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Report on BACHI Barcelona

Table of Content

Introduction 3

Mission Statement 3

Vision Statement 3

Values 3

Internal Analysis 4

Competitive advantages 4

Competitive Disadvantage 4

Tangible Resources 5

Physicists 5

Financial 5

Intangible Resources 5

Humans 6

Non-human 6

Capacity 6

VRIO Analysis 6

Strength and Weakness 8

External Analysis 9

PEST Analysis 9

Elements of economic structure 9

Elements of technological structure 10

Elements of political structure 11

Elements of social structure 12

Porter’s Five Force Analysis 12

Opportunities and Weaknesses 14

Defensive strategies 14

Offensive Strategy 15

Survival Strategy 15

Reorientation Strategy 16

BSC Matrix 16

Strategy in Cost Leadership 17

Differentiation Strategy 17

Focus Strategy 18

Conclusion 18

References 20

Introduction

The aim of the report is to analyze a company called BACHI Barcelona which is known for its accessories and handbags for men and women. The product that the company sells are of medium and high range (BACHI Barcelona). The report will identify and create mission, vision and value for the company. In addition, internal analysis will be carried out for BACHI Barcelona which will include strength, weakness, opportunity and threat for the company. Besides this, the report will identify competitive advantage and disadvantages for the company along with the identification of tangible and intangible resources for the company. VIRO analysis will also be carried in the report followed by external analysis in which PEST analysis and Porters five force analysis will be performed. Based on the internal and external analysis, the report will also identify strategies for reorientation, survival, offensive and defensive strategies. Apart from this, the report will include BSC matrix along with focus, differentiation and cost leadership strategy.

Mission Statement

The mission of the company is “To create handbag with high quality. The handbag produced by the company should be original and exclusive which satisfies the needs of client with uniqueness. We are committed to continuous improvement and we contribute with the sustainability development of environment using eco-friendly material in our merchandise, thus grasping that our product are perfect for every occasion.”(BACHI Barcelona).

Vision Statement

To be recognized by our clients as a number one company in Barcelona in the area elaboration and distribution of handbags. Also,  conquering presence in social networking sites and increasing our competitive advantages with our competitors (BACHI Barcelona). 

Values

Passion: We elaborate each bag / wallet with effusion and enthusiasm since we have a great affinity towards our work and what we do.

Quality: Create and deliver a product that meets the requirement and needs of our client; taking care of the smallest details in the elaboration of our brand.

Originality: The Company’s handbag provides a new and different experience; we do not seek to create replicas or reproduce other brand products.

Commitment: Responsibility to deliver the “BACHI” perfect for every occasion.

Elegance: Our product are exclusive and have unique design, creating distinction and making our bags ideal for every occasion.

Internal Analysis

A company only possesses competitive advantage when it has a unique idea and sustainability compared to its competitors, and this uniqueness allows the company to obtain better results and therefore have a superior competitive position in the market.

Competitive advantages

  • Differentiated product: Since the company’s prints are visible both on the inside as well as outside of handbags. Handbags are unique and are handmade. 

  • Cost leadership: Low cost in human capital as the company has only two members (BACHI Barcelona).

  • Low priced handbags as compared to competitors.

  • Close relationship with the providers of the company

  • Uses ecofriendly materials (Rosenberg,Turunen, Järvelä&Arnould, 2020).

  • National Production in Barcelona

  • Elaboration in Barcelona

  • Competitive price

Competitive Disadvantage

  • Only online sales without having a physical store like Zubi does.

  • Zubi has more variety of products allowing its customization thus contributing to the sustainability and development of local trade

  • Zubi has competitive prices and free shipping with higher prices.

  • Wide presence worldwide being a recognized brand.

  • Fortunate it has a commitment to the environment and likewise quality products.

  • Fortunate evidence of knowledge in marketing and economics (BACHI Barcelona).

  • Fortunate shows top quality organic raw material.

  • Low bargaining power in transportation

  • Low presence in social networking sites like its competitors (Zubi and Fortunate)

  • The company does not have physical store which its competitors owns various physical store.

  • Less recognition in the market on national level.

  • Poor marketing and promotion.

Tangible Resources

Tangible resources can be determined through identifying opportunities that exists for the company which will help it to economize the use of fixed assets, inventories and financial resources (Rosenberg,Turunen, Järvelä&Arnould, 2020). Tangible resources in financial aspect include utility, suppliers and customers, fees and bank expenses, and account of business. On the other hand, tangible resources in physical aspect includes raw material, production space, and equipment and machinery (cameras, vehicles and other equipment’s).

