Environmental Factors Paper

KB Washington

MKT421

April 11, 2011

David Cavazos

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For over 30 years, Stuart Weitzman has been designing shoes for the modern, sophisticated woman. Today, Stuart Weitzman Holdings, LLC is a privately-held leading designer, manufacturer, wholesaler and retailer of premium womens shoes and handbags in approximately 60 countries. Made famous by his trademark use of unique materials and keen attention to detail, Stuart Weitzman currently owns and operates 38 retail stores in the U.S., 7 stores internationally and provides exclusive licenses to 29 retailers to operate the Stuart Weitzman stores outside of the United States (Ethiopian Review, 2010). On May 6, 2010, Stuart Weitzman announced its acquisition of 55% of its holdings to Jones Apparel Group to be completed in two stages. At the initial closing, Jones made cash payments of approximately $180 million to the selling shareholders, including Irving Place Capital, a private equity investment group, for a 55% interest in Stuart Weitzman Holdings, LLC. Stuart Weitzman will remain the principal owner of the remaining 45% interest, and will continue as Executive Chairman of Stuart Weitzman Holdings, LLC. The selling shareholders will receive cash payments for their remaining interest at a final closing expected to take place at the end of 2012 (Ethiopian Review, 2010). Jones Apparel Group, Inc. is a leading designer, marketer and wholesaler of branded apparel, footwear and accessories (Ethiopian Review, 2010). In the current economy, many global companies are choosing acquisitions that can net large profits. Several factors that companies must consider are demographics and physical infrastructure, cultural differences, ethics and legal obligations, sociopolitical international relations, technology, and international legislation. Although Stuart

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Weitzman is a retailer of specialized goods for women, they understood that to remain competitive a strong marketing strategy was needed. According to Peters of Internet Retailer (2006), Weitzman hired Jesta I.S., a leading supplier of business solutions for retailers, to help them strengthen their infrastructure. Jesta I.S. helps companies increase their vision and help them build a practical plan to reach their goals. Because Weitzman is a global company some of their concerns are order management, efficient production, and workflow management for employees. They also implemented a tool called Vision Analytics, a business intelligence tool that helps the company identify performance indicators through specialized reports (para. 2). The products that Weitzman creates span all cultures. The cultural differences are mostly seen ethically and legally. Business norms vary country-to-country. Weitzmans move to work overseas happened out of a need to stay alive in the shoe industry. In 1971, shoe manufacturing dried up and all the shoe manufacturers in the United States closed. In an effort to keep the company alive, Weitzman sold off its company in the states and sold its shoe licenses for five years to a leading shoe company in Europe, Caressa (Levin, 2008). Weitzman moved his operation to Spain and continued to work with Caressa with sole jurisdiction over shoe development. Caressa quickly agreed to this arrangement because Stuart Weitzman shoes held a strong following in the market at that time. Once the contract reached its tenure, Weitzman bought his licenses back from Caressa and re-established his company. Technology is an important part of any company. Weitzman had to manage the needs of their growing company by integrating technology that helped them offer the

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highest level of customer service, yet manage their day-to-day activities with ease. One of the specific ways Weitzman approached this task was to implement software that managed their store inventory for e-commerce sales. According to Phil Kodroff, Vice President of Distribution and MIS for Stuart Weitzman, The nature of our products implies a relatively high average order size, so out-of-stocks due to imperfect inventory allocations by location can have a significant impact on bottom- line sales. By exposing enterprise-wide inventory online and in all stores, the software will enable us to capture revenue that would have been lost (RetailEDI, 2011). Weitzman has been able to maintain longevity in the shoe industry because they continue to appeal to younger markets. They specifically targeted stores that sell products to young consumers and worked with them to sell their shoes in their stores. This approach built product recognition among the younger crowd. One of their partners was Scoop, a retailer that sells cool and hip clothing to the daughters of Weitzmans regular customers. To appeal specifically to the younger customers, Weitzman created a shoe targeted to this market. Weitzman stated, I have to do a lot of design adjustment for that customer, tweak the shoes just to make it appeal to the daughter instead of to the mother. I will say it is very demanding and time consuming (Levin, 2008). Ethically, Stuart Weitzman was ahead of most American companies because they were brought in alongside a company that was already established overseas. This allowed Weitzman to learn all the cultural nuisances as a pupil. Weitzman has a stellar reputation as an upfront and legitimate business. The Foreign Corrupt Practices Act (FCPA) was established in 1977 to make it illegal for United States companies from

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giving corrupt payments to foreign officials to obtain favor in business transactions. However, many companies are now confessing their misdeeds rather than remaining silent and hoping to avoid detection. This is because of provisions of the 2002 Sarbanes-Oxley law regarding accounting reporting practices. Under this law, American senior executives can go to prison for violations (Kotler, 2009, p. 473). Stuart Weitzman is an example of an extremely savvy company that strategically maneuvered its way through an oftentimes challenging and transient industry. Weitzman has consistently applied high-end marketing strategies; even employing firms that have helped them maintain a large market share in the shoe industry. Technology upgrades ensured that customers received product quickly regardless of where they were in the world. Internationally, Weitzman was leagues ahead its competition when entering the overseas market. They were building partnerships with European companies in the early 1970s before international trade was the norm. These overseas partnerships ensured that global consumers began to build product recognition with their product increasing their customer base. Weitzman has implemented complex business strategies that may seem risky to some. Selling his company and closing all his plants in the early 1970s may not have seemed economically sound. However, this move was a success. In their most recent acquisition with Jones Group, Weitzman still remains in charge of product creation and development. He also ensured that several of his core team will walk into Jones with him to maintain the quality of product that made them an endeared leader in the shoe industry.

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Stuart Weitzman is a company that has effectively administered a marketing strategy that keeps them current, relevant, and connected to the changing and growing needs, wants, and desires of their customer.

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Armstrong, G. & Kotler, P. (2009). Marketing: An introduction (9th ed.). Upper Saddle River, NJ: Pearson Education. Ethiopian Review. (2010). Irving Place Completes Stuart Weitzman Sale. Retrieved from http://www.ethiopianreview.com/news/132803 Levin, R. (2008, September 1). Well-heeled An Interview with Stuart Weitzman. Rahs Research. Retrieved from http://rahsresearch.posterous.com/well-heeled-aninterview-with-stuart-weitzman Peters, K. (2006, May 12). Stuart Weitzman steps-up its technology infrastructure with Jestas Vision Suite. Internet Retailer. Retrieved from http://www.internetretailer.com/2006/05/12/stuart-weitzman-steps-up-itstechnology-infrastructure-with-jest Retail EDI. (2011). Stuart Weitzman Steps Up E-commerce with Store Fulfillment Using Storenet. Retrieved from http://retailedi.com/index.php/retail-news/495-stuartweitzman-steps-up-e-commerce-with-store-fulfillment-using-storenetr-live-fromvendornet