TASK

Read the background information on the fictitious business, Divine Denim Pty Ltd, and then apply the knowledge you have gained in this subject to answer the various questions.

Background

Helen Croker owns Divine Denim, a growing company making made to measure, designer denim jeans and jackets. She uses organic yarn-dyed cotton denim of different weights depending on the garment that she is making. Although she prefers to take the measurements herself, she is now making denim clothes for international customers using the self-measuring system she has developed and put online. For her custom clients, she takes measurements or uses the measurements supplied through her customers’ online application. She uses these measurements to alter the pattern for the design chosen by the client. The pattern is sent to the Cutting Department and the cut material then transferred to the Machining Department.

Helen has recently expanded into a Ready to Wear (RTW) collection which is made in Australia and sold online at a cheaper price point than the made to measure clothing.

Helen designs the RTW clothes and sends the designs to a pattern maker. She previously had two machinists working for her and has just expanded to 8 machinists and a cutter in an expanded factory to manufacture the RTW clothing. One of the machinists uses the riveting and buttonhole machines. Helen has the latest computerised machines enabling her to complete a single setup for all machines from an iPad. She has an administrator who manages the payroll, orders, creditors, delivery and invoicing. An IT expert works 2.5 days a week and manages the company's website, other IT issues and online presence including monthly podcasts. A bookkeeping service is used for basic bookkeeping, GST returns and preparing information for the tax agent.

Helen decided that she needs better cost control and regular information and has asked your firm of accountants, Good Numbers, to provide her assistance to maintain and grow her expanding business.

Question 1 Business background

As part of your initial meeting with Helen, you are concerned to find out as much as possible about the business and the strategies that she plans to use. To start this discussion, you explain to her Porter’s Five Forces and Porter's Strategy Model and how these can affect her costs and sales. You ask Helen to explain to you how she thinks the forces in Porter's model affect the custom clothing and the RTW businesses and the strategies she will take with these different products.

Required:

i. Prepare an explanation of Porter's Five Forces model and of Porter's broad-based organisational strategies for Helen.

ii. Prepare a statement from Helen setting out how she sees the forces affecting both the made to measure clothing and the RTW business and the general strategies that she is adopting for each of these businesses. Ensure that you use the background information above to support Helen’s approach to Porter's Five Forces model and Porter’s broad-based organisational strategies.

Presentation:

Record your answer to part i. in point form in one column. In the next column, record Helen’s evaluation (part ii.) of the impact that each of the points on the Five Forces and the Organisational Strategies (PFFOS) have on the made to measure business. In the last column record Helen’s evaluation of the impact that each of the PFFOS points have on the RTW businesses. See format below.