Physicists

  • All materials for making bags (fabrics, leathers, paint, zippers, etc.)

  • Available bags (Previously made stock ready for sale)

  • Physical property for making bags.

Financial

  • Capital contributed by the two partners

  • Clients and suppliers

  • They work with a Business Expansion Account for SMEs with advantageous conditions in terms of commissions and bank expenses, but they do not have financing (BACHI Barcelona).

Intangible Resources

These types of resources are very difficult to copy and competitors cannot imitate these resources easily. It is so because intangible resources are rooted with the company and they come into practice and routine through time. Intangible resources are accumulated and are evolved through time with the company (Rosenberg,Turunen, Järvelä&Arnould, 2020). Intangible resources includes legal experiences, passion for work, close relationship with suppliers, intellectual capital of owners, technology, ecofriendly material, brand identification, craft design, online store, fashion blog and services(Verma, Sharma &Sheth, 2016).

Humans

  • Both partners have great knowledge of fashion and legal resources.

  • Motivation and commitment to the undertaking that is being carried out.

  • Collaborators in the area of ​​marketing, social networks and clothing.

  • Supplier relationship

Non-human

  • Website for online sales. Complete catalog of its accessories for sale online.

  • “Stories by BACHI” blog where they report news and related news.

  • Newsletter service (upon subscription with welcome gift).

  • Access to its pages in RRSS: Facebook, Twitter, Instagram and Pinterest (BACHI Barcelona).

  • BACHI brand, Vision, Mission and Values ​​focused on customer satisfaction.

Capacity

The company is managed by two women who have common idea to create handbags and accessories that are unique and comfortable. They design their product without sacrificing innovative designs. They are working with 20 suppliers and have close relationship with them(BACHI Barcelona). 

VRIO Analysis

This analysis is a useful and analytical technique used by the company to brilliantly evaluate its resources and its competitive advantage. VRIO stand for Value, Rareness, Imitability and Organization. The VRIO analysis of BACHI Barcelona Company has been carried out in the below table.

20200731141724PM-1840535443-881451950.PNG 20200731141724PM-1221686457-736260679.PNG 20200731141724PM-667744982-666395020.PNG 20200731151832PM-1261391837-1339259328.PNG

Strength and Weakness

External Analysis

In this section external analysis of BACHI Barcelona will be carried out in. It includes PEST analysis and Porter’s five force analysis along with opportunities and threats of the company.

PEST Analysis

Elements of economic structure 20200731151832PM-1602459947-566299841.PNG 20200731151832PM-1844868541-329674547.PNG

Elements of political structure

20200731151832PM-1965572726-1745029014.PNG 20200731151832PM-714515913-119912193.PNG

Porter's Five Force Analysis

Bargaining power of suppliers: BACHI Barcelona works with 20 suppliers, which is an important number for the volume of business and its diversity, but has decided to work with local Eco Friendly suppliers, which is very good for the local community but not for the profitability since these have higher costs due to the environment where they develop their industry compared to for example Asian countries that have fewer regulations and taxation than in Spain (Flavius Hus, 2016). Another important point to keep in mind is that it is an artisan company that, although it has a sufficient stock level to meet the demand for its products, is not a standardized industry that requires significant quantities of raw materials, so the level of Negotiation to try to reduce costs is limited to harvest factors or special payment conditions that allow us to lower the price of these materials(Verma, Sharma &Sheth, 2016).

Power of negotiation of the consumers: BACHI Barcelona does a good job of informing the consumer about the virtues of its products on its website, as well as trying to give each product a story so that the consumer feels that it has added value in their purchase. Customers in this structure of sale and purchase do not have the ability to press down the price of products, but they do have the option of comparing prices, perceived qualities, and in the case of the two companies that compete strongly in this niche. Physically see the product and rationalize the purchase based on its qualities and usefulness, therefore it would be a mistake not to improve communication and interaction with consumers (Miró, 2016).

Threat on income of substitute products:BACHI Barcelona has differentiated its products very well and has kept their originality, they have all the legal experience in their directors.There is no doubt that the competition exists and that it has quality products, but none of them has a differentiation in the sale price, perceived quality, originality that makes the consumer opt for that product for only the price, therefore the price factor in this case is not decisive(Flavius Hus, 2016).

