a high response from the larger retailers, and thus Mr. Jax finally emerged as one of the main womens fashion apparel manufacturer. While Mr. Jax is considered as a small apparel suppliers comparing to the U.S. apparel suppliers, it is an excellent opportunity to enter the U.S. market with the advantage of new FTA environment. However, whether to use the national approach or regional approach is still under consideration. The final objective would remain the growth of the company.

Symptoms

The main symptom was seen during 1988 when companys net income was decreased.
Low profit outcome from four semi-related companies which was acquired for diversification of growth.

Absence of managerial talent. Increase of competition. Lack of experienced apparel manufacturing executive. Difficulty in production planning and scheduling. Restriction on capacities and deterioration of customer service. Workforce had difficulty in adapting to new machines and understanding retraining instructions.

Alternative option of opening subsidiary was a risk as well.

Problems

During 1988 when companys net income was decreased by $1355000. Therefore, the share price of the company was also decreased. Though, the total revenue was increased by $18636000, however because of the new development activities and using higher technology the cost of the operation also increased. This resulted less net income compare to previous year.

Mr. Jax Fashion acquired four companies to diversify growth but all four companies were not in the high profitability and high satisfaction category, as all of them lacked good management. Only two were bringing in profit, one at break-even and one in loss. The decreases in profits were being associated to the old management and increased competition.

Lack of entrepreneurial control and drive of the previous owner those acquired companies were not as successful as they had been prior to their acquisition which denotes there were absence of managerial talent.

Vancouver was not a for the fashion executives. They might not get higher salaries, as well as other benefits so it would isolate executives from future employment opportunities.

Production of Mr. Jax was located in four building throughout Vancouver so the division of task between buildings made production planning and scheduling very difficult. It restricted capacity and also deteriorate customer service from an excellent shipment rate.

Most of the work force is familiar to old machines they were facing difficulties in adopting new machines and Asian work force was facing difficulties understanding instructions because English was their second language.

Solutions

To cover up operational cost and cost of new development an option for it to raise enough capital would be to lose the non-profitable Company.

One option can be by bringing old management or previous owner back, they can make the managerial position stronger and reduce competition and another option is to give up those acquired company which are unprofitable.

Although it is difficult still an experienced and apparel manufacturing executive must be hired by offering higher salary and other benefits and facilities.

For efficient production planning and scheduling activity and to improve capacity they may make a new allocation plan and segment the task department wise and reallocate their all production related places in one place.

Mr. Jax Inc. has enough resources to transform its current situation into the new environment. However it would simply have to reallocate the resources to a more profitable measure.

They may make a proper schedule to train up their workforce to cop up with new machines and operational activity and may give lesson for realizing instructions properly.

Recommendation

Mr. Jax Inc. should establish a retailing chain. It has the resources to come up with the new capital and has the skills to attain the level of excellence in the new market. It would have to create some new distributing channels, which is a better alternative to grab a definite market share. This would give the retailers a chance to display all the high quality, newly designed apparel in the market, without much competition from other companies in that particular store. This way customer will be able to get acquainted with the new name in the industry. Mr. Jax Inc. can finance its entry with the grants from the government, or from equity, which will enable it to reap the high return rewards from considerable high risk investment. I recommend that Mr. Jax Inc. should expand into the US market.

Implementation

Company can start digging qualified executives to handle its diversified company structure. As soon as the company internal foundation is stabled and some reputation is built-up, it can start to expand its market broadly without having too many risks. FTA provides an easy import/export provisions for any Canadian company to expand into US market. Similarly tariffs and trade-balancing restrictions are accommodated by this Act, to make such decisions very attractive. Therefore the only hindrance that might pose a threat for Mr. Jax Inc. is the financial feasibility. It would all depend on whether the Canadian Banks or Government would give enough grants to Mr. Jax Inc. to pursue its expansion.

Conclusion

Mr. Jax Fashion Inc. is a Vancouver-based apparel manufacturer. Its main focus was on womens market segment as Louis Eisman was a womens fashion executive. This segment is a niche market, which means it can be substituted for and by other apparel styles. Fashion styles are an ongoing process, and become out of date very quickly. Thus any company has to continue with innovative styles and designs to overcome this limitation.

Mr. Jax Fashion can use younger designer to inspire creativity, focus on high quality design and materials, build up strong distribution channels and retail chain, and diversified the company by acquiring related firms and use younger designer to inspire creativity, focus on high quality design and materials, build up strong distribution channels and retail chain, and diversified the company by acquiring related firms.