Amiable Virgo Singapore: Opportunities and Challenges   It was early morning on 6 October 2016. Michelle was sipping her morning cup of coffee while reading the daily Straits Times. It read: “Eco friendly fashion catches on Singapore”.  Michelle knew it was the right time she had to make some key decisions to steer the strategic direction of her company, and embrace diverse eco-friendly materials in her designer bag business. In fact, she had been pondering upon this for almost a year. It was not an easy decision as it involved doing new things, and exploring new avenues. She called on Justin and Eric that noon, and said, “I have made my decision to introduce a new product line of bags using non-leather materials. Let’s get this moving…”.  

The Company

  Amiable Virgo Singapore (AVS) was a designer bag specialist company, a small and medium enterprise (SME) based in Singapore, which sold high-grade designer leather handbags. AVS was founded in 2000 by Michelle during the same period when local entrepreneurship was thriving in Singapore. Many start-ups sprung up during that time, thus attempting to contribute to Singapore’s economic growth. A self-proclaimed bagaholic herself, Michelle, the founder and director of AVS, started the bag business that aimed to offer trendy local designer bags of premium quality to working women at reasonable prices. AVS offered unique designer bags with an emphasis on high quality and value for money. With its mission statement, ‘making designer bags using premium quality leather without the designer price tags’, AVS carved out a niche by offering high quality bags with relatively lower prices.  

Operations

  AVS outsourced manufacturing of the bags to South Korea, and had suppliers from India and Italy. By 2015, AVS had three stores in Singapore, a franchisee in China, and an online shopping website selling its designer bags online. The signature style of the bags was the outcome of AVS’ talented design team who skilfully transformed the premium leather into unique designer bags. The leather was sourced from the best-known suppliers of high quality leather around the world.   Michelle often travelled to South Korea to liaise with manufacturers, and to Italy and India to oversee the supply chain. With a dedicated team of designers, AVS explored and experimented with leathers of all colours, skins and textures from glossy lambskin to matte pleather. The high-grade leather was then handcrafted with great care and detail focusing both on functionality and on glamour. The designer team came up with four new designs every two weeks. According to the Head of Design, Justin, such a ‘fast fashion model’ is crucial to compete with international brands, and has an edge over designer bags.   As the business grew, Michelle confined herself to strategic planning, and appointed Eric as the Head of Production with primary responsibility of sourcing for the right suppliers of leather and other accessories. With the emphasis on trendy yet functional bags using high grade-quality materials, Justin was also tasked to train AVS’ sales staff on how to market the bags by emphasising their unique specifications. There were around 12 sales staff working in AVS’ three retail stores.  

Business and Competition

  AVS’ competitors were the international brands that sold designer bags, and other local players who sold leather and non-leather designer bags. Most local players were start-ups like AVS, small and growing. A study found that there was a growing consumer interest in the fashion industry in buying from local designers. This helped to drive away competition from well-known international brands that sell designer bags to some extent. Besides its local stores, AVS’ franchise business in China was doing well. AVS’ regional business was propelled by tourists, who discovered the brand while they were shopping in Singapore. Overall, there was a good demand for AVS’ bags, both in store and online, thus creating an opportunity for it to expand further to meet the demand. This implied more production and more sourcing for materials.  

Online Business

  One of AVS’ strategic objectives was to be able to compete with other online establishments, and increase its online presence. Michelle believed that the online business held huge potential in Singapore and Southeast Asia because of the rising popularity of online shopping, and the lack of big and established online local players selling designer bags. The number of customers who bought AVS’ bags online was steadily growing. Michelle once declared ‘AVS was certainly growing more organic day by day’. Hence, this led to the interest in and initiative towards investing more in online business to tap into this opportunity as it opened windows to many international customers as well.   Though AVS’ online shopping website was picking pace, it was at a very slow rate due to many technical hurdles it faced in electronic transactions. It was taking more time to complete electronic transactions because of the absence of the latest web designing features and related software. It was, therefore, the right time to invest in new technology, and manage the online shopping more effectively. Michelle was searching to hire someone to manage the online business. She was wondering whether it was time to initiate a blog site covering the latest fashion in designer bags on AVS’ website itself. However, it was difficult to identify local Singaporeans with the right skills; and those who did possess such skills demanded high pay, thus driving the operational costs further up. Hence, the opportunity of online business was yet to be fully tapped due to the lack of resources.  

