Group Assignment-Strategy: Veja Company

Nowadays, the issues of sustainable development and eco-friendly production are supposed to be among the trendiest aspects of successful business operation. Thus, a great variety of companies transits to the use of environmentally friendly materials, assuring the positive effect not only on the condition of nature, but also on human society. Thus, the following paper is aimed to provide an analysis of Veja Company performance, a producer of eco-sneakers and shoes. The paper will discuss the key sources of company’s competitive advantage as well as analyze its external context based on PESTLE and Porter’s five forces analysis.

Veja’s Sources of Competitive Advantage

Established in 2005 as a quite risky project of Sébastien Kopp and Ghislain Morillion, Veja became an example of an eco- and environment-friendly, but still efficient business model. The secret of its success lies in efficient planning, as well as a unique idea of offered products, which has given birth to a brand new approach in business conduction (Branzei & Poldner, 2010). In fact, a precise overview of Veja’s performance history provides hints to the following aspect, which can be considered as its key competitive advantage at the market. It is an innovative approach based on the international experience of Veja founders Sébastien Kopp and Ghislain Morillion. Being young and ambitious, they visited the variety of factories and production facilities around the world, including China, South Africa, and Amazonian region among others (Branzei & Poldner, 2010). The received experience and expertise helped them to understand the gap in the performance of the most eco-friendly initiatives. Most companies pay much attention to charity, while ignoring various problems of countries where they operate. Thus, Veja was not only established as a project aimed to produce high quality eco-sneakers, but also to improve the surrounding environment through direct positive actions.

Unique materials are another source of competitive advantage. Veja’s approach significantly differs in terms of production performance. The company uses only organic cotton, grown on the basis of agro-ecological principles. None of the chemicals or pesticides is used during the process of cotton growth and harvest. In addition, the company uses only natural latex and rubber extracted from Amazonian forest trees. Furthermore, it promotes the perseverance of lands and forests through the collaboration with 35 rubber tapper families, preventing the deforestation process (Branzei & Poldner, 2010). In addition, Veja uses leather produced with traditional ecologically friendly pigments approved by Eco Label.

High quality products also help the company gain competitive advantage. A specific feature of Veja implies the creation of products with unique design and quality proven by the variety of extremely satisfied customers worldwide.

The usage of an efficient advertising strategy helps the company get a significant market share. The implementation of the word of mouth is supposed to be the most efficient action based on satisfaction received from loyal customers. In addition, the company uses blogs, forums and media coverage to directly reach the target audience.

Veja’s External Context: PESTLE and Porter’s Five Forces

PESTLE

Political factors, which influence the performance of the Veja Company, include employment laws, environmental regulations, customer protection, and taxation among others. These factors are based on changes in the local or international policies, which can occur in any country of Veja performance. Economic factors influencing the operation of the company include inflation, exchange rates, and cost of living. They cannot be controlled by the company, and the key task of Veja implies efficient adaptation to the existing conditions. Social factors are based on cultural diversity, demographics, and cross-cultural communication among employees of the firm, which influence the business pattern of Veja. However, the international experience of its founders helps to manage the company in the most efficient way. Technological factors imply possible changes in eco technologies used by Veja’s competitors. If the company does not embrace such innovations, it can lose its competitive advantage at the market. Legal factors influencing Veja’s performance are closely related to the political sphere. In fact, they include changes in advertising laws, taxation, and business regulations among others. Environmental factors imply the weather, as well as natural conditions, which can influence company’s performance. For example, the weather can decrease the harvest of cotton, reducing the Veja’s production rate.

Porter’s Five Forces

The strategic analysis based on the model of five competitive forces was described by Michael Porter in 1979 (Branzei & Poldner, 2010). It implies supporting activities aimed to assure the competitive advantage and long-term profitability of the company. According to the Porter’s five forces analysis, it can be stated that the competitive environment of Veja is quite tough, and the company needs to engage various marketing and commercial tools to assure further growth, as well as to preserve its market position. The risk of new entrants is quite high since the ethical fashion industry is becoming more popular. It is the trend necessary for efficient development in the modern business, economic and ecologic environments. Thus, the risk of new entrants is directly linked to intense competitive rivalry, being another Porter’s force, which significantly influences company’s performance at the market.

The threat of substitute products is also quite high. In fact, most of the popular brands offer products similar to Veja’s ones, including Adidas, Nike and others. A variety of large manufacturers, such as H&M or Timberland, have developed and introduced green line products, which can substitute the sneakers offered by Veja (Branzei & Poldner, 2010).

The bargaining power of customers is quite low in case of Veja. The company has the limited proposition, which is lower than the existing demand. It means that customers are willing to buy Veja’s products, but the supply is restricted by company’s facilities.

Contrary, the bargaining power of suppliers is quite high. Due to the specifics and uniqueness of the materials and resources used by Veja, it is strictly dependent on suppliers. Thus, the company can have losses due to the likelihood of the inefficiency the latter caused by controlled or uncontrolled (weather and legislation among others) factors.

Further Steps

Nowadays, the increased power of the economy has become a destructive force. It turned to the exhaustion of natural resources and environmental degradation. The policy of sustainable development promoted by Veja is an example of an efficient attempt to solve this problem, as well as to save the planet for further generations. In fact, Veja is an example of an appropriate business model developed in time.

Further steps of Veja’s efficient performance imply the development of an effective strategy to preserve the competitive position at the market. Thus, company owners Sébastien Kopp and Ghislain Morillion should enlarge the offered assortment of ethical products, attracting new customers, as well as promoting the idea of using such goods in the everyday life. The recent interviews of the owners prove their desire to introduce new projects, such as ethical T-shirts or jeans (Branzei & Poldner, 2010). Sébastien Kopp and Ghislain Morillion value the idea of the organic and natural environment as the key concept of their business performance, and the further development of Veja will be based on company’s ability to adapt to the current marketing environment, as well as to continue to innovate and preserve the planet.

Conclusion

Nowadays, the increased the power of the economy has become a destructive force. It turned to the exhaustion of natural resources and environmental degradation. The policy of sustainable development promoted by Veja is an example of an efficient attempt to solve this problem and to save the planet for future generations. In fact, Veja is an example of an appropriate sustainable business model at the appropriate time.

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