A corporate strategy for Einsco Company, Inc.

Einsco Company Inc. (ECI) is a P40 million company that has been operating in the Philippine apparel industry for 15 years now, catering to people\u27s needs and wants to clothe their bodies. The company is engaged in the conceptualization, design and distribution of garments to the C, D and E income groups and it has 160 sales outlets nationwide as of 1998. ECI\u27s corporate vision is to become one of the Philippine\u27s top ten apparel companies by the turn of the century. To realize this vision, ECI commits to pursue the following goals: winning customer confidence and loyalty by consistently providing them with creative, comfortable and unbelievable affordable clothing products to forge strategic alliances and partnerships with suppliers to foster mutual growth to nurture positive performance among employees by properly compensating, training and motivating them to provide a reasonable return to stockholders for their investments and to contribute to the well-being of society as a whole. In recent years, certain changes in the macro-environment have taken place. These changes have drastically intensified and greatly changed the complexity of competition in the apparel industry. As such, Einsco Company has to reexamine its existing objectives and strategies and formulate new ones to adapt to changes in the environment. Structural analysis revealed that the major factors affecting competition in the apparel industry includes: the sudden downturn in Asian economies triggered by the depreciation of the the Thai Baht trade liberalization and the emergence of low cost garments exporting countries. The combined effects of these factors lead to a slowdown in the country\u27s overall economic activity and in turn, hampered the growth of the apparel industry. The economic slowdown, coupled with other changes in the technological, demographic, political/legal and business environment, have also given rise to new opportunities and threats which the company has to deal with if it is to achieve its objectives. Company analysis showed that ECI possesses various strengths and weaknesses which it can use to take advantage of opportunities or protect itself from threats. These capabilities include the firm\u27s financial strengths, its strong coalition with suppliers and subcontractors, its advanced technologies, strong recruitment capabilities and skilled designers. However, ECI also has weakness that it must overcome or develop into strengths, these weaknesses consist of a poor incentive scheme, lac of know-how in proper planning and too hierarchical organizational set-up. The strengths, weaknesses, opportunities and threats, together with the personal vision of ECI\u27s owners and societal expectations act as the basis for corporate strategies. Upon jointly evaluating these basis, it is judged that ECI should adopt focus cost leadership as its generic strategy. Some of the specific strategies that this paper proposes for ECI are: pruning of unprofitable product lines and introduce more profitable ones continue investment in technology enhance the company\u27s human resource capability, concentrate on a focused geographic scope (the Philippines) and adopt a no-frills, bare-bones strategy. As important as strategy is its implementation. For ECI to successfully implement the proposed strategies, it has to make sure that the structure, system, skills, staff, style and shared values of the company are all aligned with the proposed strategies. Certain modifications to these variables are suggested in the implementation module of this paper to ensure the alignment of each S with the recommended strategies, these suggested adjustments include empowering employees and broadening their responsibilities, changing unhealthy shared values such as them-us attitude to the \u27we outlook, adoption of a more participative management style and the fusion of individual systems into an integrated whole. If the proposed strategies are implemented successfully, ECI will be able to realize a dramatic improvement in sales and profitability, enabling it to attain its corporate and functional objectives. The last module of this paper presents the financial projections for the company assuming it implements the proposed strategies successfully. The projections show that if assumptions are true, ECI will be able to realize a return on investment (ROI) of 19.68% in 1999, 34.42% in the year 2000 and over 45% per annum from the year 2001-2005. This represents a spectacular increase from the average 1.55% yearly ROI during 1993-1997. Furthermore, under the proposed plan, stockholders will be receiving dividends for the first time. The dividends shall be paid in cash according to the following amount: P50 per share in 1999 P150 per share in 2001, P250 per share in 2002 and P350, P550 and P750 per share in 2003, 2004 and 2005 respectively/ Also, slow inventory turnover, which is a perennial problem of the company for almost three years now, will improve by 4 times by the end of 1999. With this strategic plan, ECI will be well-prepared to face and cope with the myriad of changes that are shaping and re-shaping the environment