Other Challenges

  Animal-derived product manufacturers like AVS were increasingly facing the wrath of animal rights activists who regularly came out in the media to denounce animal slaughter to satisfy the clients of the luxury goods industry. To compound the problem, there were concerns about ethical treatment of farm crocodiles in one of AVS’ suppliers in India. It affected the supply of crocodile skin for its manufacturing plant resulting in less manufacturing of bags with crocodile skin. This affected AVS’ revenues as its crocodile bags were fast selling bags.   Eric was tasked to source for a new supplier of crocodile skin that would meet the ethical, and other regulatory standards. When Eric contacted their Indian supplier on the ethics matter, the supplier assured him that the problem would soon be addressed, and all that was needed was some under-the-table monetary amount to manage the regulators there. Eric was not at all comfortable with the idea of bribing authorities. On the other hand, it made things easy for him as he no longer needed to source for another supplier, and that meant saving time and money. Importantly, the Indian supplier’s leather was of high quality and reasonably priced. Eric thought deep and was in a dilemma - should he continue dealing with the Indian supplier or not? After all it would not be him who would engage in bribing, he reasoned. All he had to do was to keep silent, and that would be good for AVS.   To compound the challenges AVS faced, eco-friendly fashion, once a niche segment, has emerged from the sidelines, and more shoppers were going green. In recent years, issues of ethics and environment have created waves within the fashion industry. It was time for AVS to explore a new breed of materials that is committed to being ethical and eco-friendly for the long term. This meant that AVA ought to try non-leather eco-friendly materials for its bags. Michelle asked Eric to explore suppliers of other non-animal based materials like synthetic leather and others. Eric opposed saying that it would be going against the very foundation of AVS’ focus on high-grade leather materials. Many discussions were held on whether such a decision to diversify was right for the company, and whether it had the necessary resources. Though they were convinced that there was no other choice than to embrace change, and adapt to social preferences, no decision was made. It was a tough decision as it could involve a complete reengineering of AVS’ business operations starting with a restatement of its mission and vision statements.   It was noon on 6 October 2016 when Michelle finally called on Justin and Eric and said, “I have made my decision to introduce a new product line of bags using non-leather materials. Let’s get this moving…”.   (Students are encouraged to do desk research on local designer handbags in Singapore, and study the external environment related to this industry.)     

Question 1

  (a)Define external environment. Analyse two (2) external environment components at Amiable Virgo Singapore (AVS) that have a great impact on its business. Explain your rationale on why you think these two components will have a greater impact on AVS than other components will. (Word Limit 200-300 words; 12 marks) (b)What is organisation structure? Discussany three (3) contingency factors that favour either the mechanistic or the organic structure. Draw relevant examples from the case. (Word Limit 200-300 words; 13 marks)     Question 2  

• Brieflydescribe any two (2) factors that are reshaping and redefining the job of Michelle, the founder and director of AVS.

Some factors are Global economic, political uncertainly, changing workplaces, ethical issues, changing security threats, technology changed and increased competitiveness. (Word Limit 200-250 words; 10 marks)  

• Describethe three (3) essential management skills, and relate these skills to different managerial levels. Provide relevant case examples for these three skills in your answer.

  The three essential management skills are Human skill, Conceptual skills and Technical skill.   different managerial levels-First-line managers,Middle managers and Top managers (Word Limit 300-350 words; 15 marks)    

Question 3

 

• Explain the differences between programmed and non-programmed decisions. Draw relevant examples from the case.

(Word Limit 250-300 words, 13 marks)  

• In your own words, define decision-making. Identifyany two (2) techniques/ guidelines for improving decision-making in today’s world. Provide examples from the case where relevant.

(Word Limit 250-300 words, 12 marks)    

Question 4

 

• Give an example of an ethical dilemma. Briefly describe the four (4)factors (covered in your course) that lead to ethical or unethical decision-making. Provide relevant examples. Discuss any one (1) factor in the ethical dilemma which Eric faced when considering the Indian supplier.

(Word Limit 400-500 words; 20 marks)  

• Discuss one (1) social responsibility or ethical issue that the current fashion industry (may be confined to the bag or clothing industry) faces. Your answer must be based on a thorough desk research which you should do together with your group members.

(Word limit, 50-100; 5 marks)