Threat of new competitor: Threat is very much low as the company produces unique handbags and accessories are very difficult to copy. Apart from this, the current competition for the company is high.

Rivalry among competitors: The competitors in this niche of products exist are identified and have characteristics similar to BACHI Barcelona, making it difficult to infer that aggressive policies exist between them to win consumers(Axa Health Keeper, 2018). The biggest threat at this point is that entry barriers are weak because large amounts of capital are not needed to start such an operation and exit barriers are also not very high because if my operation was unsuccessful I do not have major assets except for the stock that prevents me from leaving the market. At the same time there is stiff competition that has a similar product structure and in turn they have physical stores which leads to being closer to the consumer and that is a disadvantage that will have to be solved in the future if it intends to lead sales in this market(Verma, Sharma &Sheth, 2016). In turn, access to the distribution of products will have to be improved so that they do not negatively impact profitability (Flavius Hus, 2016).

Opportunities and Weaknesses

20200731151832PM-250551567-1204647058.PNG

Strategies on the basis of internal and external factor

Defensive strategies

This strategy is aimed at maintaining the strengths of the company and minimizing threats from the environment. For this we will develop the following initiatives

  • Expansion of the range of products for both women and men.

  • Protect the market share that is loyalty to the customer with discounts on future purchases or prioritizing the purchase when they are limited edition products.

  • Development of a quality plan that allows increasing profitability and maintaining customer satisfaction (Flavius Hus, 2016). 

  • Develop an inventory plan based on sales and launch statistics that requires less financial resources. 

  • Monetize the marketing plan by joining sales techniques to that plan.

Offensive Strategy

This strategy is aimed at combining the strengths of the organization with the opportunities of the environment. For this we will develop the following initiatives. 

  • Expand the business to the rest of the countries of Europe 

  • Enter into new profitable lines of business such as clothing for women since the target audience has the potential. 

  • Create interactions with local distributors to distribute their products. 

  • Open retail outlets to different preferably tourist outlets (Verma, Sharma &Sheth, 2016). 

  • Create alliances with people called influencers to promote the products on the most important YouTube channels. 

  • Develop direct marketing strategies on the target group with the aim not only of increasing sales but also weakening the competition.

Survival Strategy

This strategy is aimed at combining the weaknesses of the organization with the threats of the environment. For this we will develop the following initiatives. 

  • Provide the company with an information system that allows us to know exactly each process and its cost to minimize inefficiencies and, if they exist, correct them immediately. 

  • Do not extend in diversification and support the products that have higher profitability.

  • Establish a round of negotiations with suppliers in order to lower the costs of inputs (Flavius Hus, 2016).

  • Get a line of credit in the event that the demand for products is slowed to finance their fixed costs. 

  • Leaving some external collaborators until you have a positive reaction from the market and sales begin to grow.

Reorientation Strategy

This strategy is aimed at combining the weaknesses of the organization with the opportunities of the environment. For this we will develop the following initiatives.

  • The great tourism in Barcelona undoubtedly leads to the creation of synergies with other companies such as consignment sales in order to capture the impulse purchases of tourists, until the sales do not solidify and justify an exclusive location for the company (Flavius Hus, 2016).

  • Request from the company that is in charge of marketing a market study of the current trends to complement the products that the company sells and enter this new line of products such as the sale of clothing (Axa Health Keeper, 2018). 

  • Make synergies with international companies in order to increase the profitability of products by entering other markets that are not exploiting the brand and with greater purchasing power.

BSC Matrix

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Strategies with the help of Michael Porter

Strategy in Cost Leadership

This strategy is based on the fact that the company must have the ability to reduce costs at all stages of the production process in a way that results in a benefit for the consumer as the company would transfer that lower cost to the final product. For this, BACHI Barcelona will have to renegotiate with its local suppliers the price of its raw material, the price of falcon and the price of outsourced services that it contracts by making long-term agreements to be able to transfer this decrease to the price of its products (CEPYMEnews, 2019). The company should be able to lower costs by at least 10% with this action Evaluate obtaining raw materials in countries with less tax burden, such as Asian countries,so as to generate cost-leading company.  Generate agreements with suppliers so that the product comes semi-finished from Asia and that in Barcelona they make the final details so that the product maintains its originality and differentiation. Although this contradicts one of the premises that the company has to contribute to the economy of the region where the cost strategy is installed, many times it is put in the balance which of these two situations is the most convenient for the company (Espinosa, 2017). The experience curve at this point is also important, although the company that has been operating for a year has been long enough to know which products have the possibility of lowering their costs with improvements in production through the experience gained in its manufacture. This improvement if the opportunity to take a greater market share is transferred to prices would be greater. All these actions will make it possible to achieve the objectives of lowering costs, increasing sales without sacrificing product quality.

