management information system - professor. suh - team. two seong yunmo park jiyong oh changhyup

Pacific Sunwear - Company Analysis

Management Information System- Professor. Suh

- Team. Two

Seong YunmoPark Jiyong

Oh Changhyup

C1.I ntroduction of Company

What is the Pac Sun?

2.E xternal Environment Analysis1. General Environment2. Industry Environment3. Competitor Environment

3.I nternal Environment Analysis1. History2. Business Structure3. Resources and Capabilities4. Performance

4.K ey ProblemsWhat is the critical problem?

5.R ecommendations & Implemantation 3 Recommendations for solving the problems

ONTENTS

Introduction of the company

Pacific Sunwear. inc

“We are Pacific Sunwear”

PacSun still remains

“True to its Roots”

Goal: Regain Market Leadership in Spring/Summer Wear

Introduction of the company

Pacific Sunwear. inc

Earnings Call, March 15, 2011 (Schoenfeld-CEO)

Slow growth in Men’s department

Women’s sales dropping

Refocusing goals on key competencies of Summer wear

Field leadership team was replaced and 50% of district man-

agers got axed

Launch of first mobile app. & update to “outdated website”

New advertising campaigns

30-50 store closures a year is realistic

Stores are ‘outdated and in the wrong location”

External Environment Analysis

General Environment

Economic:

- Store closures and de-cline in sales due to re-

cession- Hard to compete when

revenue is decreasing

Sociocultural:

- Increased mix of cultures And lifestyles

- More environmentally conscious

- Reputation and status image

to represent

Global:

- Increased emphasis on Reducing greenhouse

gassesAnd “going green”- clothing trends

- Hesitance to venture into unknown market


General Environment

Technological:

- Increased internet access- Increased cell phone use

- Online purchasing

Political/legal:- Possible emissions regula-

tions- Sweat shop labor laws

enforced

Demographics:- Targeting an older market- It’s not just surfers who

buy surf wear, their “niche”

Includes “non-participants” as well


Industry Environment

- Low Switching cost- A great number and variety of retailers- Major customers are normal people

- Design- Brand loyalty- Customer service

- Large number of sup-pliers - Low switching cost

- Variety of raw materials : cotton, polyester, wool

Bargaining Power of Suppliers

Bargaining Power of Buyers



- Highly competitive : Hot Topic, Hollister, Zomiez- Sensitive to economic ups and downs- Tangible product = inventory & storage cost - Differentiation : Brand

Intensity of Rivalry Among Competitors

- High exit barriers

http://static.seekingalpha.com/uploads/2009/11/5/saupload_apparel.png



- Need a large infrastructure:store distribution center

- Service industry

Threat of New Entrants

- Technology is relatively simple. - Differentiations:brand, design

- Easily access to raw materials

Threat of Substitute Products

- Daily necessity for people and clothing cannot be substi-tuted for anything



LowPower

High Power

No Sub-stitute

Middle

Intense rival-riesS

up

plie

rs

Bu

yers

Substi-tute

New En-try


Competitor Environment

Positive brand image through foundation, unique niche

product offering

Have not captured any par-ticular age group, lack com-mon selection offering, lack major advertising/marketingstrengths weaknesses

Established in California in 1988 by Orv Madden“the foundation of pop culture and its relevance to our target teen customer.”

Differentiation Strategy

2 stores in Canada

6 Stores in Puerto Rico

$6.56 Per Share

$44.65 Million Shares

Offer music and comic related t-shirts and accessories



Ability to adjust and adapt product offering seasonally,

unique store culture, exclusive product offerings

Not large enough to expand globally, pricing above aver-age at time when economy is

downstrengths weaknesses

Differentiation Strategy

396 locations

looking to ex-pand to the

600-700

$29.47 Per Share

$30.99 Million Shares

"that is consistent with many teenagers' lifestyles,“

Created in 1978 in Everett, WA.

has couches with video game systems for cus-tomers to play and Skate shops are included in larger locations



Brand recognition, status sym-bol to teenage generation, gi-

ant amounts of financial capital and assets to work with

High pricing, negative PRstrengths weaknesses

Launched in 2000 in Ohio, Off-shoot of Abercrombie & Fitch

Keep a uniform theme at each location, alternative or pop music played, and store design can give the feel of a beach location

to offer clothes for a So. Cal lifestyle

FocusedDifferentiation

Strategy

40 global loca-tions

looking to expand to southern hemi-sphere by 2014

Share data?



