Case study-TAL

TAL

The company background
TAL is the world's leading garment manufacturer that producing innovative, stylish, comfortable and functional clothes. Headquartered in Hong Kong. They specialize in the manufacture of quality men and women garments for the world's leading brands.  Their commitment to continuous innovation through investment in research and development has given them the technology edge that guarantees their garments deliver enhanced performance and look great. They have over 60 years of industry experience that enabling them to have well understanding of needs of people and tailor their processes to meet the specific needs. from wrinkle free and stain resistant treatments, to every aspect of garment manufacturing technology. TAL leads the way and sets the industry standards.

Q2: The dynamics of the apparel value chain and how the global apparel industry is classfied as a buyer-driven industry

We have identified there are two distinctive kinds of value chain, producer-driven and buyer-driven. For producer-driven value chain, it is a traditional value chain which all the decisions making and production network are centralized. And the most different part when comparing to buyer-driven value chain is that it produces enough stocks to match the demand. For buy-driven value chain, it is commonly used by many of the companies nowadays, it has transformed the manufacturing companies’ business into a full-packaged production business and allow them to have value-added services in order to attract more customers and create profits. The most significant part of this value chain is that it decentralizes its production network, for example, TAL has its production plants and distribution centres in more than 5 countries. We have also identified some problems due to globalization. Globalization always lead to a very competitive environment, and creates intensive competence for firms, and we think that the problems can be solved by differentiating the firm’s products and services in order to establish customer loyalty in order to prevent being forced into a price war. Also, by adding high value-added design can help to enhance the attractiveness and the competitiveness of the company since uniqueness is hard to be imitated. Lastly is to increase the transmission speed of marketing information to have a shorter time for making decision.

Q3: How apparel industry become buyer-driven industry?

For this question, we are responsible to identify the differences between traditional sequential value chain and the synchronous value chain. The traditional sequential value chain is mainly a step by step process system. Nothing can be done before the previous step is completed. This has a major disadvantage is by using this system will have a a longer leading time for the whole process.

Q4: Based on the Porter's value chain model, describe how the use of VMI has enabled TAL to turn the sequential value chain to an integrate and synchronous value network with its major customers such as JC Penny.

Information technology can alter each of the five competitive forces and, hence, industry attractiveness as well. The technology is unfreezing the structure of many industries, creating the need and opportunity for change. There are many benefits, including the competitive advantage creation at a lower cost or enhancing differentiation, creating new business opportunity, changing the value chain, changing 5 competitive forces, saving time-changing industry structure. Moreover, it can minimize threat of new entrant, erect entry barriers by tying up distribution channels in the integrated value system, increase entry barriers y using MTM, as it require tighter integration with the user’s value chain. Some other impacts include balancing the power of buyers, increase switching cost by demanding exclusive supplier relationship in VMI, gain customers information to understand sales pattern at the store level, erode power of suppliers and erode supplier power y controlling major recourses in the value system. (i.e manufacturing technologies and customer relationship)u Comprehensive analysis. Last but not least, it can coordinate better between buyers and suppliers, transforming the product, and it is important to buyer criterion.