Differentiation Strategy

This strategy is based on producing unique and exclusive products and customers are willing to pay more for that condition. The actions that should be included in this strategy would be specific. Marketing Actions highlighting the well-differentiated qualities of the competition, either due to its quality of completion, product history or because it is a limited edition of the same (CEPYMEnews, 2019). Recruitment of Influencer who are a trend in fashion to promote the product on their YouTube channels, Include in the product packaging a letter of thanks for having purchased the product and take the opportunity to highlight the form and originality with which it was conceived. The distribution of the product that today has a cost of 5 Euros pass it to 0, in this way we are telling the client that we care about their retail purchase, and we differentiate ourselves from the rest since all shipments from competing companies have a cost when the purchase is less than a certain amount. Generate agreements with the artisans who manufacture the products so that at fairs or exhibitions where the products are presented they give talks or workshops highlighting the manufacturing process and the experience that creating a unique product means (Espinosa, 2017). The result that is expected to be obtained with these actions to reach large customers so that a unique product for its preparation for its packing, for its history, for the service provided, for the information that comes to them constantly through the digital media is that they are willing to pay a differential price for this product. 

Focus Strategy

This strategy is based on the fact of focus or concentration, that is, the company concentrates on placing its products in well-defined segments of the population or geographic location. To develop this strategy, the following actions would have to be carried out. The company has already identified its target market: women between 22 and 44 years of age with medium-high socioeconomic power, so all marketing efforts will be directed at them. Select the products with the highest profitability and start a more standardized manufacturing without losing the quality differentiating component and would position it as the essential products for the executive woman who wants to stand out from her peers (CEPYMEnews, 2019). To do this, I would start by holding events with the most important executives in Barcelona so that they can assess the quality of the products on the spot. The repetition of this action would create a synergy that would allow me to partially absorb the increase in meeting costs with the greater focus on certain products. As the company bases its sales on the web, it has all the information of its clients, what products they saw, how many times they saw it and even the age of the clients (Espinosa, 2017).

Conclusion

It can be concluded that the report has briefly discussed strength, weakness, opportunity and threat for the company. The company BACHI Barcelona is known for its accessories and handbags for men and women. The product that the company sells is of medium and high range. The handbags and accessories are unique and are handmade. Besides this, the report has discussed competitive advantage and disadvantages for the company along with the identifying of tangible and intangible resources for the company. The company has large numbers of competitors as it does not have any physical store. The company has to take aggressive steps to sustain in the competitive market.

References

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Alalwan, A. A., Rana, N. P., Dwivedi, Y. K. &Algharabat, R. (2017). Social media in marketing: A review and analysis of the existing literature. Telematics and Informatics, 34(7), 1177-1190.

Amarakoon, U., Weerawardena, J.& Verreynne, M. L. (2018). Learning capabilities, human resource management innovation and competitive advantage. The International Journal of Human Resource Management, 29(10), 1736-1766.

Axa Health Keeper (2018). Eco-friendly products. What are they?Retrieved from https://www.axahealthkeeper.com/blog/productos-eco-friendly-que-son/

BACHI Barcelona. BACHI World: Get to know us. Barcelona, Spain. Retrieved from https://www.bachibarcelona.com/conocenos/

CEPYMEnews (2019). Michael Porter's 3 generic competitive. Retrieved from https://cepymenews.es/las-3-estrategias-competitivas-genericas-de-michael-porter

David, F.& David, F. R. (2016). Strategic management: A competitive advantage approach, concepts and cases. Pearson–Prentice Hall.

Espinosa, R. (2017).Competitive Advantage: what is it, keys, types and examples. Retrieved from https://robertoespinosa.es/2017/10/22/ventaja-competitiva-que-es-tipos-ejemplos

Felix, R., Rauschnabel, P. A.&Hinsch, C. (2017). Elements of strategic social media marketing: A holistic framework. Journal of Business Research, 70, 118-126.

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Godey, B., Manthiou, A., Pederzoli, D., Rokka, J., Aiello, G., Donvito, R.& Singh, R. (2016). Social media marketing efforts of luxury brands: Influence on brand equity and consumer behavior. Journal of business research, 69(12), 5833-5841.

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