Hollister Co Zumiez Hot topic Pac Sun-$2.00

-$1.00

$0.00

$1.00

$2.00

$3.00

$4.00

2008

2009

2010

Earnings Per Share



Hollister Co.

Zumiez Hot Topic Pac Sun0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2008

2009

2010

Gross Profit Margin



Hollister Co.

Zumiez Hot Topic Pac Sun-24.00%

-20.00%

-16.00%

-12.00%

-8.00%

-4.00%

0.00%

4.00%

8.00%

12.00%

2008

2009

2010

Return On Assets

Internal Environment Analysis

History of the Pac Sun

Tom Moore and his partners opened the second store as a mall location one year

later

In 1993, Pacific Sunwear filed with the SEC for an IPO.

Originated as a small surf shop out of Newport Beach

founder Tom Moore opened his store in 1980 catering to surfers

1997 the company completed an acquisi-tion of Good Vibrations and announced

goals to launch demo.

Brief History


Business Structure

Distribution Center in Kansas

Distribution Center in

Olathe

Headquarterin Anaheim, California

Pacific Sunwear leased and oper-ated 852 stores in all 50 states and Puerto Rico.

Headquarter and Store Location

localized assortment

planning strategies.


Resources & Capabilities

a varied se-lection of heritage

brands in-spired by

well-known action sports

plans to im-plement a

new strategic

marketing initiative.


Performance

Over the last few years, the company has continued to de-cline in profitability.

From fiscal year 2007 to fiscal year 2010, net loss further de-creased by $66,281,000.

Years

Key Problems

What is the Problem?

Decreasing women’s wear sales and stagnant men’s wear sales

Sales

Decrease

- Investors pulling out- Revenue decreasing- Mounting losses- Could lead to eventual bankruptcy

Key Problems

Current Turnaround Plan?!

Lower prices

Shift to trendier styles

Improve customer service

Play up big-name brands

Moving product quickly off the shelves

Selling off real estate to reduce costs

Result? Still Bad!!!

Why is there still no overall effect on Pac Sun sales…?

Pac Sun MUST find a Compara-tive Advantage to again become relevant in the retail industry and

thus increase sales!!

Recommendations

Recommendations & Justification

Create a PacSun clothing line and eliminate their several proprietary brands

Create brand recognition for PacSunReinforce the quality brand name

Lower overall costsThe products will be similar, with a unified PacSun logoNew clothing line will reflect the company’s roots

Justification

Recommendation #1

Recommendations


Diversify into the leisure industry

Extend into action and extreme sports and video gamesCurrent users will bring in their friends/family

Can transfer their core competencies into the leisure business

Justification

Recommendation #2

Can deal with management of risks.Certified PacSun employees can offer lessons in some sports

Skate-boarding

Snow-boarding

Skiing Surfing

Skate-boarding

Snow-boarding

Skiing

Surfing

100%

72%

63%

60%

65%

100%

58%

52%

39%

39%

100%

36%

68%

68%

66%

100%

Source: Mintel/Experian Simmons NCS/NHCS: Summer 2010 Adult Full Year—POP

which sport you participated in the last 12 months?

Recommendations


Implement a 3-Dimensional Body Scanner

Create a unique customer profile with virtual avatar and ‘closet’The profile will contain the customer’s measurements, billing information, and previous purchasesRecommend different clothing to each customer

Allow each customer to dress their avatar, and discover new clothing options for themselves

Justification

Recommendation #3

Improve customer relations

The Best Recommendation

Implementation

Once the technology catches on, we will spread it to other large locations

Promote the body scanner through conventional channels

Partner with an established com-pany,

sharing data to offer the best ser-viceInstall the system in PacSun’s high-

est traffic locations (California, Florida,

New York)

Increased sales due to the system

Thank you!

Any Questions?

management information system - professor. suh - team. two seong yunmo park jiyong oh changhyup

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