Current Issue Case: Fruit of the Loom Tries E-Commerce
Fruit of the Loom (www.fruit.com) is known for its underwear but also sells T-shirts, sweatshirts, and boxer shorts. Unlike the underwear business, in which the company sells products directly to large retailers such as Wal-Mart, the Activewear division, which manufactures blank T-shirts, uses several dozen distributors. These distributors sell the shirts to about 30,000 screen printers and embroiderers, who decorate the shirts and sell them to the public and/or retailers, who then market them to customers. This market is very competitive and complex. The distributors sell other products as well, including T-shirts made by Fruit of the Loom's competitors. Therefore, the relationships between Activewear and its distributors are critical. To boost these relationships, Fruit of the Loom decided to develop and maintain an individual Web commerce site for each of its 40 key distributors on the Internet. Each of the 40 sites includes a color electronic catalog, inventory level information, buyers' credit availability, and ordering forms. Both the shirt printers and the retailers enter the distributors' sites to facilitate their own back-office operation of inventory and billing. The distributors are allowed to advertise and sell other vendors' products on the Web site. This way Fruit of the Loom commits itself to supporting a system that benefits all channel members in a link that starts with its own site. Fruit of the Loom hopes to gain favor with the distributors, many of whom do not have the time or money to build their Web sites. The system also includes a model that automatically suggests Fruit of the Loom's substitute products for products not in stock. Even though building and maintaining 40 sites incurs a cost, Fruit of the Loom believes that the investment pays for itself. Fruit of the Loom also uses its experience to generate profit by setting up Web sites for other companies. DISCUSSION QUESTIONS 1. What strategic advantages does e-commerce bring to Fruit of the Loom? 2. Given the increasing specialization that takes place in industrial societies (out sourcing, virtual companies, etc.), does it make sense for Fruit of the Loom to be doing Internet development work inhouse? 3. Why is Fruit of the Loom using distributors for T-shirts and not for underwear?
Send in your analysis of the above case to b_cognizance@iiita.ac.in latest by 25th feb 2005. -------------------------------------------------------------------------------------------------------------------------------
Case Analysis to previous issue case
The Hiring Dilemma for High-tech Firms: 'Make vs. Buy' The existing dilemma of corporations regarding the “make vs. buy” decisions in context to the human capital is never ending. However, as suggested in the case there are certain aspects that help to come to decision in this regard. The two steps, which essential sums up the strategy of corporations of either hiring or training the personnel are listed below. Many intricacies are involved in their ambit. A) Justification for Make vs. Buy Technological oriented firms are more likely to hire than to retain because of short life cycles of products they offer (usually) and the cost involved in training of personnel. One crucial factor however, makes this decision to take, more perplexing. Would the organization would be still able to inculcate Esprit de corps that is synonym with success. Today most organizations have work culture of forming teams, assigning job to teams and getting the desired result there from. If new faces are seen quite often, then it surely take some time for people to get settled with new members whom they work with. This can consume a lot of time. Those firms that have a longer product life cycle are more likely to train there personnel to keep up with technological changes. This seems quite logical, because these firms do not face the challenge of upgradating their technical prowess over a short period of time. The issue is whom the firms should retain and in what number so as to maintain that balance of old and new people, that gives best results for it. Personal feelings plays an important role in forming work relationships—not friendships at work but job-oriented relationships—than is commonly acknowledged. They are even more important than evaluations of competence. In fact, feelings worked as a gating factor: It was found that if someone is strongly disliked, it's almost irrelevant whether or not she is competent; people won't want to work with her anyway. By contrast, if someone is liked, his colleagues will seek out every little bit of competence he has to offer. And this tendency didn't exist only in extreme cases; it was true across the board. Generally speaking, a little extra likeability goes a longer way than a little extra competence in making someone desirable to work with. This makes an unbiased decision taking process tougher. Other factors like cost of training, infrastructural costs etc too play a hand in this decision of make or buy. However, the real challenge lies in getting that perfect blend of people that would be just right. Once the decision is taken and strategy formulated then management should follow it wholeheartedly otherwise the mid way path would only lead to unfavourable consequences. This aspect is equally crucial in a firm's ability to keep alive itself.
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