Realizing the Growth Potential of Small Danish Fashion Companies
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Realizing the growth potential of small Danish fashion companies Department of Marketing Author: Razieh Negarandeh Cand.merc. MCM Master Thesis Supervisor: Lise Skov Copenhagen Business School April 2008 Executive summary The Danish fashion industry consists of about 92% one-man companies and only about 2% who have more than five employees. Even though it still has the sixth largest export commodity in Denmark in 2006 and has a turnover of about DKK 23 billion in 2007. This contradiction was one the reasons for this thesis choice of research. There is a focus on how can the small fashion companies best be assisted to overcome the challenges they face to grow and become successful. An overview of the international industry is given in order to give a background understanding and how the strong the competition is. Next and overview of the Danish fashion industry is given first its history and development and next the facts and figures that enables to get a deeper understanding of the fashion industry today. Subsequently the initiatives taken by the government and the fashion industry are discussed. It illustrates that the government is willing to assist the SMEs within fashion and has put forward some initiatives that now needs to be developed further by the fashion industry and its stakeholders. In order to give a practical example on how the SMEs within fashion can be assisted, London College of Fashion has been used as a best example case. It is excellent learning example that should be studied by the stakeholders within Danish fashion industry and the government. Next Management of SMEs was analysed on a theoretical base and practical base. An important part of making a fashion company successful is the marketing and branding aspect. As argued by Saviola et al. “Fashion is all about the intangible values and the intangible values it creates“ thus branding is the ultimate tool to create this. The theories on how to create a strong, favourable, and unique brand were provided. Finally and discussion and recommendation chapter is made that discusses the initiatives that need to be taken in order to best assist the SMEs within Danish fashion. Three actor levels is defined, the government, the fashion industry, and the SMEs in order to specify who should or could be responsible for the formulated recommendations. Table of Content 1. Introduction.............................................................................................................................3 1.1 Background....................................................................................................................3 1.2 Problem Identification....................................................................................................4 1.3 Delimitations .................................................................................................................5 1.4 Definitions.....................................................................................................................6 2. Methodology ...........................................................................................................................7 2.1 Research approach .........................................................................................................8 2.2 Research strategy ...........................................................................................................9 2.3 Data Collection ............................................................................................................10 2.4 Theoretical framework.................................................................................................14 2.5 Structure of the project.................................................................................................15 3. Ethnographic study................................................................................................................17 4. International Fashion Industry ...............................................................................................19 4.1 France..........................................................................................................................19 4.2 Italy .............................................................................................................................21 4.3 London ........................................................................................................................22 4.4 New York ....................................................................................................................22 4.5 Spain............................................................................................................................23 4.6 Germany......................................................................................................................23 4.7 Scandinavia..................................................................................................................23 4.8 Asia .............................................................................................................................24 5. Danish fashion.......................................................................................................................25 5.1 History.........................................................................................................................25 5.2 Danish Fashion Fairs....................................................................................................27 5.3 The outsourcing of Danish apparel production .............................................................28 5.4 The fashion geography.................................................................................................29 5.5 Danish Fashion industry today .....................................................................................30 6. Development within Danish design industry..........................................................................31 6.1 Number of companies and employment........................................................................31 1 6.2 Fashion industry...........................................................................................................32 6.3 The fashion companies organizational structure ...........................................................34 7. Initiatives in the Danish fashion industry ...............................................................................36 7.1 Governmental initiatives ..............................................................................................37 7.2 KravleGaarden.............................................................................................................42 8. London College of Fashion....................................................................................................44 8.1 The Centre for Fashion Enterprise................................................................................44 8.2 Fashion Business Resource Studio ...............................................................................47 9. Management of SMEs ...........................................................................................................49 9.1 SMEs Entrepreneurial background...............................................................................49 9.2 Strategic management in SMEs – a theoretical approach..............................................51 9.3 Development of SMEs – a practical approach ..............................................................55 9.4 Development of marketing and branding strategy.........................................................61 10. Discussion and Recommendations .......................................................................................68 10.1 Challenges faced by the SMEs ...................................................................................68 10.2 Resources on the Danish market for SMEs within fashion industry ............................70 10.3 Ideas gained from best practice example ....................................................................72 10.4 Recommendations......................................................................................................73 11. Conclusion...........................................................................................................................83 Bibliography..............................................................................................................................85 Appendix...................................................................................................................................88 2 1. Introduction 1.1 Background Danish Design has the last couple years become a high priority in the Danish government’s strategy concerning Danish trade and business life. The government has for many years concentrated on building Danish competitiveness within knowledge industry such as IT or pharmaceutical but lately it has acknowledged that the Danish industries’ strength is more than the traditional industries connected to knowledge. The report “Et billede af dansk design” by Erhvervs- og Byggestyrelsen (EBST) from 2007, shows that Danish design has revealed to be a great competitive factor that generates billions per year and employs a great number of people. Danish design is defined as furniture, graphic, communication, interior, and fashion design. Fashion design is also seen as part of the Danish textile and clothing industry which alone